BANKING

Pradhan Mantri Jan Dhan Yojana (PMJDY)

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 INTRODUCTION

Pradhan Mantri Jan Dhan Yojana (PMJDY)

PM Modi launches the " Pradhan Mantri Jan Dhan Yojana"

Country India

Prime Minister(s) Narendra Modi

Ministry Finance

Key people Nirmala Sitharaman

Launched 28 August 2014; 6 years ago,

Status Active

Website www.pmjdy.gov.in

ALOK KUMAR-19MBAJ0065

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Pradhan Mantri Jan Dhan Yojana (PMJDY, translation: Prime Minister's
People's Wealth Scheme) is a financial inclusion program of
the Government of India open to Indian citizens (minors of age 10 and
older can also open an account with a guardian to manage it), that aims to
expand affordable access to financial services such as bank accounts,
remittances, credit, insurance and pensions. This financial
inclusion campaign was launched by the Prime Minister of India Narendra
Modi on 28 August 2014.[1] He had announced this scheme on his first
Independence Day speech on 15 August 2014.

Run by Department of Financial Services, Ministry of Finance, under this

scheme 15 million bank accounts were opened on inauguration
day.[2][3] The Guinness Book of World Records recognized this achievement,
stating: "The most bank accounts opened in one week as a part of the
financial inclusion campaign is 18,096,130 and was achieved by the
Government of India from August 23 to 29, 2014".[4] By 27 June 2018, over
318 million bank accounts were opened and over ₹792 billion (US$12
billion) were deposited under the scheme.

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OBJECTIVE OF PMJDY

PMJDY has six main objectives out of which first three will be fulfilled in
first year of launching of scheme.

a. Universal access to banking facilities:

In order to ensure in depth penetration of banking facilities each district is

divided into Sub Service Area (SSA) so as to confirm access to banking
facilities within 5km range by 14 August 2015. Some of the country which
has accessibility and connectivity problem will be covered in phase-II of
the program.

b. Banking accounts with RuPay debit card with provision of

overdraft facility:

The primary aim is to open a basic account of each household in country.

A RuPay debit card 8 is also provided with each account. In future there
will be provision of over drafting up to Rs 5000 after successful operating
debit card for a period of 6 months. There will be nominal interest rate on
overdraft money. It will also act as micro finance scheme.

c. Financial literacy programme:

Being majority of villagers are illiterate there is a need to run financial

literacy programme. The main aim of such program is to make people
aware and capable of using financial services provided by banks.

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d. Creation of credit guarantee fund:

In future government has planned to create a credit guarantee fund that

would be used to cover the defaults in overdrafts accounts.

e. Micro finance:

Government will provide micro- insurance to all willing and eligible

persons. This objective will be fulfilled in 2 nd phase of PMJDY.

SCHEME DETAILS
Pradhan Mantri Jan-Dhan Yojana (PMJDY) is National Mission for Financial
Inclusion to ensure access to financial services, namely, a basic savings &
deposit accounts, remittance, credit, insurance, pension in an affordable
manner. Under the scheme, a basic savings bank deposit (BSBD) account
can be opened in any bank branch or Business Correspondent (Bank Mitra)
outlet, by persons not having any other account.

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 BENEFITS UNDER PMJDY
• One basic savings bank account is opened for unbanked person.
• There is no requirement to maintain any minimum balance in PMJDY
accounts.
• Interest is earned on the deposit in PMJDY accounts.
• Rupay Debit card is provided to PMJDY account holder.
• Accident Insurance Cover of Rs.1 lakh (enhanced to Rs. 2 lakh to new
PMJDY accounts opened after 28.8.2018) is available with RuPay card
issued to the PMJDY account holders.
• Life Insurance Cover of Rs. 30,000 to eligible PMJDY account holders
who opened their account for the first time between 15.8.2014 to
31.1.2015 is available.
• An overdraft (OD) facility up to Rs. 10,000 to eligible account holders
is available.
• PMJDY accounts are eligible for Direct Benefit Transfer (DBT),
Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri
Suraksha Bima Yojana (PMSBY), Atal Pension Yojana (APY), Micro
Units Development & Refinance Agency Bank (MUDRA) scheme.

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PERFORMANCE

Due to the preparations done in the run-up, as mentioned above, on the

inauguration day, 15 million bank accounts were opened.[2] The Prime
Minister said on this occasion- "Let us celebrate today as the day of financial
freedom." By September 2014, 30.2 million accounts were opened
with State Bank of India 2.99 million accounts, Canara Bank 1.621 million
accounts, Central Bank of India 1.598 million accounts and Bank of
Baroda with 1.422 million accounts.[8] On 20 January 2015, the scheme
entered into Guinness book of world records setting new record for 'The
most bank accounts opened in one week'

The balance in Jan Dhan accounts rose by more than ₹270

billion (US$3.8 billion) between 9 November 2016 and 23 November 2016.
1.9 million householders have availed the overdraft facility of ₹2.56
billion (US$36 million) by May 2016.[11] Uttar Pradesh and West
Bengal have got 29% of the total deposits under the scheme,
whereas Kerala and Goa became the first states in the country to provide
one basic bank account to every household.

The total number of account holders stood at 294.8 million, including 176.1
million account holders from rural and semi-urban branches. A total of 227
million RuPay cards have been issued by National Payments Corporation of
India (NPCI) till August 2017. The amount of deposits rose to ₹656.97
billion (US$9.2 billion) by August 2017.

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According to an analysis of various studies, "Beyond enabling account
ownership and the use of financial services, the PMJDY also facilitated
financial inclusion for a variety of demographics. While the programme has
made significant headway towards genuine financial inclusion, it is clear
that improving policy communication, widening and deepening progress in
low-income states, and ironing out the kinks in the bank-agent model will
be crucial if these hard-fought gains are to prove sustainable."[14] At least
300 million new families have got Jan Dhan accounts in which almost ₹650
billion (US$9.1 billion) have been deposited, Prime Minister Narendra Modi
said on 28 August 2017, on the eve of third anniversary of the scheme
aimed at financial inclusion.

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FINANCIAL INCLUSION – BACKGROUND
The efforts to include the financially excluded segments of the
society into formal financial system in India are not new. The concept was
first mooted by the Reserve Bank of India in 2005 and Branchless
Banking through Banking Agents called Bank Mitr (Business
Correspondent) was started in the year 2006. In the year 2011, the
Government of India gave a serious push to the programme by
under taking the " Sw abhimaan" campaign to cover over 74,000
villages, with population more than 2,000 (as per 2001 census), with
banking facilities. State- wise number of villages covered under the
campaign may be seen in Annexure-1.Learnings from the campaign

• The efforts need to be converged so as to cover the various aspects of

PMJDY, like availing of Micro Credit, Insurance & Pension.

• The campaign focussed only on the supply side by providing banking

outlets in villages of population greater than 2000, but the entire
geography could not be covered.

• The target was for coverage of villages and not of the households.

• The remuneration of the Bank Mitr (Business Correspondent) was

very poor.

• Dependability and trust factor with a mobile BC was not high. Most
of the BCs operated off-line which locked a customer with a
particular BC thereby constraining the utility.

• Some technology issues hampered further scalability of the

campaign.

• The deposit accounts so opened under the campaign had very limited
number of, or no transactions.

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FINANCIAL INCLUSION: CURRENT STATUS- INDIA

• Despite various measures for financial inclusion, poverty and exclusion

continue to dominate socio-economic and political discourse in India even
after six decades of post economic independence era. Though
economy has shown impressive growth during post liberalization era of
1991, impact is yet to percolate to all sections of the society and

therefore, India is still home of 1/3rd of world's poor.

• Census, 2011 estimates that only 58.7% of the households have access
to banking services

The present banking network of the country (as on 31.03.2014)

comprises of a bank branch network of 1,15,082 and an ATM network of
1,60,055. Of these, 43,962 branches (38.2%) and 23,334 ATMs
(14.58%) are in rural areas

• Progress towards opening of accounts, providing basic banking services

during the recent years as indicated above. However, it is essential that all
the sections be financially included in order to have financial stability and
sustainability of the economic and social order.

• According to World Bank Findex Survey (2012) only 35% of Indian

adults had access to a formal bank account and 8% borrowed from a
formal financial institution in last 12 months. The miniscule number suggests
an urgent need to further push the financial inclusion agenda to ensure that
people at the bottom of the pyramid join the mainstream of the formal
financial system.

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 KEY BARRIERS TO FINANCIAL INCLUSION

There are many hurdles on the path of financial inclusion. Strong

will power and efficient institutional setup is the need of hour to
fulfill the objective. Following are the different challenges and
barriers to achieve financial inclusion

1) Human Barriers:

One of the biggest hurdles of the road to achieve financial inclusion

is lack of financial literacy. People are still not aware of less interest
rate on credit given by banks, use of debit card and online
transitions. Until people are made aware of financial literacy,
instead of helping poor’s, financial inclusion may put them in more
trouble. Lack of proper identity card and poor financial status are
also main reasons that avoid people to attract towards banking
system.

2) Institutional Barriers:

There are many public private ventures along with different

ministries which are working in the field of financial inclusion, but
due to lack of proper coordination outcome of such programs is not
significant. There is conflict among goals of different organizations.
Inadequate framework on rules and regulations is also a major
challenge which needs to be handled. There is also need to expand
number of bank branches in order to reach the left out people.

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3) Telecom connectivity:

In India still 55000 villages (nearly 10%) are not connected with
telecom connectivity. It is nearly impossible to provide banking
facilities in these area. Most of the left out part are of Himachal
Pradesh, Jammu and Kashmir and 82 LWE (Left Wing Extremism).
Due to demographic constraints it will take long time to ensure
connectivity in such areas.

4) Issue of keeping accounts functional:

This is a great challenge to ensure proper functioning of accounts.

It takes a lot of effort to convince and open a bank account of new
customer, but if the account becomes dead means no transition
takes place then there is no outcome of the project. Until people
feel the importance of saving and banking product it is very difficult
to keep accounts live

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INVESTMENTS

Pradhan Mantri Jan-Dhan Yojana statistics as on 3 July 2019 (All figures

in millions)

Jan dhan Yojana announced by Prime Minister Narendra Modi on 15

August 2014 and the scheme was launched on 28 August 2014. The
objective of starting the scheme is about 59% of rural women in the
name of women, more than 50% of the accounts of facilities assured in
the country.

Number of Accounts
Number
Bank Type Balance in Accounts
of RuPay Cards
Rural Urban Total Female

151
Public Sector Banks 155 131 287 ₹793 billion (US$11 billion) 235
(53%)

34
Regional Rural Banks 52 10 62 ₹181 billion (US$2.5 billion) 38
(56%)

6.7
Private Banks 6.9 5.6 13 ₹30 billion (US$420 million) 12
(54%)

192 ₹1,005
Total 214 147 361 285
(53%) billion (US$14 billion)

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ACHIEVEMENTS UNDER PMJDY

Approx. 32.41 crore Jan Dhan accounts have been opened with more than
Rs 81,200 crore of deposit balance.  53% women Jan Dhan account holders
and 59% Jan Dhan accounts are in rural and semi urban areas. More than
83% operative Jan Dhan accounts (except states of Assam, Meghalaya, J&K)
are Aadhaar seeded, with issuance of approx 24.4 crore RuPay cards to these
account holders.  More than 7.5 crore Jan Dhan accounts receiving DBTs.
 Banking Correspondents (BCs) have been deployed in 1.26 lakh Sub
Service Areas (rural areas), each catering to 1000-1500 households. Nearly
13.16 crore Aadhar Enabled Payment System (AePS) transactions have
taken place through BCs during the month of July, 2018.  13.98 crore
subscribers under Pradhan Mantri Suraksha Bima Yojana (PMSBY) with
19,436 claims, involving an amount of Rs. 388.72 crore settled so far.

The road ahead

The PMJDY is also the world’s largest financial inclusion plan and the
government is planning to add more features to it. As PMJDY completes six
years, the Ministry of Finance said that ensuring coverage of PMJDY account
holders under micro-insurance can be included in the scheme. Under the
Atma Nirbhar Bharat package, the government has recently extended micro-
credit facilities such as the PM SVANidhi scheme for street vendors. Now,
the government has assured improving access of PMJDY account holders to
micro-credit and micro-investment facilities too.
Meanwhile, Finance Minister Nirmala Sitharaman said that PMJDY has been
the foundation stone for the Modi government’s 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 was to provide every adult with a bank
account, which PMJDY has nearly completed

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THANK YOU

BY

Alok Kumar – 19MBAJ0065

Sathvik N – 19MBAJ0053

Sathish R – 19MBAJ0052

Mohammed Yusha – 19MBAJ0044

Ragul Raja KR – 19MBAJ0028

Ankit singh Thakur –19MBAJ0067

Preetham UK – 19MBAJ0048

Umeshwaran K – 19MBAJ0063

Vijay kumar P – 19MBAJ0034

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