Pradhan Mantri Jan Dhan Yojana (PMJDY)
Driven by the ‘Better India’ dream, Indian Prime Minister, Mr. Narendra Modi has been launching a number of government policies and schemes that are targeted towards benefiting all Indian citizens. Some of these schemes are targeted to specific segments of the populace depending on theirneeds. The Pradhan Mantri Jan Dhan Yojana is one such scheme.
Available facilities under Jan Dhan Yojana
Under this scheme, it was formally announced (through email to Chairmans of PSU banks) that one bank account for every single household in India is nothing but a ‘National Priority’. Those who open bank accounts under this scheme will be entitled to:
- One Zero-Balance account and an associated debit card from RuPay.
- Upon opening the account, the account holder are entitled to accidental insurance coverage of 1 lakh which will be provided by HDFC Ergo.
- Additionally, opening an account entitles the account holder for RuPay Kisan Card.
- Once the bank account remains active for 6 months, the account holder will be offered the facility of overdraft of ₹5000 from the respective bank.
- Account holders will be allowed to check balance from normal phones (previous restricted only to smartphones). They can also use their normal phones for transferring funds. This feature has been made available by National Payments Corporation of India using a new technology.
- National Unified USSD Platform also made mobile banking available to the poor people.
The government also plans to include other features like pension, remittances and micro insurance under this scheme over the coming years.
Economic implication of Jan Dhan Yojana
This scheme might look shallow for the first time. However, the scheme can have far reaching impacts on Indian economy. Here is a quick list of possible benefits that will show up over a period of time:
- Debit cards, direct transfers etc. will allow cashless transactions to take place. With cashless transaction, every financial transaction gets recorded, which effectively increases the white money transaction of the country. This will, to a great extent, eliminate the black market that has for long plagued the Indian economy.
- The scheme opens up doors to formal credit sector. This is specifically helpful for rural sectors like agriculture, handicrafts etc. Access to formal credit will mean that poor people can now borrow money at lower interest rates (as opposed to informal credit sector). This will help them to overcome immense debt problems and increase their productivity.
- Access to direct bank accounts and ability to make financial transactions through mobile and debit cards will rule out the third-party middle men (specifically in agricultural and other rural sectors) who embezzle money. Farmers or rural industry works will be able to buy/sell products at better rates. This will mobilize the whole economy and improve the lifestyle of the deprived classes of the country.
- Even the bare minimum deposit of ₹ 100 in every account will create a pool of money that will help India as a whole to repay international debts that have accrued over years.
There is absolutely no doubt that direct access to government’s financial services will eliminate pilferage and lead to positive spin-offs that will set the whole of Indian economy to a growth trajectory.
What are the possible negative aspects of Jan Dhan Yojana?
It is an irrefutable argument that there are some loopholes that are yet to be addressed. While the Jan Dhan Yojana makes a lot of promises and offers financial freedom to the deprived class of the society, there are some negative spin-off effects too! Here are some of the concerns that require attention:
- Overdraft facilities are not readily available to everyone. Banks have their own guidelines and the account holders need to adhere to the same. Overdraft facilities are provided depending on the transaction history of the account.
- Direct financial transactions will require direct contact of buyers and sellers. This is one of the major hurdles in the rural sectors. Education and knowledge is the primary hindrance. For instance, many farmers and labors don’t yet have information about the potential buyers. Government needs to educate them and open up channels.
- The primary goal of the scheme is to provide bank account for those who do not have one. However, it may be possible for those who already have accounts to open another account with additional benefits as declared by the government. This however can be dealt with ease with some strict vigilance from the banks.
Results of Pradhan Mantri Jan Dhan Yojana so far
So far the results of the scheme are impressive. In fact, the word ‘impressive’ will be an understatement. On the very first day on which the scheme was launched, a record number of 1.5 crore bank accounts were opened all over India. By September 2015, the numbers ramped up to 3.02 crores with State Bank of India leading with 30 lakh bank accounts. By November 6, 2014, the numbers reached the 7 crore mark with a total deposit of ₹ 5,000 crore, which is equivalent to US $ 1 billion.
Guinness World Record
The Pradhan Mantri Jan Dhan Yojana managed to pave its way to Guinness World Record on January 2015. According to Guinness World Records, the scheme set a new record of “The most bank accounts opened in one week”.
Only time will tell whether the intended purpose of economic growth will be achieved by this scheme or not. Currently it seems that Modi government will possibly hit the target of continued economic growth spree with new schemes and endeavors that are designed to make India emerge as a global socio-economic and political power.