FINANCIAL INCLISION THROUGH PRADHAN MANTRI JAN DHAN YOJANA

INDEX

SL.NO CHAPTERS PAGE NUMBERS

1 INTRODUCTION

2 RESEARCH METHODOLOGIES

3 SWOT ANALYSES

4 OUTCOME OF THE STUDY

5 SUGGESTIONS AND CONCLUSION

 CHAPTER 1
INTRODUCTION

INTRODUCTION
 Since independence, the government and the reserve bank of india have taken many
initiatives for financial inclusion such as nationalization of banks, establishing regional rural
banks, cooperative banks, appointing banking correspondence agents (bca), launching of
Swabhiman and Swavlambhan Schemes, introducing micro finance, opening up of no-frills
account and provision of keeping 25% of bank branches in rural areas, initiating the model of
Bharatiya Mahila Bank, simplifying the KYC norms and so on. But the objective of financial
inclusion has never been achieved in entirely. Recently, the government has come up with an
innovative idea of connecting people especially from rural and remote areas with banking
industry by launching Pradhan Mantri Jan Dhan Yojana (PMJDY) with the vision of economic
liberalization and development and growth of all. The PMJDY, roughly translated as 'People's
Wealth Scheme' was announced by the Prime Minister in his Independence Day speech with the
slogan 'Mera Khata – Bhagya Vidhata' which means 'My Bank Account – The Creator of the
Good Fortune' (Mohan, 2014). PMJDY is a comprehensive financial inclusion programme,
targeting opening up of 7.5 crore new accounts within five months with insurance and pension
facilities. Under this provision of the scheme, the account holder is entitled to get accidental
insurance worth Rs 1 lakh, overdraft of up to Rs 5,000 and life insurance of Rs 30,000. On the
accident insurance cover of Rs 1 lakh being offered to new account holders, it comes with the
condition that before making the claim, the holder should have used his/her account during the
45 days prior to the claim date. The Rupay debit card being given to the beneficiaries will have
an inbuilt accident insurance cover Rs 1 lakh and an overdraft facility up to Rs 5000. The use of
debit cards will allow the unbanked to start a building a transaction history, which can be a
decisive step in initiating the accountholder towards financial inclusion. The PMJDY also aims
at eliminating corruption as it would facilitate routing of subsidies directly into the accounts of
intended beneficiaries (Cowan and Pande, 2014). Pradhan mantri jan dhan yojana (PMJDY) is a
social upliftment scheme which aims to bring the millions of excluded Indian people in the
main financial stream though financial inclusion. Prime Minister on his Independence Day
speech on 15th August 2014 declared “PRADHAN MANTRI JAN DHAN YOJNA” scheme
which intended to accomplish financial inclusion by providing basic banking accounts with a
debit card, with insurance. This scheme was launched on 28 August 2014 with target of 1 Crore
banks account on first day itself. The scheme ends to target 7.5 Crore families which are
financially excluded. At present only 58.7% of the total population comes under financial
inclusion.

HISTORY

Financial inclusion promotes economic development. An efficient financial system in a

country includes well developed commercial banks. The country's structure of financial system
plays a crucial role in smooth and efficient functioning of the economy as well. A financial
system involves set of multiple segments and is associated with institutions, agents, practices
and markets. Financial development through a network of banking institutions helps to mobilize
savings and investment in the economy for productive purposes. The Government of India
along with the Reserve Bank of India (RBI) and National Bank for Agriculture and Rural
Development (NABARD) has been making concerted efforts to enhance financial inclusion in
India. These measures include expansion of formal financial services, licensing new banks,
increasing number of branches of banks, increasing banking outlets, extension of ATM
services, promoting SHGs-Bank linkage, encouraging Micro Finance Institutions (MFIs), use of
Business Facilitators and Correspondents, easing of ‘Know-your – customer' norms, electronic
benefits transfer, use of mobile technology, opening of ‘no-frill accounts' and emphasis on
financial literacy. Other measures to support financial inclusion include opening customer
service centers, credit counselling centers, and offering kisan credit card, national pension
scheme, and national insurance scheme.
Financial inclusion is a process of ensuring access to appropriate financial products and
services needed by all sections of the society in general and vulnerable groups in particular, at
an affordable cost, in a fair and transparent manner, by regulated, mainstream institutional
players (GOI, 2008). The objective of financial inclusion is to transform the lives of vulnerable
people, mainly poor, by providing them access to banking finance and enabling them to
generate stable income (Reddy, 2017). Financial Inclusion helps vulnerable segments of the
society and is concerned with financial needs of people requiring financial services like saving
accounts, credit on easy terms, insurance, asset-leasing, and pensions.

In fact, contrary to general belief, historically, India is a pioneer in financial inclusion.

The Cooperative Credit Societies Act, 1904 gave an impetus to cooperative movement in India
(Roy, 2011). The objective of cooperative banks was to extend banking facilities, mainly
availability of credit on easy terms compared to money lenders who were well known to charge
high rates of interest. In India, financial inclusion exercise explicitly started with nationalization
of State Bank of India in 1955. In 1967, there emerged a debate on social banking and
consequently 14 private sector banks were nationalised in 1969 to serve unbanked population,
mainly weaker sections of society as well as rural areas. Financial inclusion promotes savings,
particularly in rural areas and it brings vulnerable groups into formal banking services. The
concept of priority sector lending became important by 1974 which implied directed lending to
unbanked areas, and in 1980, eight more private banks were nationalised to extend banking in
rural and remote areas. Since then, there has been considerable reorientation of bank lending to
accelerate process of development, especially of the priority sector, which had not previously
received sufficient attention.

In the previous decades, few initiatives were undertaken as discussed above, but formal
thrust came from 2008 after adoption of recommendations of Report of the Committee on
Financial Inclusion (GOI, 2008). RBI’s cautious policy on financial inclusion had been to
ensure a balance between equity and efficiency as well as ensuring financial health of banks and
preserving their lending capacities. RBI had adopted a bank-led approach and has been neutral
to the use of technology by individual banks. With the aim of making door step banking
facilities available to the unbanked population, RBI during 2010-2013, identified villages with a
population of more than 2,000 and allotted them to different banks for extending coverage
through various modes of banking like branch banking, BC, ATMs, mobile vans etc.
Consequently, according to the RBI, in January 2013, banking facility had reached more than
two lakh villages with nearly 80 per cent out-reach through business correspondents, and nearly
10 crore savings bank deposit accounts, including erstwhile no-frill accounts, were opened
during 2010 to 2012. In the second phase starting from 2013, close to 5 lakh un banked villages
with population lower than 2,000 were similarly allotted to various banks. On August 15, 2014,
Pradhan Mantri Jan Dhan Yojana (PMJDY) was announced which was launched on August 28,
2014. PMJDY is a comprehensive financial inclusion plan to provide banking services to all
households in the country with a strong focus on the use of technology. It was realized that
exclusion from the banking system excludes people from all benefits that come from a modern
financial system. Hence, with this Mission, households will not only have bank accounts with
indigenous RuPay Cards but will also gain access to credit for economic activity and to
insurance and pension services for their social security. The main features of PMJDY include
Rs. 5,000 overdraft facility for Aadhar-linked accounts and a RuPay debit card with inbuilt Rs.
1 lakh accident insurance cover. In addition, for accounts opened between August 15, 2014
and January 26, 2015, a Life Insurance cover of Rupees 30,000 is available to the eligible
beneficiaries. Additionally, one of the salient features of PMJDY was that after remaining
active for 6 months, the account holder will become eligible for an overdraft of up to Rs 5,000.
In recent years, after launch of PMJDY in August 2014, the reach of banking
August 15, 2014 and January 26, 2015, a Life Insurance cover of Rupees 30,000
is available to the eligible beneficiaries. Additionally, one of the salient features
of PMJDY was that after remaining active for 6 months, the account holder will
become eligible for an overdraft of up to Rs 5,000. In recent years, after launch
of PMJDY in August 2014, the reach of banking sector has been extended to
nearly 95 per cent of households. As on June 2016, 4,52,151 such villages have
been provided banking services as of June 2016, with majority being covered
through BCs.

The aim of this study is to understand the success of PMJDY. The

strategy was to undertake a follow-up survey, a type of longitudinal study, on
the same set of Gram Panchayat, where we had earlier conducted interviews in
late 2013 and early 2014, before the launch of PMJDY.

INTRODUCTION TO PRADHAN MANTRI JAN DHAN YOJANA

Hon'ble Prime Minister, Narendra Modi on 15th August, 2014 announced

"Pradhan Mantri Jan-Dhan Yojana (PMJDY)" which is a National Mission for
Financial Inclusion. The task is gigantic and is a National Priority. This
National Mission on Financial Inclusion has an ambitious objective of covering
all households in the country with banking facilities and having a bank account
for each household. It has been emphasised by the Hon'ble PM that this is
important for including people left-out into the mainstream of the financial
system.

The Pradhan Mantri Jan-Dhan Yojana has launched on 28th August, 2014,
across the nation simultaneously. It has launched formally in Delhi with parallel
functions at the state level and also at district and sub-district levels. Camps are
also to be organized at the branch level. The Pradhan Mantri Jan-Dhan Yojana
lies at the core of development philosophy of "Sab Ka Sat Sab Ka Vikas". With
a bank account, every household would gain access to banking and credit
facilities. This will enable them to come out of the grip of moneylenders,
manage to keep away from financial crises caused by emergent needs, and most
importantly, benefit from a range of financial products. As a first step, every
account holder gets a Rupay debit card with a ` 1,00,000/- accident cover.
Further, they cover by insurance and pension products. There was need to enrol
over 7.5 crore households and open their accounts. Earlier efforts by the
Government of India include setting up a committee on financial inclusion
under the chairmanship of Dr. C. Rangarajan. The committee finalized its report
in early 2008. As is evident from the preamble of the report, the committee
interpreted financial inclusion as an instrumentality for social transformation.
"Access to finance by the poor and vulnerable groups is a prerequisite for
inclusive growth. In fact, providing access to finance is a form of empowerment
of the vulnerable groups. Financial Inclusion denotes delivery of financial
services at an affordable cost to the vast sections of the disadvantaged and low-
income groups. The various financial services included credit, savings,
insurance and payments and remittance facilities. The objective of financial
inclusion is to extend the scope of activities of the organized financial system to
include within its ambit people with low incomes. Through graduated credit, the
attempt must be to lift the poor from one level to another so that they come out
of poverty."

It is a known fact that in India, while one segment of the population has
access to assortment of baking services encompassing regular banking facilities
& portfolio counselling, the other segment of underprivileged and lower income
group is totally deprived of even basic financial services. Exclusion of large
segments of the society from financial services affects the overall economic
growth of a country. It is for this reason that Financial Inclusion is a global
concern. In Sweden and France, banks are legally bound to open an account for
anybody who approaches them. In Canada, law requires Banks to provide
accounts without minimum balance to all Canadians regardless of employment
or credit history. In the United States, the Community Reinvestment Act (1977)
is intended to encourage depository institutions to help meet the credit needs of
the communities in which they operate, including low and moderate income
neigh bore-hoods, consistent with safe and sound operations. In India, the
Banking industry has grown both horizontally and vertically but the branch
penetration in rural areas has not kept pace with the rising demand and the need
for accessible financial services. Even after decades of bank nationalization,
whose rationale was to shift the focus from class banking to mass banking, we
still find usurious money lenders in rural areas and urban slums continuing to
exploit the poor. After economic reforms of 1991, the country can ill-afford not
to include the poor in the growth paradigm. Financial Inclusion of the poor will
help in bringing them to the mainstream of growth and would also provide the
Financial Institutions an opportunity to be partners in inclusive growth.

Experiences in India and abroad has shown that traditional Banks have
struggled to reach the poor with financial services. Recognizing this fact, many
countries such as Brazil, Indonesia, Malaysia, Mexico etc. have allowed non-
banks to offer payments, deposits and cash-in/cash-out services. Similarly, in
India, enabling an inclusive competitive landscape should be a top priority.
India has several strategic assets providing favourable initial conditions for
transformational change towards digital financial inclusion:

• A strong banking network (1,15,000 branches) linked to Ekberg (RBI's Core

Banking Solution), now spreading into unbanked rural areas.
• A significant outreach of India Post (1,55,000 outlets), POS and ATM
terminals which can facilitate a vibrant cash-in/cash-out network across the
country.
• A nation-wide telecom network with 886 million mobile connections and 72%
mobile penetration.

• Strong Network of computer based service providers in the form of Common

Service Centres (CSC) promoted by Department of IT.
• A strong national payments infrastructure that includes an Inter- Mobile
Payments Service/Immediate Payment System (IMPS) to transfer funds over
mobile phones.
• A world class national ID system covering the largest (650M) headcount and
expanding by 30M citizens per month.

 Official mission:

Objective of "Pradhan Mantri Jan-Dhan Yojana (PMJDY)" is ensuring

access to various financial services like availability of basic savings bank
account, access to need based credit, remittances facility, insurance and pension
to the excluded sections i.e. weaker sections & low income groups. This deep
penetration at affordable cost is possible only with effective use of technology.

PMJDY is a National Mission on Financial Inclusion encompassing an

integrated approach to bring about comprehensive financial inclusion of all the
households in the country. The plan envisages universal access to banking
facilities with at least one basic banking account for every house hold, financial
literacy, access to credit, insurance and pension facility. In addition, the
beneficiaries would get Rupay Debit card having inbuilt accident insurance
covers of र 1 lakh. The plan also envisages channelling all Government benefits
(from Centre / State / Local Body) to the beneficiaries accounts and pushing the
Direct Benefits Transfer (DBT) scheme of the Union Government. The
technological issues like poor connectivity, on-line transactions will be
addressed. Mobile transactions through telecom operators and their established
centres as Cash Out Points are also planned to be used for Financial Inclusion
under the scheme. Also an effort is being made to reach out to the youth of this
country to participate in this Mission Mode Programme.

 Scheme Details:

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.

Account can be opened in any bank branch or Business Correspondent

(Bank Mitra) outlet. PMJDY accounts are being opened with Zero balance.
However, if the account-holder wishes to get cheque book, he/she will have to
fulfil minimum balance criteria.

 Documents required to open an account under pradhan mantri jan-

dhan yojana:

 If aadhar Card/aadhar Number is available then no other documents is

required. If address has changed, then a self-certification of current address is
sufficient.
 If aadhar Card is not available, then any one of the following Officially Valid
Documents (OVD) is required: Voter ID Card, Driving License, PAN Card,
 and Passport & NREGA Card. If these documents also contain your address,
it can serve both as “Proof of Identity and Address”.
 If a person does not have any of the “officially valid documents” mentioned
above, but it is categorized as ‘low risk' by the banks, then he/she can open a
bank account by submitting any one of the following documents:

a. Identity Card with applicant's photograph issued by Central/State

Government Departments, Statutory/Regulatory Authorities, Public
Sector Undertakings, Scheduled Commercial Banks and Public
Financial Institutions;
b. Letter issued by a gazette officer, with a duly attested photograph
of the person.

 Special Benefits under PMJDY Scheme:

 Accidental insurance cover of Rs.1.00 lac

 No minimum balance required.
 Life insurance cover of Rs.30,000/-
 Easy Transfer of money across India
 Beneficiaries of Government Schemes will get Direct Benefit Transfer in
these accounts.
 After satisfactory operation of the account for 6 months, an overdraft
facility will be permitted
 Access to Pension, insurance products.
 Accidental Insurance Cover, RuPay Debit Card must be used at least once
in 45 days.
 Overdraft facility up to Rs.5000/- is available in only one account per
household, preferably lady of the household.
  Interest on deposit.

CURRENT STATUS OF FINANCIAL INCLUSION IN THE COUNTRY:

 In order to ensure financial inclusion various initiatives were taken up by

RBI/ GOI like Nationalization of Banks, Expansion of Banks branch
network, Establishment & expansion of Cooperative and RRBs,
Introduction of PS lending, Lead Bank Scheme, Formation of SHGs and
State specific approach for Govt. sponsored schemes to be evolved by
SLBC etc.
 RBI wide Mid-term Review of Annual Policy Statement for the year
2005-2006, advised Banks to align their policies with the objective of
financial inclusion. Banks were advised to make available a basic
banking 'No frills' account either with 'nil' or very
minimum balances as well as charges that would make such accounts
accessible to vast sections of population. Besides, it has been emphasized
upon by the RBI for deepening and widening the reach of Financial
Services so as to cover a large segment of the rural & poor sections
of population.
 RBI in the year 2006, with the objective of ensuring greater financial
inclusion and increasing the outreach of the banking enable the banks to
use the services of NGOs/SHGs, MFIs and other Civil Society
Organizations as intermediaries in providing financial and banking
services through use of &quote; Business Facilitator and Business
Correspondent Model& quote;.
 Census 2011 estimated that out of 24.67 crore households in the country,
14.48 crore (58.7%) households had access to banking services. Of the
16.78 crore rural households, 9.14 crore (54.46%) were availing banking
services. Of the 7.89 crore urban households, 5.34 crore(67.68%)
 households were availing banking services.
 In the year 2011, Banks covered 74,351 villages, with population more
than 2,000 (as per 2001 census), with banking facilities under the &quote;
Swabhimaan & quote; campaign with Business Correspondents as
explained later. However the programme had a very limited reach and
impact.
 The present banking network of the country (as on 31.03.2014) comprises
of a bank branch network of 1,15,082 and an ATM network of 1,60,055.
Of these, 43,962 branches (38.2%) and 23,334 ATMs (14.58%) are in
rural areas. Moreover, there are more than 1.4 lakh Business
Correspondents (BCs) of Public Sector Banks and Regional Rural Banks
in the rural areas. BCs are representatives of bank to provide basic
banking services i.e. opening of basic Bank accounts, Cash deposits,
Cash withdrawals, transfer of funds, balance enquiries, mini statements
etc. However actual field level experience suggests that many of these
BCs are not actually functional.
 Public Sector Banks (PSBs) including RRBs have estimated that by
31.05.2014, out of the 13.14 crore rural households which were allocated
to them for coverage, about 7.22 crore households have been covered
(5.94 crore uncovered). It is estimated that 6 Crore households in rural
and 1.5 Crore in urban area needs to be covered.

LATEST TREND-PRADHAN MANTRI JAN DHAN YOJANA

 34.73 crore accounts opened by public sector banks and 1.26 crore accounts
by major private banks
 Pradhan Mantri Jan Dhan Yojana (PMJDY) was launched in August 2014
with the objective to, inter-alia provide universal access to banking facilities
 to the people of the country. As informed by banks, out of 35.99 crore
accounts opened under PMJDY as on 26 June 2019, 29.54 crore accounts are
operative accounts.
 Private Banks are allowed to open accounts under PMJDY. As apprised by
them, 1.26 crore accounts have been opened by major private banks under
PMJDY.
 Public sector banks and major private banks have also apprised that jan dhan
accounts are not debited with any banks charges.
 Under PMJDY, as on 26 June 2019, while 34.73 crore accounts have been
opened by public sector banks (including sponsored Regional Rural Banks),
1.26 crore accounts have been opened by major private banks.

FEATURES & BENEFITS TO THE CUSTOMER

 Each family will have a bank account which will help them to save their
earnings.
 No minimum balance required.
 Issue of a Rupay Debit card from the account through ATM as well as
BC Terminal. Account holder will also get an accidental insurance of Rs.
1 lakh.
 Life Insurance Cover of Rs.30000/- if accounts are opened before 26th
January 2015).
 Inter-operability in accounts through Aadhaar based transactions as well
as through Rupay card.
 Interest on deposit would be received on balance maintained. Easy
Transfer of money across India.
 Beneficiaries of Government Schemes will get Direct Benefit Transfer in
these accounts
 After satisfactory operation of the account for 6 months, an overdraft
 facility may be considered.
 Access to Pension, insurance products through these accounts
 A person who is already having a bank account with any bank NEED
NOT to open a separate account under PMJDY. He/she will just have to
get issued a rupay Card in his existing account to get benefit of accidental
insurance. .

LEARNING FROM THE PAST CAMPAIGN AND SHIFT IN

APPROACH:

Sr. Earlier Approach New Approach (PMJDY)

No (Swabhimaan)
1 Villages with population greater Focus on household; Sub Service
than 2000 covered; thus limited Area (SSA) for coverage of the
geographical coverage whole country.
2 Only rural Both rural and urban
3 Bank Mitra (Business Fixed point Bank Mitra (Business
Correspondent) was visiting on Correspondent) in each SSA
fixed days only comprising of 1000-1500
households (3 to 4 villages on an
average) to visit other villages in
the SSA on fixed days
4 Offline accounts opening Only online accounts in CBS of
Technology lock-in with the the Bank
vendor
5 Focus on account opening and Account opening to be integrated
large number of accounts with DBT, credit, insurance and
remained dormant pension
6 Inter-operability of accounts was Inter-operability through RuPay
not there Debit Card, AEPS etc.
7 No use of Mobile Banking Mobile wallet and USSD based
 mobile banking to
be utilized
8 Cumbersome KYC formalities Simplified KYC/e-KYC in place
as per RBI guidelines
9 No guidelines on the Minimum remuneration of the
remuneration of the Bank Mitra Bank Mitra (Business
(Business Correspondent). Banks Correspondent) to be ` 5000/-
went generally with Corporate ( Fixed + Variable)
BCs who used to be least
expensive to them
10 A recent RBI survey finds that Viability and sustainability of
47% of Bank Mitra are Bank Mitra (Business
untraceable Correspondent) is identified as a
critical Component
11 Monitoring left to banks Financial Inclusion campaign in
Mission Mode with structured
monitoring mechanism at Centre,
State and District level
12 Financial literacy had no focus The rural branches of banks to
have a dedicated Financial
Literacy Cell
13 No active involvement of states / State level & District level
districts monitoring committees to be set
up
14 No brand visibility of the Brand visibility for the
Programme & Bank Mitra programme & Bank Mitra
(Business Correspondent) (Business Correspondent)
proposed
15 Providing credit facilities was not OD limit after satisfactory
encouraged operations / credit history of 6
months
16 No grievance redressal Grievance redressal at SLBC
 mechanism level in respective States

PRESENT PLAN

Comprehensive FI based on six pillars is proposed to be achieved as

under:

Phase I

• Universal access to banking facilities

• Providing Basic Banking Accounts for saving & remittance and RuPay Debit
card with inbuilt accident insurance cover of 1 lakh and RuPay Card.
• Financial Literacy Programme

Phase II

• Overdraft facility of up to 5000/- after six months of satisfactory performance

of saving /credit history.
• Creation of Credit Guarantee Fund for coverage of defaults in overdraft A/Cs.
• Micro-Insurance.
• Unorganized sector Pension schemes like Swavalamban In addition, in this
phase, coverage of households in hilly, tribal and difficult areas would be
carried out. Moreover, this phase would focus on coverage of remaining
adults in the households and students.
• All the rural & semi-urban areas of the country are proposed to be mapped
into Sub Service Area (SSAs) comprising 1000-1500 households with an
average 3-4 villages with relaxation in NE/Hilly states.
• It is also proposed that looking to the viability of each centre around 74000
villages with population more than 2000 which were covered by Business
Correspondents under Swabhimaan Campaign will be considered for
conversion into full-fledged Brick & Mortar branches with staff strength of
1+1 / 1+2 in the next three to five years.
• All the 6 lakh villages across the entire country are to be mapped according to
the Service Area of each Bank to have at least one fixed point Banking outlet
catering to 1000 to 1500 households, called as Sub Service Area (SSA). It is
proposed that SSAs shall be covered through a combination of banking
outlets i.e. branch banking and branch less banking. Branch banking means
traditional Brick & Mortar branches. Branchless banking comprises of fixed
point Business Correspondents agents, who act as representative of Bank to
provide basic banking services.
• The implementation strategy of the plan is to utilize the existing banking
infrastructure as well as expand the same to cover all households. While the
existing banking network would be fully geared up to open bank accounts of
the uncovered households in both rural and urban areas, the banking sector
would also be expanding itself to set up an additional 50,000 Business
Correspondents (BCs), more than 7,000 branches and more than 20,000 new
ATMs in the first phase.
• The comprehensive plan is necessary considering the learning’s from the past
where a large number of accounts opened remained dormant, resulting in
costs incurred for banks and no benefits to the beneficiaries.
• The plan therefore proposes to channel all governments benefits (from
Centre/State/Local body) to the beneficiaries to such accounts and pushing
the Direct Benefits Transfer (DBT) scheme of the Union Government
 including restarting the DBT in LPG scheme. MGNREGS sponsored by
Ministry of Rural Development (MORD, GOI) is also likely to be included in
Direct Benefit Transfer scheme.

THE IMPORTANCE OF FINANCIAL INCLUSION IN INDIA

1. The rural masses will get access to banking like cash receipts, cash payments,
balance enquiry and statement of account can be completed using fingerprint
authentication. The confidence of fulfilment is provided by issuing an online
receipt to the customer.

2. Reduction in cash economy as more money is brought into the banking

ecosystem

3. It inculcates the habit to save, thus increasing capital formation in the country
and giving it an economic boost.

4. Direct cash transfers to beneficiary bank accounts, instead of physical cash

payments against subsidies will become possible. This also ensures that the
funds actually reach the intended recipients instead of being siphoned off along
the way.

5. Availability of adequate and transparent credit from formal banking channels

will foster the entrepreneurial spirit of the masses to increase output and
prosperity in the countryside.

6. Access to financial services enables the poorest and most vulnerable in

society to step out of poverty and reduces the inequality in society
7.  Financial inclusion not only helps individuals and families, but collectively it
develops entire communities and can help drive economic growth

8. Financial inclusion is about enabling and empowering people and

communities:

 Enabling people to have the ability and tools to manage and save their
money
 Empowering people with the skills and knowledge to make the right
financial decisions

9. Participation within the financial system leads to all kinds of individual

benefits, including:

 Ability to start and grow a business, which gives people an opportunity

through micro-financing schemes for example to better long term prospects
 Being able to pay for an education for children, which in turn enables a new
generation of educated and informed individuals
 The ability to handle uncertainties that require ad hoc and unexpected
payments or ‘financial shocks’
10. Financial inclusion through access to an account, savings and a payment
system (whatever that maybe) enables potential and empowers men, women
and whole communities. This in turn promotes:
 Investment within the community provides jobs and again research shows
that employment boosts status, income and ones outlook on life. Collectively
this helps to invigorate economies.
 Equality both within the community and within families
 CHAPTER 2
RESARCH METHODOLOGY
REVIEW OF LITERATURE

 Bharati Pajari (2016), “Pradhan Mantri Jan Dhan Yojana (PMJDY) : A

Major step towards Financial Inclusion in India”. The author suggested
that life insurance cover, accidental cover and credit facilities should be
given to all account holders without any exclusion and to conduct more
number of financial literacy center. AJMS Vol.6 No.1 January-June 2017
10
 Unnamalai. T (2015) has published an article entitled “Role of Indian
Bank’s in financial inclusion policy through Pradhan Mantri Jan Dhan
Yojana (PMJDY)”. The researcher find out in their study the public
sector banks are the leader in opening an account, account balance
maintained with them, issue of Rupay debit cards, etc., He also suggests
that the government of India can open a number of branches for regional
rural banks and may give permission for the private sector banks for
opening branches.
 Paramasivan and Kama raj (2015) have published an article entitled
“Commercial Bank’s performance on Pradhan Mantri Jan Dhan Yojana”.
The authors concluded that the PMJDY scheme has created an impressive
result in the banking sector with regard to eradicate of financial un touch
ability in the country.
 Gitte Madhukar R. (2015) has published an article “Pradhan Mantri Jan
Dhan Yojana: A National Mission on Financial Inclusion in India”. The
authors revealed that the PMJDY programme is in true sense one of the
poverty alleviation programmes. Crores of poor people in India are still
outside the organized financial system, despite the nationalization of
commercial banks long ago in 1969. Hence, this is the mission to
 eradicate poverty through the financial inclusion programme. The poor
and the underprivileged people in rural, semi-urban and urban areas are
expected to get all the benefits such as financial inclusion, financial
stability and financial freedom through the PMJDY.
 Shetty and Deokar (2014) jointly published in their findings that
“Pradhan Mantri Jan Dhan Yojana” is not a new programme but there
were various programmes initiated by RBI and Ministry of Finance, but
due to lack of co-ordination among people, government and RBI, the
objectives of all those programme have not been achieved till now. It
concludes that formulation of programme is not sufficient for conversion
of dreams into reality, but this requires effective and transparent
implementation of that programme at the ground level with the co-
ordination of government, bank and the general public.

STATEMENT OF THE PROBLEM:

A lot of research has been made on Pradhan Mantri Jan Dhan Yojana so far.
But no research has been made on what extend financial inclusion can be
achieved through PMJDY, which is nationwide policy for achieving financial
inclusion. This is the scope for doing research on this topic

OBJECTIVES OF THE STUDY

1. To identify the level of awareness on PMJDY among resident of india.

2. To identify the level of usage of benefits arising out of PMJDY
3. To identify how much problem they are feeling when they come to the
banks for PMJDY scheme
4. To identify the PMJDY scheme are really worked for rural areas and help
to increase their economic growth
SCOPE OF STUDY

1. The target group are people residing the Indian

2. Banking habits and awreness about financial product and service come
within the purview of study
3. The target group include unemployed people housewife agriculturelist
and people engaged in small business

Research methodology
The project aims to understand the level of awareness and
achievement of RBI in achieving the dream target financial inclusion The
survey was conducted among the 200 resident. This research work was started
with exploratory research design in due course of item it was converted to
casual research design
Sample design
TARGET POPULATION
The target audience includes the resident of Indian
SAMPLE FRAME
The sample frame had a RANDOM SAMPLE frame
SAMPLE SIZE
The sample size of the research is around 200
SAMPLE METHOD
The sample method included conducting a survey with resident either through
personal interaction or through telephonic interaction convenient sample
technique was adopted

COLLECTION OF DATA

Primary data
The data are collected from typical rural area . The data also are collected from
different Nationalisation bank and private bank also. It also collected from
Reserve Bank of India sources. Primary data was collected through opinion
survey techniques like direct interview, structured questionnaire, and
observation.
Secondary data
The data was extracted from various archives like- books, e-newspapers,
magazines, journals and internet search

PLAN OF ANALYSIS

Since the study is based on secondary data. The analysis will be

according to qualitative techniques content analysis is prescribed as the
techniques to analyze some statistical tools.

LIMITATIONS

 The bank wise data are provided in a pdf format and thus are not very
user friendly to carryout statistical analysis.
 The summary data have been uploaded on a monthly basis from 2018-19
for few months. Thus, even though the data is generally high frequency
data, because of these few lapses, weekly analysis is not feasible for the
full period.
 For the private banks, data was not uploaded on a regular basis. So,
analysis failed to capture the growth for some time points.
CHAPTER 3
 SWOT ANALYSIS

SWOT ANALYSIS

It is one thing to discern attractive opportunities in the environment; it is

another to have the necessary competencies to succeed in these opportunities.
Each business needs to evaluate strengths and weaknesses periodically. In
examining its pattern of strengths and weaknesses, clearly the business does not
have to correct all of its weakness nor gloat about all of its strengths. The big
question is whether the business should limits itself to those opportunities where
it now possesses the required strengths or should consider better opportunities
where it might have to acquire or develop certain strengths.
A market opportunity is an area of need in which a company can perform
profitably. Opportunities can be listed and classified according to their
attractiveness and the success probability. The company’s success probability
depends on whether its business strengths not only match the key success
requirements for operating in the target market but also exceed those of its
competitors. Mere competence does not constitute the competitive advantage.
The best performing company will be one of that can generate the greatest
customer value and sustain it over time.
Some development in the external environment represents threats. An
environmental threat is a challenge posed by an unfavourable trend or
development that would lead, in the absence of defensive marketing action, to
sales or profit deterioration

SWOT:
Analysis is important technology by the company can reap its position
future and can over comes its negative aspects. Therefore, swot analysis plays
an important role of formulating the business strategies for any company, which
is obvious best on its strength, weakness, opportunity and threat.

STRENGTHS AND WEAKNESSES

Strengths and weaknesses internal to the organization. Strengths represent

positive attributes or characteristics, factors that provide an advantage. 
Weaknesses are attributes or characteristics that place the business at a
disadvantage relative to others.

OPPORTUNITIES AND THREATS

Opportunities and threats are external to the organization.  Opportunities

represent external trends and chances to improve performance - something
 happening in the outside environment that presents positive potential.  Threats
are elements or trends in the outside environment that could cause trouble for
the business, place it at risk.

STRENGTHS:

 Financial mainstreaming of the poorest of the poor of the country to

create inclusive growth and development. As per the PMJDY website, 99%
of the households now have at least one bank account.
 It will help in generating higher savings for the poor people. As per one
study[i], availability of bank branches positively impacts savings. As per the
recent study conducted by State Bank of India(SBI)[ii], Jan Dhan Accounts
are keeping villagers sober and it might be helping in slowing rural inflation.
 Account holders will get the overdraft facility of ₹5000. It can help the
people to start some self-employment activities which have the potential to
improve their well-being and it will strengthen their decision-making
abilities.
 It will provide accident insurance cover of ₹1 lakh to deal with tragedies
and shocks of life for the poor households.
 It will provide RuPay debit card to every account holders to access the
facility of cashless transactions.

WEAKNESSES:

 As per various reports [iii], it was found that one-fifth of these Jan Dhan
accounts are dormant and 79 % of the households [iv] already had a regular bank
account. Therefore, dormancy and zero balance accounts are serious challenges
of this scheme.
 As per the data, only 1.5% account holders have sanctioned loans and
around half of the account holders did not even avail the loan. The loan facility
is provided on the basis of the discretion of bank employees which can create
some biases in disbursing the loans.
 As per the RBI report [v], Jan Dhan accounts were misused during the
demonetization process last year and a large sum was deposited to these
accounts.
 The absurd limit of ₹50,000 stops some poor people [vi] to receive their
subsidies in the Pradhan Mantri A was Yojana (PMAY) [vii].
 Only 76% of the Jan Dhan account holders got a Rupay card [viii] and at
least one in five of the issued cards remained dormant.

OPPORTUNITIES:

 It can help in implementing the Direct Benefit Transfer (DBT)

[ix] scheme in terms of JAM trinity solution where J-Jan Dhan, A-Aadhaar,
and M-Mobile. JAM [x] can usher into a radical transformation to provide
social benefits directly to the bank accounts of the people, in turn, reducing
hassles and massive leakages prevalent in the social-security schemes.
 Digital India scheme [xi] and government’s consistent push for Mobile
banking [xii] can create a conducive climate for increasing financial
inclusion. In fact, after the demonetization of high-value currencies, there is a
consistent increase in digital payment.
 It can be used to provide for funding facilities to vulnerable sections of
the society. In fact, as per the Gates Foundation Report [xiii], it helped in
financially empowering the women and marginalized sections of the society.
 MUDRA yojana [xiv] and Stand-Up India [xv] scheme can create
opportunities for Jan Dhan Yojana to create business opportunities by
providing funding to the ‘unfunded’ as well as ‘unbanked’ sections of the
society.
 It can help in increasing the ‘financial literacy’ in the country which will
help in increasing the penetration of various financial services like insurance,
loans, investment options etc. to far-flung areas of the country.

THREATS:

 The first and most obvious threat can come from the next government
which comes into power if it is not BJP. They might scrap the whole scheme
on various grounds.
 Sustainability of these accounts in serving the long-term interests of
providing financial services to the poorest sections of the society when they
are not provided with gainful employment opportunities or the other ways of
generating income.
 Recently Supreme Court of India has given its verdict in the Aadhar case
and provided “the Right to Privacy to every individual in the country. On the
face of it, linking bank accounts with Aadhar number can create hurdles for
the scheme in providing direct benefit transfer.
 Misuse of these Jan Dhan accounts and RuPay cards will always be a
threat to this program of the government. Due to this, a number of Jan Dhan
accounts were closed during demonetization because of their suspicious
activities [xvii].
 The overdraft facility and insurance scheme can also increase the NPA
(Non-performing Assets) of the Banks who are already stressed due to stalled
projects of the private and public sectors
 CHAPTER 4
OUTCOME OF THE STUDY

OUTCOME OF THE STUDY

Majority of the PMJDY accounts were opened in rural areas.

 During the study period, majority of the PMJDY account holders were open
their bank account with pub
 LIC sector banks followed by RRB and private sector banks.
 During the study period majority of the Rupay card issued by public sector
banks followed by RRB and private sector banks.
 During the study period highest amount of PMJDY account balance
maintained with Public sector followed by Regional Rural Banks and Private
 sector Banks.
 During the study period the huge number of Rupay debit card issued by
public sector banks followed by Regional Rural Banks and private sector
banks.
 Annual growth rate of No of Rupay debit card issued by banks and amount of
PMJDY account balance maintained by banks is increased trend. But the No
of zero balance account opened is decreased during the year 2015, but it is
increased during the year 2016.
 More than 50 per cent of the eligible subscribers are below the age of 40, and
over 70 per cent are women, hence the scheme has managed to target the
appropriate subscriber base for a long term defined contribution pension
scheme.
 The campaign focused only on the supply side by providing banking outlets
in villages of population greater than 2000, but the entire geography could
not be covered.
 In India, banking penetration has been low despite efforts made by the RBI
and Government. The main aim of government effort under financial
inclusion is to extend credit to rural and vulnerable segment of society. In
2011, according to census, only about 58.7 percent of people in India were
availing credit from formal, institutional sources
 In Karnataka, 1.16 crore accounts were opened until February 21, 2018 of
which 66.06 lakh are in rural areas and 49.70 lakh in urban/metro areas
(Table 3). The average amount of balance under these accounts in Karnataka
is Rs. 2,211.2 as compared with the national average of Rs. 2,388.4 for all-
India.
 In terms of educational qualification, 44.7 per cent of farmers were
matriculate and 2 per cent were at least graduates. In case of non-farmers,
50.8 per cent were matriculates and 11.9 per cent were at least graduates.
 Most of farmers and non-farmers had studied up to matriculation level, and
only 24.0 per cent farmers and 16.9 per cent non-farmers had no formal
education
 Only one member had opened a PMJDY account in the family. In the case of
28.7 per cent of farmer households, at least one family member had a
PMJDY account while in case of non-farmers, this was 50.8 per cent. It is
interesting to note that, despite efforts by the Government, 25.3 per cent of
farmers and 22.0 per cent of non-farmers had not opened a PMJDY account
(Table 9).
 The ownership pattern of rupay card reflected lack of awareness, amongst
farmers and non- farmers - 68.7 per cent of farmers and 67.8 per cent of non-
farmers did not have a rupay card

IN CASE OF FARMERS

 94.0 per cent needed help to operate ATMs or online banking. Non-
farmers, comparatively but only marginally, were in a better position at
handling banking services on their own than farmers but did face similar
levels of difficulties with digital services and mobile banking
 The amount of loan extended by banks for one year ranged between the
minimum of Rs. 30,000 to Rs.3 lakh before PMJDY. After PMJDY, the
range widened from Rs. 10,000 to Rs. 3 lakh. As expected, range of rate
of interest narrowed from 2.5 per cent to16.0 per cent before PMJDY to
4.0 per cent and 14.0 per cent after PMJDY.
 The loan extended by MFIs was lower in amount ranging between Rs.
15,000 and Rs.30,000 before PMJDY and between Rs.10,000 and
Rs.50,000 after PMJDY. The rate of interest had ranged between 12.0
and 36.0 per cent before PMJDY and between 4.0 and 24.0 per cent after
 PMJDY.
 The role of money lender has not changed since launch of PMJDY. The
amount of loans ranged between Rs. 25,000 and Rs.45,000 before
PMJDY and between Rs.10,000 to Rs. 2.5 lakh after PMJDY. The range
of rate of interest has also widened from 24.0 to 60.0 per cent before
PMJDY to 14.0 and 120.0 per cent after PMJDY.
 In the case of non-farmers, role of banks has improved after PMJDY in
terms of loan applications. In fact, rate of interest that banks were
charging had also changed from 8.0 per cent charged earlier than PMJDY
to a range of 4.0 per cent to 16.66 per cent after PMJDY.
 CHAPTER 5
SUGGESTIONS AND CONCUSIONS

SUGGESTIONS

 Based on the study the majority of the PMJDY accounts holders are rural
areas. So, the banks should attract more customers from urban area also.
 From the overall findings of the study compare to public sector banks
performance private sector b
 Banks performance is very low. So the private sector banks actively
participate in PMJDY scheme.
 Most of the people are not aware of benefits available for PMJDY account.
So the government of India and concerned authority should explain the
various benefits of having PMJDY scheme account.
 The Government of India and RBI may open more number of financial
literacy center and conduct more number of financial literacy camps for the
purpose of achieving 100% financial inclusion.

CONCLUSION

The main motive of PMJDY scheme is for enhancing financial inclusion.

PMJDY scheme has been started with an objective to provide access to banking
facilities for all household through a bank branch. The present study tried to
investigate the current status of the PMJDY in India. The results revealed that
the performance of the public sector banks are good as compare to the regional
rural banks and private sector banks to carry on the PMJDY scheme. Mere
opening of bank accounts not fulfill the aim of the scheme, but there should be a
continuous operation of bank accounts to give the real success of the scheme.
There is no doubt the progress of the scheme will attract remaining population
those who are not having bank account in our country, defiantly PMJDY
scheme may become a corner stone of our economic growth, development and
progress of our economy.

MY LEARNINGS AND EXPERIENCE

This project gave me great opportunity to learn about the all aspects of
financial inclusion trough Pradhan Mantri Jan Dhan Yojana. And helped me to
know about current situation of financial inclusion in the country.
 In last few years financial inclusion has emerged as the biggest question
before the government and also an effective tool to bring whole country into
one formal financial system. It has not only contributed to the growth of
financial system of the country, but also to helped families tap in to the success
of financial and economic growth of the country. As the information and
awareness is rising more and more people are enjoying the benefits of financial
inclusion in India. The main reason of most of failure of financial system is
large part of our economy is out of reached of basic financial services. But once
people aware of financial system and if they came in formal financial system, it
will help country to improve financially and there will be growth of our
economy.

This project gave me a great learning experience and at the same time it
gave me enough scope to implement my educational ability. The information
advice presented in this project is based on secondary information.

BIBLIOGRAPHY

 CGAP publications, 2012, ‗Financial Inclusion and the Linkages to

Stability, Integrity and Protection: Insights from the South African
Experience‘
 Dr. Supravat Bagliand PapitaDutta, (Aug. 2012)‗A Study Of Financial
Inclusion In India‘, Radix International Journal Of Economics &
Business ManagementVol.1, Issue 8, pp.1-18.
 Dr. Chakrabarty.K.C (2013), ‗Financial Inclusion in India: Journey So
Far And Way Forward‘ Keynote address delivered by Deputy Governor,
Reserve Bank of India at the Finance Inclusion Conclave organized by
CNBC TV 18 at New Delhi on September 6, 2013.
 Dr. Chakrabarty. K.C (2012), ‗Financial Inclusion – Issues in
Measurement and Analysis‘ Keynote Address by Dr. K. C. Chakrabarty,
Deputy Governor, Reserve Bank of India at the BIS-BNM Workshop on
 Financial Inclusion Indicators at Kuala Lumpur on November 5, 2012.
 Anand Sinha (2012), ―Financial Inclusion and Urban Cooperative
Banks‖, edited transcript at the launch of the financial inclusion program
of COSMOS Bank at Pune.  Sarkar A.N (2013), ―Financial Inclusion:
Fostering Sustainable Economic Growth in India‖, The Banker, Vol.
VIII, No.4, pp.44-53.
 Sarkar A.N (2013), ―Financial Inclusion Part-II: Fostering Sustainable
Economic Growth in India‖, The Banker, Vol. VIII, No.5, pp.32-40. 
Status of Microfinance in India: 2010-11, NABARD  Narayan Chandra
Pradhan (2013), ―Persistence of Informal Credit in Rural India:
Evidence from All- India Debt and Investment Survey and Beyond‖, RBI
Working Paper Series, WPS (DEPR): 5/2013
 Report on PMJDYby Department of Financial Services, Ministry of
Finance, Government of India  C. Paramasivan and V. Ganesh kumar
(2013) ―Overview of Financial Inclusion in India Overview of Financial
Inclusion in India‖, International Journals of Management and
Development Studies, Vol. 2, March, PP45-49
 Dr. Anupam Sharma and Ms. Sushmita Kukereja (2013) ―An Analytical
study: Relevance of Financial Inclusion for Developing nations‖,
International Journal of Engineering and Science, PP15-20

WEBSITES:
1. www.pmjdy.gov.in
2. www.rbi.org.in
3. www.wikipedia.org
4. www.grameeninfo.org
5. www.dfs.gov.in
6. www.scribd.in

NEWS PAPERS & MAGAZINE:

THE HINDU, OUTLOOK, FINANCIAL EXPRESS, YOJANA, FRONTLINE,
INDIAN JOURNAL OF COMMERCE,