Pradhan Mantri Jan Dhan Yojana (PMJDY) - UPSC

Pradhan Mantri Jan Dhan Yojana (PMJDY) is the National Mission for Financial Inclusion.

It ensures access to financial services, namely, Banking/ Savings & Deposit Accounts, Remittance, Credit, Insurance, Pension in an affordable manner.

PMJDY has been the foundation stone for people-centric economic initiatives. Whether it is Direct Benefit Transer (DBT), Covid-19 financial assistance, PM-KISAN, increased wages under Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA), life and health insurance cover, the first step of all these initiatives is to provide every adult with a bank account, which PMJDY has nearly completed.

Objectives

Ensure access to financial products & services at an affordable cost.

Use of technology to lower cost & widen reach.

Basic tenets of the scheme

Banking the unbanked: Opening of basic savings bank deposit (BSBD) account with minimal paperwork, relaxed KYC, e-KYC, account opening in camp mode, zero balance & zero charges.

Securing the unsecured: Issuance of Indigenous Debit cards for cash withdrawals & payments at merchant locations, with free accident insurance coverage of Rs. 2 lakhs.

Funding the unfunded: Other financial products like micro-insurance, overdraft for consumption, micro-pension & micro-credit.

What Is Financial Inclusion

Financial inclusion is defined as the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low-income groups at an affordable cost.

In a diverse country like India, financial inclusion is a critical part of the development process. Since independence, the combined efforts of successive governments, regulatory institutions, and civil society have helped in increasing the financial-inclusion net in the country.

Being able to have access to a transaction account is a first step toward broader financial inclusion since a transaction account allows people to store money, and send and receive payments.

A transaction account serves as a gateway to other financial services.

What Are The Other Initiatives To Increase Financial Inclusion In India

• Digital Identity (Aadhaar)
• National Centre for Financial Education (NCFE)
• Centre for Financial Literacy (CFL) Project
• Expansion of financial services in Rural and Semi-Urban Areas
• Promotion of Digital Payments
• Achievements of the Scheme
• Approach Towards Digital Banking

Accounts opened are online accounts in the core banking system of banks.

Focus has shifted from ‘Every Household’ to Every Unbanked Adult’.

Fixed-point Business Correspondents.

Simplified KYC / e-KYC in place of cumbersome KYC formalities.

Extension of PMJDY with New Features

Focus shift from ‘Every Household’ to Every Unbanked Adult’.

RuPay Card Insurance

Free accidental insurance cover on RuPay cards increased from Rs. 1 lakh to Rs. 2 lakh for PMJDY accounts opened after 28th August 2018

Increased Financial Inclusion

Within 10 days of nationwide lockdown due to Covid-19, more than about 20 crore women PMJDY accounts were credited with ex-gratia.

PMJDY Accounts have grown three-fold from 14.72 crore in Mar’15 to 46.25 crore as on 10th August 2022.

In August’22, out of total 46.25 crore PMJDY accounts, 37.57 crore (81.2%) are operative.

Only 8.2% of PMJDY accounts are zero balance accounts.

Deposits have increased about 7.60 times with an increase in accounts 2.58 times (Aug’22 / Aug’15)

Prevention of Leakage

DBTs via PM Jan Dhan accounts have ensured every rupee reaches its intended beneficiary and prevents systemic leakage.

Smooth DBT Transactions

Close monitoring to avoid DBT failures in consultation with DBT Mission, National Payments Corporation of India (NPCI), banks and various other Ministries ensures that the eligible beneficiaries receive their DBT in time.

Digital Transactions

The total number of digital transactions have gone up from 978 crore in FY 2016-17 to 7,195 crore in FY 2021-22.

The total number of Unified Payments Interface (UPI) financial transactions have increased from 1.79 crore in FY 2016-17 to 4,596 crore in FY 2021-22.

Similarly, total number of RuPay card transactions at Point of Sales (PoS) and E-commerce have increased from 28.28 crore in FY 2016-17 to 151.64 crore in FY 2021-22.