Transformative Impact of Pradhan Mantri Jan Dhan Yojana (PMJDY) on the Financial and Banking Sectors
- August 29, 2024
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Transformative Impact of Pradhan Mantri Jan Dhan Yojana (PMJDY) on the Financial and Banking Sectors
Sub: Eco
Sec: Banking
Introduction and Background:
- Launch: The Pradhan Mantri Jan Dhan Yojana (PMJDY) was launched on August 28, 2014, as a national mission for financial inclusion.
- Significance: Over the last decade, 53.13 crore Jan Dhan accounts have been opened, demonstrating the scheme’s massive reach and impact. The scheme is recognized as a key pillar of financial inclusion in India.
Objectives and Features of PMJDY:
- Basic Savings Bank Account:
- Objective: To open a Basic Savings Bank Account for unbanked individuals.
- No Minimum Balance: PMJDY accounts do not require any minimum balance, making them accessible to all.
- Interest on Deposits: These accounts earn interest similar to regular savings accounts.
- RuPay Debit Card:
- Issued to all PMJDY account holders.
- Accident Insurance Cover: Rs 1 lakh for accounts opened before August 28, 2018, and Rs 2 lakh for those opened thereafter.
- Overdraft Facility:
- Eligible account holders can access an overdraft (OD) facility of up to Rs 10,000.
- Direct Benefit Transfers (DBT):
- PMJDY accounts are pivotal for the DBT of government subsidies and benefits, ensuring efficient delivery directly to the beneficiaries.
- Integration with Other Schemes:
- PMJDY accounts are linked to various other government schemes, including Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY), Atal Pension Yojana (APY), and the Micro Units Development & Refinance Agency Bank (MUDRA) scheme.
Progress and Achievements:
- Widespread Adoption:
- As of August 14, 2024, 53.13 crore accounts have been opened, including 35.37 crore in rural and semi-urban areas.
- Women Beneficiaries:
- 29.56 crore accounts are held by women, reflecting a strong focus on gender inclusion.
- Deposits:
- Total deposits in PMJDY accounts amount to Rs 2,31,235.97 crore.
- Banking Infrastructure Expansion:
- Branches: The number of branches of scheduled commercial banks has increased by 46%, from 1,05,992 in 2013 to 1,54,983 in 2023.
- ATMs: The number of ATMs has risen by 30%, from 1,66,894 in 2014 to 2,16,914 in 2024.
- Points of Sale (POS): The number of POS terminals increased from 10.88 lakh to 89.67 lakh over the last decade.
Impact on the Financial and Banking Sectors:
- Enhanced Demand for Banking Services:
- The opening of more than half a billion accounts has significantly increased demand for banking services, leading to the expansion of banking infrastructure across the country.
- Digital Payment Solutions:
- The launch of UPI and other digital payment solutions post-PMJDY has greatly eased banking transactions and promoted the usage of bank accounts.
- DBT Architecture and Efficiency Gains:
- PMJDY accounts are the bedrock of the government’s DBT architecture, ensuring faster, more reliable benefit transfers and weeding out ineligible or fake beneficiaries.
- According to the RBI’s Report on Currency and Finance (2024), DBT and other governance reforms have resulted in savings of Rs 3.48 lakh crore in government schemes like MG-NREGS and PM-Kisan until March 2023.
State-wise Distribution and Sectoral Analysis:
- Statewise Analysis:
- Uttar Pradesh: The state with the highest number of PMJDY accounts, with 9.45 crore accounts.
- Lakshadweep: The least number of accounts, with only 9,256 accounts.
- Other Key States: Fifteen states, including Bihar, West Bengal, Madhya Pradesh, Maharashtra, and Karnataka, have more than 1 crore PMJDY accounts each.
- Sectoral Distribution:
- Public Sector Banks: Hold the largest share with 41.42 crore accounts.
- Regional Rural Banks: Have 9.89 crore accounts.
- Private Sector Banks: Hold 1.64 crore accounts.
- Rural Cooperative Banks: Hold 0.19 crore accounts.
Pradhan Mantri Jan Dhan Yojana (PMJDY)
- Objective: PMJDY aims to ensure financial inclusion by providing access to financial services such as savings accounts, credit, insurance, and pension to the unbanked population.
- Features:
- Basic Savings Bank Account: No minimum balance required.
- RuPay Debit Card: Issued to account holders with accident insurance coverage.
- Overdraft Facility: Up to Rs 10,000 available to eligible account holders.
- Direct Benefit Transfer (DBT): Facilitates the direct transfer of subsidies and benefits into these accounts.
Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)
- Objective: PMJJBY provides life insurance coverage at an affordable cost to the masses.
- Coverage: Life insurance cover of Rs 2 lakh for death due to any reason.
- Eligibility: Individuals aged 18 to 50 years with a bank account.
- Premium: Rs 436 per annum.
- Tenure: The policy is renewable annually.
Pradhan Mantri Suraksha Bima Yojana (PMSBY)
- Objective: PMSBY offers accidental death and disability insurance.
- Coverage:
- Rs 2 lakh for accidental death or full disability.
- Rs 1 lakh for partial disability.
- Eligibility: Individuals aged 18 to 70 years with a bank account.
- Tenure: The policy is renewable annually.
Atal Pension Yojana (APY)
- Objective: APY provides a pension scheme focused on the unorganized sector, offering a guaranteed pension after retirement.
- Eligibility: Open to all citizens aged 18 to 40 years.
- Contributions: Monthly contributions vary based on the age at entry and the chosen pension amount.
- Pension Benefits: Guaranteed pension ranging from Rs 1,000 to Rs 5,000 per month, starting at the age of 60.
Micro Units Development & Refinance Agency (MUDRA) Bank
- Objective: MUDRA Bank provides financial support to micro and small enterprises, helping them access affordable credit.
- Loan Categories:
- Shishu: Loans up to Rs 50,000.
- Kishore: Loans ranging from Rs 50,000 to Rs 5 lakh.
- Tarun: Loans ranging from Rs 5 lakh to Rs 20 lakh.
- Target Group: Non-corporate small business segments such as small manufacturing units, shopkeepers, vendors, artisans, and others in the unorganized sector.
- Focus: The scheme aims to promote entrepreneurship and support the growth of small businesses.