The Pradhan Mantri Jan-Dhan Yojana (PMJDY) is a national mission for financial inclusion, aiming to ensure access to various financial services such as basic savings & deposit accounts, remittance, credit, insurance, and pension in an affordable fashion. The program enables individuals without any other bank account to open a Basic Savings Bank Deposit (BSBD) account.
Objective of PMJDY
The main objective of PMJDY is to provide access to various financial services, including basic savings bank accounts, need-based credit, remittance facilities, insurance, and pensions to excluded sections — typically the weaker sections and low-income groups. A significant part of this initiative is to channelise all government benefits (from Centre/State/Local Body) to the beneficiaries’ accounts, thereby promoting the Direct Benefits Transfer (DBT) scheme of the Union Government.
Benefits Offered by PMJDY
The PMJDY offers several benefits, including no requirement to maintain a minimum balance in the accounts, and interest is earned on the deposited amount. It provides Rupay Debit card to account holders, and eligible account holders can avail of an overdraft facility of up to Rs. 10,000. Importantly, PMJDY accounts qualify for Direct Benefit Transfer (DBT), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY), Atal Pension Yojana (APY), and Micro Units Development & Refinance Agency Bank (MUDRA) scheme.
Notably, the program offers life insurance coverage and accidental insurance cover worth Rs. 2 lakhs each under PMJJBY and PMSBY, respectively. Both these insurance covers are provided at nominal premiums, automatically debited from the account holder’s account annually.
Challenges to the Implementation of PMJDY
Despite the benefits and objectives of PMJDY, it faces several challenges that limit its impact and effectiveness. These include a lack of awareness, particularly in rural areas; limited infrastructure, such as ATMs and bank branches in remote areas; limited resources where eligible individuals do not have necessary documents to open a bank account; and the prevalence of cash transactions limiting the uptake of digital payments.
Other Financial Inclusion Initiatives in India
Aside from PMJDY, several other initiatives aim to enhance financial inclusion in India, such as Digital Identity (Aadhaar), National Centre for Financial Education (NCFE), Centre for Financial Literacy (CFL) Project, and the promotion of Expansion of financial services in Rural and Semi-Urban Areas. Harnessing these initiatives can particularly help in promoting digital payments.
Way Forward
To maximize the impact of PMJDY and overcome the challenges, it is crucial to raise awareness about the program and its benefits in remote areas. This awareness campaign can be facilitated through various media channels. The government should focus on improving essential banking infrastructure in these areas and work towards simplifying the documentation process for opening bank accounts under this scheme. Furthermore, considering exceptions to some conditions (like the need for a successful transaction 90 days prior to the accident to avail insurance) could go a long way in enhancing the effectiveness of the initiative.
