The Pradhan Mantri Jan Dhan Yojana (PMJDY) has completed nine years of successful implementation.
PMJDY is the National Mission for Financial Inclusion.
The PMJDY was announced by Prime Minister Narendra Modi in his Independence Day address on 15th August 2014.
While launching the programme on 28th August 2014, the Prime Minister had described the occasion as a festival to celebrate the liberation of the poor from a vicious cycle.
Background
Pradhan Mantri Jan Dhan Yojana (PMJDY) is National Mission for Financial Inclusion to ensure access to financial services, namely, Banking/ Savings & Deposit Accounts, Remittance, Credit, Insurance, Pension in an affordable manner.
1. Objectives:
o Ensure access of financial products & services at an affordable cost
o Use of technology to lower cost & widen reach
2. Basic tenets of the scheme
o 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
o Securing the unsecured - Issuance of Indigenous Debit cards for cash withdrawals & payments at merchant locations, with free accident insurance coverage of Rs. 2 lakhs
o Funding the unfunded - Other financial products like micro-insurance, overdraft for consumption, micro-pension & micro-credit
2. Initial Features of PMJDY
The scheme was launched based upon the following 6 pillars:
Universal access to banking services – Branch and BC
• Basic savings bank accounts with overdraft facility of Rs. 10,000/- to every eligible adult
• Financial Literacy Programme– Promoting savings, use of ATMs, getting ready for credit, availing insurance and pensions, using basic mobile phones for banking
• Creation of Credit Guarantee Fund – To provide banks some guarantee against defaults
• Insurance – Accident cover up to Rs. 1,00,000 and life cover of Rs. 30,000 on account opened between 15 Aug 2014 to 31 January 2015
• Pension scheme for Unorganised sector
3. Important approach adopted in PMJDY based on experience:
Accounts opened are online accounts in core banking system of banks, in place of earlier method of offline accounts opening with technology lock-in with the vendor
3.
o Inter-operability through RuPay debit card or Aadhaar enabled Payment System (AePS)
o Fixed-point Business Correspondents
o Simplified KYC / e-KYC in place of cumbersome KYC formalities
4. Extension of PMJDY with New features – The Government decided to extend the comprehensive PMJDY programme beyond 28.8.2018 with some modifications
o Focus shifted from ‘Every Household’ to Every Unbanked Adult’
o RuPay Card Insurance - Free accidental insurance cover on RuPay cards increased from Rs. 1 lakh to Rs. 2 lakhs for PMJDY accounts opened after 28.8.2018.
o Enhancement in overdraft facilities: OD limit doubled from Rs 5,000/- to Rs 10,000/-; OD upto Rs 2,000/- (without conditions) with Increase in upper age limit for OD from 60 to 65 years
5. Impact of PMJDY
PMJDY has been the foundation stone for people-centric economic initiatives. Whether it is direct benefit transfers, COVID-19 financial assistance, PM-KISAN, increased wages under 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.
One in 2 accounts opened between March 2014 to March 2020 was a PMJDY account. Within 10 days of nationwide lockdown more than about 20 crore women PMJDY accounts were credited with financial assistance of Rs 500 per month for three months through DBT in each women PMJDY account.
PMJDY has brought the unbanked into the banking system, expanded the financial architecture of India and brought financial inclusion to almost every adult.
