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PRADHAN MANTRI JAN-DHAN YOJANA (PMJDY)

Focus: GS-III Indian Economy

Introduction

Pradhan Mantri Jan-Dhan Yojana – PMJDY was announced by Prime Minister in 2014, and has been a key initiative towards the commitment to provide financial inclusiveness and support to the marginalized and hitherto socio-economically neglected classes.

Background to Pradhan Mantri Jan-Dhan Yojana

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.

Objectives

  • Ensure access of financial products & services at an affordable cost
  • Use of technology to lower cost & widen reach

Basic tenets of the scheme

  1. 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
  2. Securing the unsecured – Issuance of Indigenous Debit cards for cash withdrawals & payments at merchant locations, with free accident insurance coverage of Rs. 2 lakhs.
  3. Funding the unfunded – Other financial products like micro-insurance, overdraft for consumption, micro-pension & micro-credit

Initial Features: 6 Pillars based on which the scheme was launched

  • Universal access to banking services – Branch and BC
  • Basic savings bank accounts with overdraft facility of Rs. 10,000/- to every household
  • Financial Literacy Program– 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 Unorganized sector

Important approach adopted in PMJDY based on past 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
  • Inter-operability through RuPay debit card or Aadhaar enabled Payment System (AePS)
  • Fixed-point Business Correspondents
  • Simplified KYC / e-KYC in place of cumbersome KYC formalities

Extension of PMJDY with New features

The Government decided to extend the comprehensive PMJDY program with some modifications

  • 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 28.8.2018.
  • Enhancement in overdraft facilities –
  • OD limit doubled from Rs 5,000/- to Rs 10,000/-;  OD upto Rs 2,000/- (without conditions).
  • Increase in upper age limit for OD from 60 to 65 years

Jan Dhan Darshak App

  • A mobile application, was launched to provide a citizen centric platform for locating banking touch points such as bank branches, ATMs, Bank Mitras, Post Offices, etc. in the country.
  • The facilities under Jan Dhan Darshak App could be availed as per the need and convenience of common people.

The road ahead

  • Endeavour to ensure coverage of PMJDY account holders under micro insurance schemes. Eligible PMJDY accountholders will be sought to be covered under PMJJBY and PMSBY. Banks have already been communicated about the same.
  • Promotion of digital payments including RuPay debit card usage amongst PMJDY accountholders through creation of acceptance infrastructure across India
  • Improving access of PMJDY account holders to Micro-credit and micro investment such as flexi-recurring deposit etc. 
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September 2022
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