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Pradhan Mantri Jan Dhan Yojana – How successful is it?

April 8, 2015

On September 2 last year, soon after the ambitious Pradhan Mantri Jan Dhan Yojana was launched, we wrote in these columns that the real challenge was to keep the accounts that would open under the PMJDY alive. ( We had written that the government need not rush the ambitious plan of financial inclusion without a proper action plan.

How successful is pradhan mantri's jan dhan yojana

More than half a year later, the PMJDY seems to have progressed steadily although the scheme still faces several teething troubles.

In September, we had pointed out that the rush to open the accounts to meet the deadline set by the Prime Minister meant that there was no proper screening of the account holders. Besides, what was also required was a survey at the rural level to identify the financially excluded population to avoid duplication of accounts and even fake accounts.

A mid-January appraisal of the project by the government showed that the scheme though successfully exceeded its financial inclusion target by opening 115 million bank accounts, only 28 per cent of the accounts opened under the scheme were “active”.

Besides, there was apparently also an initial disconnect between the data published by the Government portal and the data published by the Reserve Bank of India. (Compare the RBI data of November last year with that of the Government during that period).

“The evidence is quite strong that the numbers claimed are incorrect and I believe that both the Prime Minister’s office and the RBI should ask difficult questions to these banks,” claims Subhash Chandra, a Mumbai-based political insights consultant and founder of SC Polling insights company, who based his study on the October and November data. Chandra points out that amongst a select list of 15 PSU banks, the disconnect is even larger. “The claimed number of Jan Dhan accounts opened by these banks in November is 8 million while the actual number according to the RBI is only 3 million,” he said.

It is indeed a matter of interrogation whether the banks fudged the number, which is not surprising considering that statements sent by banks are not correct all the time as the clerical staff, who prepares the statement goes by the statement prepared the month before, which may or may not show actual figures. There is a tendency that generally, managers just sign the statements without even looking through them carefully, largely because at times it is not physically possible for them to look into each and everything”. “It’s all a matter of trust, and the officer concerned or manager sometimes has to implicitly believe that the statements (and lots and lots of them to be sent every month) are perfect,” explains a banker on conditions of anonymity.

What further corroborates such a possibility are the RBI statistics that were made public in March this year and which showed that despite creating a record with opening of the accounts under the PMJDY, the state-run banks did falter when it came to lending the micro-sector that has fallen 5.5 per cent over the last 14 months.

A Right to Information (RTI) query further revealed that not a single claim was settled till December last year under the RuPay accidental insurance policy of the PMJDY and though 25 of the 34 accidental claims were under process, “only six fulfilled the criteria”. (It may be mentioned that all RuPay cardholders are eligible for an accidental claim policy that remained effective till March 31, 2015).

The All India Bank Officers’ Confederation president, Y Sudarshan, reportedly stated on March 30 that there was still “a huge backlog in issuing ATM cards, cheques or passbooks” under the scheme and it was still not clear whether the government or banks will pay for the overdraft money of Rs. 5000, that could be availed by the account holder after six months of opening the account.

Yet, despite these initial hurdles that can at best be termed as “teething troubles”, the Jan Dhan Yojana is a good beginning more so in the light of the fact that prior to the scheme, only 58.7 per cent of households in India availed of banking services, and as the 59th Round Survey Results of the National Sample Survey Office in 2013 showed, over 70 per cent of the total farmer households had no access to any formal sources of credit.

The move by the public sector banks (PSBs) to provide financial inclusion to all the households by opening at least one bank account per household under PMJDY is commendable despite the inherent problems involved.

What adds to the confidence is a recent data released by the Ministry of Finance on the PMJDY Website that shows a sharp fall in the percentage of Zero Balance accounts in 2015 – from 67.32 percent at the end of January to 62.8 percent at the end of February.

Experts attribute this decline to a) issue of more RuPay cards, which increase the usability of the accounts, and b) seeding of AADHAR cards with bank accounts for various schemes like for Mahatma Gandhi National Rural Employment Guarantee Act (NREGA) and the re-launch of Direct Cash Transfers (DBTL) for the LPG subsidy under the PAHAL scheme of the Ministry of Petroleum and Natural Gas.

At a recent Financial Inclusion Conference to mark the Reserve Bank of India’s 80th anniversary celebrations on 2nd April, Prime Minister Narendra Modi pointed out that the scheme had thus far attracted deposits to the tune of Rs. 14, 000 crore.

This is indeed a credible achievement of the government and Modi now wants the next phase to  provide “social security like accident and life insurance, and pensions schemes, to PMJDY account holders”. However, in the process he and his government needs to ensure that the initial teething troubles are taken care of at the earliest. After all, any effort for financial inclusion of the poor should be welcomed and scrutinised closely for the good of the society.

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Disclaimer: The views expressed are of those of the author and do not represent the views of

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