How does PMJDY help in financial inclusion?

The Pradhan Mantri Jan Dhan Yojana (PMJDY) completed ten years of its implementation on August 28.

PMJDY, the National Mission for Financial Inclusion, continuously endeavours to provide support to the marginalised and economically backward sections through its financial inclusion interventions.

Union Finance Minister Nirmala Sitharaman said PMJDY integrates the poor into the economic mainstream and plays a crucial role in the development of marginalised communities.

Pradhan Mantri Jan Dhan Yojana (PMJDY)

• With a view to increase banking penetration, promote financial inclusion and to provide at least one bank account per household across the country, a National Mission on Financial Inclusion, known as Pradhan Mantri Jan Dhan Yojana (PMJDY), was announced on August 15, 2014. 

• The scheme was formally launched on August 28, 2014 at national level by Prime Minister Narendra Modi.

• In order to give impetus to financial inclusion initiatives of the government, PMJDY scheme was extended with the focus on opening of accounts shifting from “every household” to “every unbanked adult”. 

How does PMJDY help in financial inclusion?

• PMJDY has been successful in increasing banking penetration and to promote financial inclusion across the country.

• In the Indian context, financial inclusion is the process of ensuring access to appropriate financial products and services needed by vulnerable groups, such as weaker sections and low income groups, at an affordable cost in a fair and transparent manner by mainstream institutional players. 

• Financial inclusion is a national priority of the government as it is an enabler for inclusive growth. It provides an avenue to the poor for bringing their savings into the formal financial system, an avenue to remit money to their families in villages besides taking them out of the clutches of the usurious money lenders. 

• Jan Dhan Yojana is one of the biggest financial inclusion initiatives in the world.

• Census 2011 estimated that out of 24.67 crore households in the country, only 14.48 crore (58.7 per cent) had access to banking services. 

• In the first phase of the scheme, these households were targeted for inclusion through opening of a bank account within a year of launch of the scheme.

• Notably, there are no account opening fees or maintenance charges and no requirement to maintain a minimum balance under this scheme.

• It offers basic savings bank accounts with an overdraft facility of Rs 10,000 to every account holder.

Basic tenets of the scheme:

i) Banking the Unbanked: Opening of basic savings bank deposit accounts with minimal paperwork, relaxed KYC, e-KYC, account opening in camp mode, zero balance and zero charge.

ii) Securing the Unsecured: Issuance of indigenous debit cards for cash withdrawals and payments at merchant locations, with free accident insurance coverage of Rs 2 lakh.

iii) Funding the Unfunded: Other financial products like micro-insurance, overdraft for consumption, micro-pension & micro-credit.

Achievements under PMJDY

• PMJDY has been the foundation stone for people-centric economic initiatives. Whether it is direct benefit transfers, COVID-19 financial assistance, PM-KISAN, increased wages under MGNREGA, life and health insurance cover, the first step of all these initiatives is to provide every adult with a bank account, which PMJDY has nearly completed. 

• The PMJDY accounts have not only been instrumental in receiving Direct Benefit Transfers, but also serve as a platform for hassle-free subsidies/payments made by government to the intended beneficiary without any middlemen, seamless transactions, and savings accumulation.

• It has been crucial in providing life and accident insurance to millions of unorganised sector workers through Jan Suraksha schemes (micro insurance schemes).

• Under PMJDY, the number of bank accounts grew nearly four-fold from 14.72 crore in March 2015, to 53.13 crore as on August 14, 2024. 

• Total deposits under PMJDY have swollen from Rs 15,670 crore as of March 2015, to over Rs 2.31 lakh crore as of August 2024.

• Average deposit per account is Rs 4,352 as on August 14, 2024. 

• Over the past decade, PMJDY has played a pivotal role in bringing millions of unbanked individuals, particularly women, into the formal financial system.

• About 67 per cent of the accounts have been opened in rural or semi-urban areas, and 55 per cent of accounts have been opened by women.

• Approximately 35.35 crore RuPay cards with an inbuilt accidental insurance of Rs 2 lakh (Rs 1 lakh for accounts opened before August 28, 2018) coverage has also been provided to PMJDY account holders.