Jan Dhan scheme: In six years, deposits up six-fold

Deposits under the scheme now account for about 9 per cent of bank demand deposits

The government’s flagship scheme for financial inclusion has reached close to 400 million beneficiaries in six years since implementation, said the finance ministry on Friday.

Nearly 190 million people did not have a bank account in India in 2018. The Pradhan Mantri Jan Dhan Yojana (PMJDY) may have considerably reduced the proportion of the unbanked.

Deposits in these accounts — made for those who would not have wanted to have a bank account if a minimum balance was mandatory — have grown six-fold in these six years.

However, what stands out is that the share of such deposits in commercial banks, in proportion to demand deposits, has grown from 2.8 per cent after a year of the scheme’s completion to 8.6 per cent today. This indicates that Jan Dhan account holders are now availing of banking services more frequently.

At the same time, the share of inoperative accounts has declined. Only 60 per cent of Jan Dhan accounts were operative in March 2017. The figure had risen to 81 per cent in January 2020.

“PMJDY has been the foundation stone for the Modi government’s peoplecentric economic initiatives. Be it direct benefit transfers, Covid-19 financial assistance, PM-KISAN, increased wages under MGNREGA, or life and health insurance cover, the first step was to provide every adult with a bank

The average balance in PMJDY accounts has increased from ~1,279 in August 2015 to ~3,239 on August 19, 2020, showing a 2.5x rise in five years

account, which PMJDY has nearly completed,” Finance Minister Nirmala Sitharaman said in a tweet.

Over the last six years, Jan Dhan accounts have been used extensively for implementation of various schemes. The average balance in PMJDY accounts has increased from ~1,279 in August 2015 to ~3,239 on August 19, 2020, showing a 2.5x rise in five years.

At the same time, the proportion of such accounts being given Rupay debit cards has reduced. While more than 80 per cent of account holders had debit cards based on the indigenously developed payments system technology in 2015 and 2016, the number has fallen to 74 per cent in August 2020.

PMJDY was launched in August 2014, after Prime Minister Narendra Modi unveiled it during his first Independence Day speech, with the aim to bank all households in India. In 2018, the ambit was expanded to include all adults in India.

These special basic savings bank accounts come with an accident insurance cover of ~200,000 as well as an overdraft facility, with an upper limit of ~10,000.