Mera khata, bhagya vidhata (PMJDY)

Benefits & Challenges

In India, nearly one fourth of population is illiterate as well as Below Poverty Line. Rural poverty is above 30% of population in states like Assam, Bihar, MP, UP, Odisha, Jharkhand, Chhattisgarh & Manipur. Rural poverty can be attributed to lower farm income, lack of sustainable livelihood, lack of skills, under-employment and un-employment. To understand the concept better, let us know the origin and progress of Financial Inclusion in India.

1954: Rural Credit survey and recommendations for Financial Inclusion efforts

1955: Nationalization of Imerial Bank of India and its conversion into SBI

1969: Nationalisation of 14 major commercial banks

1970: Lead Bank Scheme

1976: Regional Rural Banks establishment

1978: Integrated Rural Development Programme (IRDP)

1980: Nationalisation of 6 more commercial banks

1999: Swarnajayanti Gram Swarozgar Yojana (SGSY) based on SHG model

2004: No-frills SB account

2005: First time the term “Financial Inclusion” used by RBI

2008: C Ranjarajan Committee on Financial Inclusion submitted report

2014: Launch of PMJDY


Great people do not do different things, but, they do things differently. The proverb is rightly matching for launching of Pradhan Mantri Jan Dhan Yojana which is a programme keeping in mind the flaws of earlier programmes under Financial Inclusion with a remedy to induce an unbanked into basic banking stream with minimum service charges. It is a vital step for poverty alleviation with inclusive growth for entire country with more focus on six lakh villages. It is the most ambitious schemes of the Central Government. Pradhan Mantri Jan Dhan Yojana (PMJDY) is National Mission for Financial Inclusion to ensure access to financial services, namely, Deposit Accounts, Remittance, Credit, Insurance, Pension at an affordable price.

Basic Savings Bank Deposit Account can be opened with zero balance taking care of Identity and residence proof. Bank has to issue Passbook to all accounts even if the balance is zero and also to issue personalized RuPay debit card with PIN to all customers. RuPay Debit cards can be issued to blind persons, minor account holders also. In case of illiterate person, only biometric or Aadhar based Rupay cards are to be issued.


According to public opinion, though huge number of accounts (17.90 crores) were opened, the accomplishment of the scheme needs detailed evaluation. Let us understand benefits and adversities of the scheme.


  • Savings Bank account with no minimum balance prescription
  • Interest on amount deposited in the account
  • Accidental insurance cover of Rs.1 lakh without any premium, if the customer activate his RuPay Debit Card within 90 days of its issuance. Balance enquiry in zero balance account also will be treated as transaction. Personal Accident Insurance is available to RuPay card holders from the age of 18 years to 70 years
  • Easy Transfer of money across India through electronic mode
  • Beneficiaries of Government subsidies / schemes will get Direct Benefit Transfer in their Savings account.
  • Access to pension and insurance products at affordable premium.
  • If the Savings Bank account operated satisfactorily for a period of 6 months, an overdraft facility will be permitted upto Rs.5000/- to one account per household.
  • Lower interest rate on the OD facility


There are some reports of malpractices with respect to Jan Dhan accounts and they should be considered as threat for smooth functioning of the scheme.

  • There is sizeable quantum of probability for fraudulent transactions in these accounts due to illiteracy and poverty. Though banks have devised ways to address those situations, there are limitations arising out of illiteracy by ensuring biometric access to bank accounts. However, Aadhaar seeding implies that some numerical have still to be punched in the machine to operate an account. As all the numerals are in English, only the banker or the business correspondent (BC) can punch in the Aadhaar number.
  • Due to illiteracy and poor economic conditions, poor unemployed persons are recruited as third parties to use their deposit accounts to launder proceeds for fraud schemes by criminals which is known as Money mules. People who serve as intermediaries for criminals and criminal organizations whether they are aware or not. The involvement of intermediaries makes it difficult to identity of fraudsters. In some cases the third parties may be innocent, while others they may be having complicity with criminals
  • Messages received on mobile phones from banks are in english and therefore the illiterate person has to seek someone’s assistance to understand and interpret the message. In each of the above cases, the privacy of an individual’s bank balance is breached. This makes the illiterate population vulnerable to malpractices.
  • Monitoring is another big challenge. Given the heavy lifting by Banks, newly opened PMJDY accounts in rural & urban area may moved to rural and urban cooperatives.
  • In the present set-up, there are number of regulatory authorities for financial inclusion (RBI, NABARD, SEBI, SIDBI and MUDRA bank). There should be a single authority to ensure operational and administrative guidelines for the PMJDY scheme.
  • There is a need to study the money lenders continuance despite efforts by Government to curb their operations in the financial market. Operations of Money lenders continue to account for about 30% of finance business.
  • Even the rate of interest charged by Banks in India is low, reasonable and market oriented, people prefer to go to money lenders due to ease of doing business
  • The condition for accidental insurance eligibility is linked with usage of RuPay debit card within 90 days of its issuance which is not known to many illiterate customers.
  • Coverage of insurance to card holders is available from the age of 18 to 59 years only with valid Aadhar card which may not be much beneficial to economical backward classes.
  • Overdraft facility is not readily available to everyone. There are conditions for fixing overdraft limit for an individual like customer induced transactions in the account, DBT / MGNREGA credits within a period of six months.
  • For operating profitably, banks need that accounts should maintain a minimum balance. Otherwise these zero balance accounts will be a burden to Banks with huge operational costs and ultimately it may affect the customer service to others.
  • Number of transactions per account through BCA has been very low. With little commission (around 2%) given to BCs based on the transactions done by the public, many BC Agents will be leaving their jobs due to meager salary / income. (According to a survey around 47% of BC Agents are leaving their jobs)

Though the concept and objects of the scheme to include the excluded is a great thought, the present status needs extra incessant monitoring for its success. There are strengths and weaknesses in PMJDY. It is time to retrospect the real beneficial progress made in the scheme. So far, there is success in creation of infrastructure in mainstream area. The next phase should be on extending real benefits to the needy people and more focus on small villages and areas where the progress is not much noticed. It is an opportunity to India to set an example to the world as how to execute a simple idea into a grand triumph to transform lives of poor.

Data source: Ministry of Finance, Government of India
Article by
Chief Manager
Union Bank of India
Staff College, Kalkere
Bangalore 560083
Email:[email protected]

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