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The One-Rupee Trick: How banks cut their zero-balance Jan Dhan accounts

Flagship scheme brings range of benefits to poor. There’s a catch. Many officials are quietly depositing Re 1 from their pockets to erase zero-balance accounts — and dress up the data.

Written by Shyamlal Yadav , Jay Mazoomdaar | New Delhi |
Updated: September 13, 2016 1:03:33 pm
zero balance, bank zero balance, jan dhan accounts, bank jan dhan account, erase zero balance accounts, punjab and sind bank, zero balance account, open zero balance account, how to open bank account, indian express investigation, syndicate bank, banking, banking and finance, indian express news, business, banking news Passbooks with deposits of ₹ 1 at the office of a bank agent in Barh, Bihar. Source: Shyamlal Yadav

In August 2014, a few weeks after the launch of Jan Dhan, the government’s flagship scheme under which the unbanked get bank accounts, Kamlesh, a housewife at Purnapur village in Uttar Pradesh’s Bareilly, opened an account at the Punjab and Sind Bank’s local branch. Wife of a farmer, the opening balance in her account was zero. This wasn’t unusual — in fact, accounts like Kamlesh’s, called zero-balance accounts, made up almost half of all the 17.90 crore Jan Dhan accounts a year later given that most of the holders were poor and had little by way of savings.

But on August 5 this year, when Kamlesh got her passbook updated, she was in for a surprise. “Re 1 had been deposited in my account on September 29, 2015. I didn’t deposit the money, I don’t know where it came from. I will ask the bank about this,” she said. It’s not just Kamlesh, and it’s not just that branch in Bareilly, or even that bank.

Investigating information obtained from more than 30 nationalised and regional rural banks under the Right to Information (RTI) Act, The Indian Express went to more than 25 villages and cities spread across six states, checked individual passbooks and interviewed account holders. To find that bank officials are quietly making one-rupee deposits, many from their own allowances, some from money kept aside for office maintenance. Their ostensible goal: to reduce the branch’s tally of zero-balance accounts.

As many as 20 branch managers and officials told The Indian Express, on the condition that they not be identified, that there is “pressure” on them to show that zero-balance accounts are falling in number. “There was a perception that so many zero-balance accounts means no one is using them, so there was pressure on us to change that,” said one official.

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The short-cut was the one-rupee deposit.

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Indeed, as per RTI information provided, 18 public sector banks and their 16 regional rural subsidiaries held 1.05 crore Jan Dhan accounts with deposits of Re 1.

From Ajit Kumar Das’s Syndicate Bank account in Guwahati to Lallu Paswan’s Punjab National bank account in Bihar’s Barh; from Guddi Devi’s Bank of Baroda account in Rajasthan’s Sawai Madhopur to Nizam Khan’s Bank of India account in Raatibad near Bhopal.


They all had Rs 1 deposited in their zero-balance accounts. There were a few cases of despoits of Rs 2 or Rs 5, and in one case, Prem Bai of Raatibad, near Bhopal, found 10 paise had been transferred to her zero-balance account in Bank of India on July 20, 2016.

Indeed, at the macro level, the number of zero-balance accounts has fallen sharply. From 76% in September 2014 to almost 46% in August 2015, then a steady fall to 24.35% on August 31, 2016.

In fact, RTI information obtained until August 2016 shows that the percentage of accounts with such deposits of one rupee is significant across banks and across the country.

Read | Jan Dhan empowers, that’s why the red flag

Take, for instance, the case of Punjab National Bank, which has opened 1.36 crore Jan Dhan accounts of which 39.57 lakh (almost 29%) are those with deposits of Re 1. Bank of Baroda has 1.4 crore Jan Dhan accounts of which 12.97 lakh (9.26 per cent) have deposits of Re 1. There’s also UCO Bank with 74.6 lakh Jan Dhan accounts of which 11.06 lakh (14.83 per cent) have deposits of Re 1.

List of Jan Dhan accounts from six states

And those were just the top three. Punjab and Sind Bank, which currently has the least number of zero-balance accounts (0.40%), refused to provide details of Jan Dhan accounts with Re 1-Rs 10 in deposits.

6 states, 1 story: How they got the rupee

At the ground level, The Indian Express spoke to over 20 branch officials of various nationalised banks and their regional rural subsidiaries in Assam, Bihar, Chhattisgarh, Madhya Pradesh, Rajasthan and Uttar Pradesh who admitted, on condition of anonymity, that the deposits of Re 1-Rs 10 were sourced from various perks and other expenditure heads that come under their jurisdiction.

These include entertainment allowance, conveyance allowance, canteen subsidy, office maintenance funds, and fee obtained for Demand Drafts and online transfers. At least 10 branch officials said they had deposited these amounts from their own pockets, just to keep the accounts alive.

They said that most of these cash deposits were done manually with staff filling pay-in slips in bulk. In a few cases, the money was transferred electronically by the banks’ Business Correspondent Agents (BCA) or Bank Mitras — contract staff who take banking facilities to rural clients — who are allowed to open accounts to deposit money they take from account holders under Jan Dhan before transferring them to individual accounts.

For example, in Rajasthan’s Sawai Madhopur district, out of 40 bank passbooks scrutinised by The Indian Express, 15 had Re 1 credited by transfer as the first entry. None of the account-holders knew the source of these entries.

When The Indian Express visited Barh in Bihar, around 200 Jan Dhan account passbooks with deposits of Re 1 were found in the office of a BCA. “I was asked by the branch manager to deposit Re 1 in around 120 Jan Dhan accounts between October 9, 2015 and October 11, 2015. The bank officials said they would give this amount to me later. In many other accounts, bank staffers themselves deposited the amount to remove the zero balance,” said the agent.

“We took money from expenditure head of the branch and put Re 1 or Rs 2 in the accounts having zero balance. This was just to keep those accounts operational,” said a senior official of Punjab National Bank in Barh.

“We have noticed some such cases. There was pressure from the top level and some bank staffers did it themselves. But such cases are only a few,” said an official at a Central Bank of India branch in Bareilly.

“In my branch, nearly 1,000 such accounts were opened. Due to pressure from the top level, I deposited Re 1 in many of those accounts myself,” said a branch official at Baroda UP Gramin Bank in Bareilly, a subsidiary of Bank of Baroda.

“I was heading another branch before being transferred here and I had personally put Re 1, Rs 2 and Rs 3 in around half of the around 1,000 accounts opened under Jan Dhan in that branch. It was the usual practice in the branch due to pressure from the top,” said an official of the Aryawarta Gramin Bank, a subsidiary of Bank of India, in Mainpuri, UP.

An official at Bank of Baroda’s Baler branch in Rajasthan claimed that the bank’s “business correspondents may have put Re 1 in those accounts to encourage banking practices” among villagers.

“The branches have certain targets and there is pressure. For the last one year or so, we have ensured that new accounts are opened with some deposit. But there are issues with accounts opened earlier in bulk. It is difficult to persuade those account holders to deposit money,” said the official.

(Reporting from Meerut, Bareilly, Mathura and Etawah in UP, Guwahati in Assam, Barh in Bihar, Bhopal in MP, Durg in Chhattisgarh and Sawai Madhopur in Rajasthan)

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