Financial Management

A project on
Financial Inclusion and PMJDY

Prepared by
Archisman Ghosh (20)
Mayukh De (44)
Nakshtra Das (46)
 Financial Inclusion and PMJDY

 Introduction
Any kind of government services is considered as public goods and availability of
such goods to the entire population is the main objective of any Public policy. When
we specifically talk about banking services or financial services the term “Financial
Inclusion” comes in.
Scenario in India
India after 72years of independence is still unable to bring all of its citizens under the
formal banking system.
The government, Reserve Bank of India have been making efforts to promote
financial inclusion as one of the national objectives of the country. But still a report
claims that more than 19 crore people do not have any bank account even after the
ambitious and successful launch of Pradhan Mantri Jan Dhan Yojana. Apart from that,
the new launch of the Indian Postal Payment Bank, building robust branch networks
of scheduled commercial banks, co-operative banks, and Regional rural bank could
not make any difference. Most of the people in the rural area where this deprivation is
mostly seen, could not figure out the necessity of presence of formal sector.
Financial Inclusion protects the financial wealth a person might have and mitigates the
mistreatments of vulnerable sections by the extortionate money lenders by providing
easy access to loans.

 Objectives
• To understand present status of financial inclusion in the country.
• To study the Pradhan Mantri Jan Dhan Yojana (PMJDY) performance &
Challenges.

 Survey of Literature
N. Swati in his “A Study on Pradhan Mantri Jan Dhan Yojana (PMJDY) In Uttara
Kannada District, Karnataka” focuses on the analysing different schemes in financial
inclusion and socio-economic profile of the PMJDY account holders and analyse the
problems faced by banks.
Rajat Deb and Prasnejit Das in their study focuses on “Perceptions of Bank Account
Holders About PMJDY – A Study on Baikhora Region Of South Tripura “.
  Methodology
This paper is an attempt of exploratory research, based on the secondary data sourced
from journals, articles and reports available at RBI, Government of India. Based on
the objectives of the study the descriptive research design is employed for the study.
Scope of the study:
The scope of present study is limited to the performance and progress of Pradhan
Mantri Jan-Dhan Yojana. The study also covered the benefits, and challenges of
PMJDY.

 Analysis and Findings

Pradhan Mantri Jan Dhan Yojana (PMJDY), is financial inclusion program of
Government of India that aims to expand and make affordable access to financial
services such as bank accounts, remittances, credit, insurance and pensions without
any kind of discrimination. This inclusion campaign was launched by the Prime
Minister of India Narendra Modi on 15 August 2014. He had announced this scheme
on his first Independence Day speech on 15 August 2014.

The Main Benefits:

• Accidental Insurance Cover:
It's not often we hear of insurance cover along with a bank account. The Pradhan
Mantri Jan Dhan Yojana provides insurance cover. This accidental insurance cover is
to the tune of Rs 1 lakh and could be extremely helpful especially for the deprived
classes, in the unfortunate event of accidental death of the bread earning member.
• No Minimum Balance Required Under Pradhan Mantri Jan Dhan Yojana:
Most of the savings bank accounts today require a minimum balance to be maintained
in the savings account. Even government owned banks have this norm and the balance
requirements is higher in the case of private sector banks. In case of accounts opened
through Pradhan Mantri Jan Dhan Yojana there is no need to maintain the minimum
balance.
• Pradhan Mantri Jan Dhan Yojana Life Insurance Cover of Upto Rs 30,000:
Though for many individuals this might not be a big sum, it could certainly be of
solace for the poorer classes.
 • Direct Transfer of Subsidies and Other Benefits:
Individuals who receive various benefits under various government schemes like
LPG subsidy and others can now receive the amount directly into their PMJDY
accounts. This is highly beneficial and will help ensure transparency.
• Easy Transfer of Money Under the Pradhan Mantri Jan Dhan Yojana:
It is also possible to transfer money. This is a big advantage especially for the poorer
classes.
• Overdraft Facility
The account would also one an overdraft facility. This would provide access to capital
when in need of emergency. However, this would be available only after six months
of successful operation.
• Access to other Financial products:
Holders of PMJDY would also get access to pension and other insurance products.

Facts and Figures:

As we can see that after the launch of PMJDY 12 crore accounts were opened in both
rural as well as in urban areas.

No of Accounts opened under PMJDY as on 31.01.2015 (Summary)

No of RuPay Balance in
Debit Card Accounts (In
Rural Urban No of
Lacs)
Accounts

Public 53300249 45147276 98447525 91232024 817463.04

Sector
Bank

Rural 18489448 3297833 21787281 14967614 159948.08

Regional
Bank
 Private 3226397 2012086 5238483 4593161 72551.50
Banks

Grand 75016094 50457195 125473289 110792799 1049962.62

Total

As on 12th September 2018 about 32 crore bank accounts were opened under this
PMJDY scheme. Amongst the Public sector banks State Bank of India had opened
31.267% of total accounts making Punjab National Bank in second position with
11.19% new accounts. And Bank of Baroda is in the third position with 7.156% of
new accounts opened in public sector banks.

Bank Number of Number of Number of Deposits in Number of

Type Beneficiaries Beneficiaries Total Accounts RuPay Debit
at rural/semi at urban Beneficiaries Cards issued
(In
urban centre metro centre to
lac)
bank bank beneficiaries
branches branches

Public 142009599 121612557 263622156 6526974.50 199381469

Sector
Banks

Regional 44914766 8228437 53143203 1453772.74 37034034

Rural
Banks

Private 6052309 3974380 10026689 219886.22 9303167

Sector
Banks

Grand 192976674 133815374 326792048 8200633.46 245718670

Total
The diagram clearly depicts that about 10 crore accounts were opened in major private
banks out of which about 6 crore accounts were opened in rural areas whereas about 4
crore accounts were opened in urban metro areas.

One day after the announcement of demonetization on November 8, 2016, the

cumulative Balance in about 25 crore accounts was about Rs. 45,600 crores. But post
demonetization, that figure has gone up. While the final word is yet to be said on the
alleged channelling of black money into Jan Dhan accounts, the scheme has indeed
led to a Transformation. A total of 240 million RuPay cards have been issued by
National Payments Corporation of India. There is a data which depicts the current
status of PMJDY statics as on 12th September 2018:

Bank Name / Deposits in Number of RuPay Debit Cards issued to

Type Accounts beneficiaries
(In lac)

Public Sector 6526974.50 199381469

Banks

Regional Rural 1453772 37034034

Banks

Private Sector 219886.22 9303167

Banks
 Grand Total 8200633.46 245718670

Progress Report:

The statistics shows the progress of number of accounts open in PMJDY, in all the
three banks i.e. Public Sector Banks, Regional Rural Banks and Private Sector Banks.
The diagrams clearly show an increase in the number of accounts.

Challenges and Problems faced by PMJDY Implementation-

• The Connectivity Challenge:

As we know around 68% of population lives in rural areas which need to be connected
through complete banking system to avail this facility which is huge business
potential for the banking sector. But it throws up connectivity-related challenges that
need to be addressed in rural areas. Lack of physical and digital connectivity is posing
a major hurdle in achieving financial inclusion for rural India.
• Technological Issue:
The technological issues affecting banks from poor connectivity, networking and
bandwidth problems to managing costs of maintaining infrastructure especially in
rural areas. To meet the increasing demands for banking services, banks often depend
on passive optical network connectivity, for which they end up paying high costs to
internet service providers.
 • Infrastructure of banks in rural areas:
It is about connectivity in the banking system. The connections in rural areas are not
reliable and fall shorts on bandwidth. An alternative option must be adapted to
connect in rural areas branches through satellite links. Banking through WAN or
internet link of lower bandwidth at remote locations repeatedly suffers from video
delays, slow browsing, slow file transfer, slow upload and download of files, failing to
meet the demands of account holders at the particular time.
One of the major problems is as most of the people are aware of it but still, they are
not turning into bank account user may be because they do not still understand the
proper channel of opening a bank account under Pradhan Mantri Jan Dhan Yojna.
• Gender Gap:
There is major gender gap in banking sector; by 2012 for every 1,000 deposit accounts
in the name of men, just 394 were opened in the name of women. Chhattisgarh, West
Bengal, Madhya Pradesh, Maharashtra and Gujarat were even worse than the national
banking sex ratio, while Delhi and the four southern States were better.
• ATM Network:
People may face problem due to ATM in rural areas as there is low network of ATM
so people are not well known how to use ATM.
• New account opening:
Creating new account is not challenge but transaction of this account is a challenge.
As staff which is already there may find pressure if there is lot of people come with
the problem at a time.
• Procedure not clear:
Most of the people are aware but still so many are not turned around as they are not
understanding the proper procedure of opening account and required document at a
time.
• Coverage of Difficult areas:
Many areas like parts of North East, Himachal Pradesh, Uttarakhand, Jammu &
Kashmir etc. are facing challenges of infrastructure and telecom connectivity . In these
areas all household may not be fully covered under campaign
• Brand Awareness and sensitization:
Customer must get proper awareness about the PMJDY and their benefit after opening
account. All thing must clear to customer and made aware that overdraft of up to
5,000/- to be provided in their account is a credit facility which needs to be repaid in
order to get fresh limits and is not a grant.
  Conclusion:

The Pradhan Mantri Jan Dhan Yojana scheme has shown impressive growth in the
number of accounts opened in both rural as well as in urban and metro cities. In the
globalized scenario, it is important to financially include all sections of the society in
this scheme so that we can achieve the goal of inclusive growth of the nation. PMJDY
is a national objective on financial inclusion which is concentrated on the individual
household with an aim to provide formal financial support through the organized
financial system. The success of the PMJDY scheme depends on the effective
regulatory system and successful implementation of the programme. The challenge is
the conversion of the non-operative accounts with zero balance into operative and for
this, it’s important to focus on financial literacy programme. “Mera Khata – Bhagya
Vidhaata.” is the slogan of this scheme. The PMJDY scheme has created an
impressive result in the banking sector with regard to the eradication of financial
untouchability in the country. Mere opening of bank accounts may not fulfil the aim
of the scheme, but there should be a continuous operation of bank accounts to give the
real success of the scheme. Success of the PMJDY scheme depends on the effective
regulatory system and successful implementation of the programme. The challenge is
the conversion of the non-operative accounts with zero balance into operative and for
this it’s important to focus on financial literacy programme. “Mera Khata – Bhagya
Vidhaata.” is the slogan of this scheme. The PMJDY scheme has created an
impressive result in the banking sector with regard to eradication of financial
untouchability in the country. Mere opening of bank accounts may not fulfil the aim
of the scheme, but there should be continuous operation of bank accounts to give the
real success of the scheme.

 References:
• https://financialservices.gov.in/Banking/PMJDY%20BROCHURE%20Eng.pdf
• http://krishikosh.egranth.ac.in/handle/1/5810031644
• http://webcache.googleusercontent.com/search?q=cache:JEynVZ9fGQgJ:amity
.edu/UserFiles/admaa/192Paper%25206.pdf+&cd=6&hl=en&ct=clnk&gl=in
• https://www.pmjdy.gov.in/files/progress/phase1.pdf
• https://www.pmjdy.gov.in/BankwiseLatest)