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Journalism of Courage
As the Pradhan Mantri Jan Dhan Yojana (PMJDY) completed 10 years on Wednesday (August 28), Prime Minister Narendra Modi hailed the “momentous” achievement of the scheme that has been “paramount in boosting financial inclusion and giving dignity to crores of people, especially women, youth, and the marginalised communities”.
The PMJDY was launched on August 28, 2014, as a national mission for financial inclusion. Over the last decade, 53.13 crore Jan Dhan accounts have been opened, with 29.56 crore women beneficiaries, more than the population of the European Union, and almost the same as the population of the United States respectively, the government said.
The PMJDY was one of the early initiatives of the Modi government. The Prime Minister announced the scheme in his first Independence Day address on August 15, 2014.
“I have come here with a pledge to launch a scheme on this festival of freedom. It will be called Pradhan Mantri Jan Dhan Yojana,” Modi said from the ramparts of the Red Fort.
“I wish to connect the poorest citizens of the country with the facility of bank accounts through this yojana… This yojana will open the window. …An account holder under Pradhan Mantri Jan Dhan Yojana will be given a debit card. An insurance of one lakh rupees will be guaranteed with that debit card for each poor family…,” he said.
The scheme was launched on August 28. Banks organised 77,892 camps around the country, and opened about 1.8 crore accounts. Guinness World Records recognised the achievement: “The most bank accounts opened in 1 week as part of a financial inclusion campaign is 18,096,130 and was achieved by Department of Financial Services, Government of India from 23 to 29 August 2014.”
The launch of PMJDY provided an unprecedented boost to the government’s campaign for financial inclusion, at a scale never seen before. Earlier governments too, had taken initiatives for financial inclusion — for instance, the previous UPA government began a scheme of no-frills bank accounts for people who did not have an account — but they had failed to gain traction.
* The foremost objective of the PMJDY was to open a Basic Savings Bank Account for unbanked individuals. There was no requirement to maintain any minimum balance in PMJDY accounts, and these accounts earned interest on deposits like regular accounts.
* PMJDY account-holders were given RuPay debit cards.
* An accident insurance cover of Rs 1 lakh was available with RuPay cards issued to PMJDY account holders. The cover was enhanced to Rs 2 lakh for new PMJDY accounts opened after August 28, 2018.
* Eligible PMJDY account holders can avail overdraft (OD) facility up to Rs 10,000.
* PMJDY accounts are also eligible for Direct Benefit Transfers (DBT), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY), Atal Pension Yojana (APY), and the Micro Units Development & Refinance Agency Bank (MUDRA) scheme.
As of August 14, 2024, the number of PMJDY accounts stands at 53.13 crore — including 35.37 crore accounts in rural and semi-urban areas, and 17.76 crore accounts in urban areas — and total deposits at Rs 2,31,235.97 crore. More than half the PMJDY accounts (29.56 crore) are in the names of women. A total 36.14 crore RuPay debit cards have been issued to PMJDY account holders. (See charts)
The largest share of PMJDY accounts is with public sector banks (41.42 crore accounts until August 14), followed by Regional Rural Banks (9.89 crore accounts), private sector banks (1.64 crore), and Rural Cooperative Banks (0.19 crore).
A statewise analysis of PMJDY accounts shows the most accounts have been opened in Uttar Pradesh, the most populous state (9.45 crore), and the fewest in Lakshadweep (only 9,256 accounts). There are 15 states apart from UP with more than 1 crore PMJDY bank accounts: Bihar, West Bengal, Madhya Pradesh, Rajasthan, Maharashtra, Assam, Odisha, Karnataka, Jharkhand, Gujarat, Chhattisgarh, Tamil Nadu, Andhra Pradesh, Telangana, and Haryana.
The scheme, which is one of the components of the JAM trinity of PMJDY, Aadhaar, and mobile, has had a transformative impact on the financial and banking sectors of the economy.
* First, the opening of more than half a billion bank accounts has fuelled demand for banking services, encouraging commercial banks to expand their infrastructure in recent years.
The number of branches of scheduled commercial banks in the country has increased by 46 per cent to 1,54,983 in 2023 from 1,05,992 in 2013. Of the total 1.54 lakh branches, 35 per cent are in rural areas, 28 per cent in semi-urban areas, 18 per cent in urban areas, and 19 per cent in metropolitan areas.
The number of ATMs has increased by 30 per cent from 1,66,894 at the end of June 2014 to 2,16,914 in 2024. The number of Points of Sale (POS) has increased from 10.88 lakh to 89.67 lakh during the last 10 years.
* Second, the rollout of payment solutions such as UPI — launched two years after the PMJDY — has eased and increased banking transactions.
The Reserve Bank of India, in its Report on Currency and Finance released on June 29, 2024, noted, “India’s financial inclusion initiatives received a fillip when PMJDY was launched in 2014… The digital technological revolution widened the usability of bank accounts from a traditional deposit or credit account to a payment intermediary. As per the World Bank’s Findex database, 78 per cent of Indian adults (population with 15 years or more of age) had a bank account in 2021 as compared to 53 per cent in 2014.”
* Third, PMJDY accounts have become the bedrock of the government’s DBT architecture. While this has ensured faster delivery of benefits to the poor, the JAM trinity has played a crucial role in improving efficiency by weeding out ineligible or fake beneficiaries.
In fact, DBT and other governance reforms resulted in a gain of Rs 3.48 lakh crore in the implementation of government schemes including MG-NREGS and PM-Kisan until March 2023, according to data from the RBI’s Report on Currency and Finance.
