The Indian government recently pushed banks to enhance access for Pradhan Mantri Jan Dhan Yojana (PMJDY) account holders to micro-credit and micro-investment products, such as flexi-recurring schemes. Launched seven years ago, the PMJDY aims to provide affordable financial services to marginalized groups using technology. This article will discuss the objectives, key features, achievements, and challenges of the scheme and offer suggestions for future improvements.
Objective and Key Features of PMJDY
The primary goal of PMJDY is to ensure that weaker sections of society and low-income groups get access to various financial services at reasonable rates. The scheme uses technology to attain this objective.
The PMJDY revolves around six principal components:
- Universal Access to Banking Services
- Financial Literacy Program
- Creation of Credit Guarantee Fund
- Insurance and Pension Schemes for the unorganized sector
- Overdraft Facility
- Interoperability through RuPay cards or Aadhaar-enabled Payment System (AePS)
Achievements of PMJDY
Since its inception in 2015, the number of PMJDY accounts has grown from 17.9 crores to 43.04 crores in 2021, with women constituting 55.47% of the account holders. Additionally, 66.69% of account holders live in rural or semi-urban areas.
Total deposits have surged from Rs. 22,901 crore in 2015 to Rs. 1.46 lakh crore in 2021. Furthermore, an increasing number of these accounts have become operative over the years, indicating an increasing utilization of the scheme.
The usage of RuPay cards has also escalated over time. The Jan Dhan Darshak App aids in identifying unserved villages, resulting in a substantial decline in such areas.
Impact of PMJDY
PMJDY has been instrumental in implementing people-centric economic initiatives, ranging from Direct Benefit Transfer (DBT), Covid-19 financial assistance, and PM-KISAN to increased wages under MGNREGA and insurance coverage. The PMJDY has largely achieved its objective of providing every adult with a bank account.
It has formalized the financial system by encouraging the poor to bring their savings into the formal financial network, offering them a safe way to remit money and protecting them from predatory lenders.
Challenges Faced by PMJDY
Despite numerous achievements, the PMJDY faces significant challenges. Rural India’s lack of physical and digital connectivity presents a major obstacle to achieving financial inclusion. Technological issues, such as poor connectivity, network problems, and high infrastructure maintenance costs, particularly in rural areas, also pose issues.
Additionally, despite widespread awareness about the scheme, many potential users are deterred due to a lack of understanding regarding the account opening process and the documents required.
A Way Forward for PMJDY
Moving forward, there should be efforts to ensure that PMJDY account holders are covered under micro insurance schemes. Eligible PMJDY account holders should be targeted for coverage under Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY). There should also be concerted efforts to promote digital payments, including RuPay debit card use amongst PMJDY account holders, by creating a supportive infrastructure across India.
