PMJDY celebrates its 7 years; brings 43 crore under the formal banking system

As India celebrates its 75th Independence Day, nearly 43 million poor beneficiaries in the country now have basic bank accounts, thanks to the Centre’s flagship financial inclusion program, Pradhan Mantri Jan Dhan Yojana ( PMJDY).

The program, announced by Prime Minister Narendra Modi in August 2014, dispelled initial apprehensions about its effectiveness and has proven to be a constant driver of financial inclusion.

Also read: Over 5.82 crore of inoperative Jan Dhan accounts: Ministry of Finance

According to the latest government data, PMJDY now has 42.89 crore beneficiaries (basic bank account holders) with a total balance of 1,43834 crore. More than half of the beneficiaries are women (23.76 crore) while 28.57 crore come from rural and semi-urban areas.

“Unprecedented achievement”

Asked about the impact of the program so far, Dr Janakiram, director of the Institute for Development and Research in Banking Technology (IDRBT), a branch of RBI, said, “PMJDY has been extremely successful so far. present … The massive financial inclusion achieved by the program is unprecedented.

A senior State Bank of India official said the average account balance, which hovers between 3,000 and 3,500 in banks, is “an indication” that the program has now become a savings channel for families at. low income.

“The total deposit balance of 1.43 lakh crore is actually a huge amount. Our studies have shown that a good number of these accounts are used regularly, ”said Prasanna Tantri, executive director, Center for Analytical Finance, Indian School of Business (ISB).

The World Bank’s Global Findex database also showed a “substantial” increase in financial inclusion in the country after 2014. According to the index, 80 percent of people over 15 in the middle income group lower have a bank account now, up from 53% in 2014.

The next step

While PMJDY’s contribution has been well recognized, there is also a need to take it to the next level, according to experts.

Also Read: Why PMJDY Needs To Scale To The Next Level

“In the future, we should move from financial inclusion to financial empowerment by providing credit. PMJDY should become Prime Minister Jan Dhan Vridhi with universal access to bank credit for the most disadvantaged sections of our society, ”said the head of the IDRBT.

It would also need a credit history model, which will require reducing cash transactions, moving to digital transactions, and building credit models using artificial intelligence / learning techniques. automatic, he added.

“We should think about building India’s next generation digital financial infrastructure by focusing on these needs and reducing the cost per transaction as well as the cost of maintaining these accounts,” Janakiram said.

According to Tantri, there is a need to build a database to capture the income and transaction history of Jan Dhan account holders on the basis of which credit distribution models can be built. “For now, we only have aggregate data. Banks and FinTechs can perform further data analysis to create a new database, ”he added.