The Pradhan Mantri Jan-Dhan Yojana (PMJDY) recently celebrated six successful years of implementation. Launched on August 28, 2014, the National Mission for Financial Inclusion was described by the Prime Minister as a festival marking the liberation of the poor from poverty’s vicious cycle.
The Pradhan Mantri Jan Dhan Yojna (PMJDY)
PMJDY is a key initiative aimed at furthering the Indian government’s commitment to financial inclusion. Financial inclusion refers to the process of ensuring that vulnerable groups such as the low-income and weaker sections have access to affordable, timely, and adequate credit along with other financial services. Financial inclusion is a national priority as it serves as an enabler for inclusive growth and provides an avenue for the poor to bring their savings into the formal financial system. It also allows them to remit money to their families in rural areas while drawing them out of the clutches of unscrupulous money lenders.
Achievements under PMJDY
As of August 19, 2020, the total number of PMJDY accounts stood at 40.35 Crore. In terms of distribution, 63.6% of these accounts belonged to rural residents, while 55.2% were opened by women. During its launch year, almost 17.90 Crore PMJDY accounts were opened, and the number has been steadily increasing since then. Among the total PMJDY accounts, around 86.3% (34.81 Crore) are operative, as per the RBI guidelines. The total deposit balances stand at Rs. 1.31 lakh crore, demonstrating an increase of about 5.7 times between 2015 and 2020.
Extension and Features of PMJDY
The Government extended the PMJDY initiative with some modifications on August 28, 2018. The focus shifted from ‘Every Household’ to ‘Every Unbanked Adult’. Additionally, free accidental insurance cover on RuPay cards was increased from Rs. 1 lakh to Rs. 2 lakh for accounts opened after this date. Overdraft facilities were enhanced too, doubling the limit from Rs 5,000/- to Rs 10,000/-. Furthermore, the upper age limit for OD was increased from 60 to 65 years.
The scheme was launched based on six key principles: Universal access to banking services, basic savings bank accounts with an overdraft facility of Rs. 10,000/- for every household, Financial Literacy Program, Creation of Credit Guarantee Fund, Insurance and Pension Scheme for the Unorganized sector.
Way Forward
Looking ahead, there is room for improvement and expansion. PMJDY account holders should be covered under micro insurance schemes wherever possible. Eligible PMJDY account holders will be sought for coverage under Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY). There’s a need to promote digital payments amongst PMJDY account holders. Moreover, efforts should be made to improve their access to micro-credit and micro-investment options such as Flexi-recurring deposit. Lastly, there should be an added emphasis on facilitating financial and digital literacy for the common man.