Pradhan Mantri Jan Dhan Yojana and its implementation

Pradhan Mantri Jan Dhan Yojana (PMJDY) was launched by government on 28th August, 2014. Its main aim was to provide financial inclusion by providing each household with a bank account.

Financial Inclusion means providing financial service at affordable cost to the people of lower income section.

The main features of PMJDY are as:

  1. Each household will be provided with a banking facility within one year of its launch either through a bank or a business correspondent agent.
  2. Every account holder will be provided a debit card with Rs. 1 lakh accidental cover.
  3. An overdraft facility of Rs. 5000 will also be provided to those whose account is enabled with Aadhaar.
  4. All central, state or local government benefits can be channeled through these accounts.
  5. In its 1st phase, all households will be provided banking facility upto August 2015. In 2nd phase, which is upto August 2018, overdraft facility, accidental cover and pension scheme will be provided.

Here Overdraft facility means to provide credit to the account holder to withdraw more than they have in their account, without exceeding the specified negative amount. This amount must be repaid within one month.

Untill now, nearby 16 crore accounts have been opened which is a remarkable figure. Also, Guinness Book of World Record have given the certificate of “Most bank accounts opened within a week as a part of financial inclusion campaign”.

But there are two sides of the same coin. World’s Bank Global Findex Study states that total formal bank accounts increased from 35% to 53% in India after the launch of the scheme. This means there is only 18% increase in the bank accounts directly implying that nearly 47% of our country still does not have any bank account.

Also, Dormancy in India is very high that is about 40%. Dormancy means that not every person who have the account uses it. Also, to get accidental cover the RuPay credit/debit card must be used regularly every 45 days which is not possible for people living is the villages. RuPay card is Indian version of credit/debit card smiliar to that of international cards like VISA or Master Card. To get benefit of overdraft facility, account should be enabled with Aadhaar. As Aadhaar is itself in controversy with the matter of privacy concern of a citizen and also every citizen does not have Aadhaar. So, most likely all people will not be able to enjoy the overdraft facility. It is a good initiative of Direct Benefit Transfer (DBT) in the account of people working under different schemes like MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) as the money flow will become smooth and transparent. But there are still a lot to be done under PMJDY.

Now overall, it is clear that more people should be covered under PMJDY as half of the country is still without bank account which is not a good sign. If we want to fully utilize Direct Benefit Transfer by linking it with PMJDY, firstly those people who do not have bank account should be provided with one so that DBT can be done by providing employment through schemes like MGNREGA. Dormancy is also a problem because people at village level who already have an account under PMJDY will not be able to use the RuPay card every 45 days. Firstly, there is no facility of using debit/credit card in every villages as there are itself very less banks at village level. Also, people with less earning will not be indulged in transaction every 45 days. So, there are still many problems in the implementation of PMJDY which should be checked seriously and improved to make PMJDY a success.

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