CHAPTER01

INTRODUCTION0
INTRODUCTION0

Since independence,0the govt and therefore the monetary0institution|bank|banking concern|

banking company} of Bharat have0taken several initiatives0for financial
inclusion like nationalization of banks,0establishing regional rural banks,0cooperative banks,
appointing banking correspondence0agents (bca), launching of0Swabhiman and
Swavlambhan Schemes, introducing0small finance, gap from essential account and0provision
of keeping twenty fifth of0bank branches in rural areas, initiating the0model of Bharatiya
Mahila Bank, 0simplifying the KYC norms then on.0however the target of
monetary inclusion has ne'er been achieved in entirely.0Recently, the govt has come back up
with AN innovative plan of connecting individuals0particularly from rural and remote areas
with industry by0launching Pradhan Mantri0Gregorian calendar month Dhan Yojana
(PMJDY) with the0vision of economic liberalisation0and development and growth of all. The
PMJDY, roughly translated as 'People's Wealth Scheme' was proclaimed by the Prime
Minister in his Fourth of July speech0with the saying 'Mera Khata – Bhagya0Vidhata' which
suggests 'My checking account 0– The Creator of the nice Fortune' (Mohan, 2014).
PMJDY could be a comprehensive money0inclusion programme,
targeting gap from seven.5 large 0integer new accounts inside 5 months0with insurance and
pension facilities. below this0provision of the theme,0the account0holder is entitled to
induce accidental insurance0value Rs one 100000, bill of exchange of up to Rs five,000
and insurance of Rs thirty,000. On the accident insurance cowl of Rs one 100000 being
offered to new account holders, it comes with the0condition that before creating the claim,
the holder ought to have used his/her account0throughout the forty five days before the claim
date. The Rupay revolving credit being given to beneficiaries can have AN integral accident
insurance cowl Rs one 100000 ANd an bill0of exchange facility up to Rs 5000. the
employment of debit cards can enable the unbanked to begin a building
a dealing history, which may be a decisive step in initiating the accountholder
towards money inclusion. The PMJDY0additionally aims at eliminating corruption0because
it would facilitate routing of0subsidies directly into the accounts of0supposed beneficiaries
(Cowan and Pande, 2014). Pradhan mantri0Gregorian calendar month dhan yojana
(PMJDY) could be a social0upliftment theme that aims to bring the0immeasurable excluded
Indian individuals within the0main money stream although money inclusion. 0Prime Minister
on his Fourth of July speech on fifteenth0August 2014 declared “PRADHAN
MANTRI Gregorian calendar0month DHAN YOJNA” theme that supposed to
accomplish money0inclusion by providing basic0banking accounts with a revolving credit,
with insurance.0This theme was launched on twenty eight August 2014 with target
of one large integer banks account on 1st day itself.0The theme ends to focus
on seven.5 large integer0families that square measure financially0excluded. at the
present solely fifty0eight.7% of the full population comes below money inclusion.
HISTORY

Financial inclusion promotes economic0development. AN economical financial set-

up0during a country includes well0developed business banks. The country's structure of
monetary system plays an important role in sleek and economical functioning of the
economy additionally. A financial set-up involves set of multiple segments and is related
to establishments, agents, practices and markets. money development through a network of
banking establishments helps to mobilize savings and investment within the economy for
productive functions. the govt  together with the monetary institution bank banking concern
banking company} of India (RBI) and commercial0bank for Agriculture and Rural
Development (NABARD)0has been creating conjunctive efforts to boost financial inclusion
in India. These measures embody enlargement of formal money0services, licensing new
banks, increasing range of branches0of banks, increasing banking retailers, extension of
ATM services, promoting0SHGs-Bank linkage,
encouraging small Finance0establishments (MFIs), use of Business0Facilitators and
Correspondents, easing of ‘Know-your –0customer' norms, electronic edges transfer, use of
mobile technology,0gap of ‘no-frill accounts' and stress0on money skill.
 different measure support0money0inclusion embody gap0client0service centers,
credit counseling0centers,0and providing kisan mastercard,0national pension theme,
and social0insurance theme.

Financial inclusion could be a0method of making0certain access

to applicable money0merchandise and services0required by all sections0of the
society normally and0vulnerable teams especially, at an0inexpensive price, during
a honest and clear manner,0by regulated, thought institutional players (GOI, 2008). the
target of monetary inclusion is to rework0the lives of vulnerable0individuals, in the
main poor, by providing them0access to banking finance and0sanctionative them to
get stable financial gain0(Reddy, 2017). money Inclusion helps0vulnerable segments of the
society and thinks about with0money desires of individuals requiring0money services like
saving accounts, credit on simple terms,0insurance, asset-leasing, and pensions.

In fact, contrary to general belief,0traditionally, Bharat0could be a pioneer

in money inclusion.0The Cooperative Credit Societies Act, 1904 gave AN impetus to
cooperative movement in Bharat (Roy, 2011). the target of0cooperative banks was to
increase banking facilities, in the0main handiness of credit on simple0terms compared
to cash lenders0WHO were renowned to charge0high rates of interest. In
India, money inclusion exercise0expressly started with nationalization of0depository
financial institution of Bharat in 1955.0In 1967, there emerged a discussion0on social
banking and consequently0fourteen non-public sector banks were0nationalised in 1969 to
serve unbanked0population, in the main weaker sections of society0additionally as rural
areas. money inclusion promotes savings0 notably in rural areas and it brings
vulnerable teams into formal banking services. The0construct of priority
sector loaning became vital by 1974 that understood directed loaning to unbanked areas, and
in 1980, eight a lot of non-public0banks were nationalised to increase0banking in rural and
remote areas. Since then, there has been extensive reorientation of bank loaning to
accelerate method of development, particularly of the priority sector, that had
not antecedentl0 received comfortable attention.

Consequently, in line with the run, in Gregorian calendar month 2013, banking facility had

reached over 2 100000 villages with nearly eighty per cent out-reach through business
correspondents, and nearly ten large integer savings monetary fund accounts, together
with erstwhile no-frill accounts, were opened throughout 2010 to 2012. within
the second part ranging from 2013, on the brink of five 100000 global organization banked
villages with population not up to a pair of,1000 were equally assigned to varied banks.
On holy day of obligation, 2014, Pradhan Mantri Gregorian calendar month Dhan Yojana
(PMJDY) was proclaimed that was launched on August twenty eight, 2014. PMJDY could be
a comprehensive money inclusion attempt to offer banking services to all or
any households within the country with a powerful specialise in the employment of
technology. it had been accomplished that exclusion from
the industry excludes individuals from all edges that come back from a
contemporary financial set-up. Hence, with this Mission, households won't solely have bank
accounts with autochthonous RuPay Cards however also will gain access to credit for
economic activity and to insurance and pension services for his or her Social Security. the
most options of PMJDY embody Rs. 5,000 bill of exchange facility for Aadhar-linked
accounts and a RuPay revolving credit with integral Rs. one 100000 accident
insurance cowl. additionally, for accounts opened between holy day of obligation, 2014
and Gregorian calendar month twenty six, 2015, a insurance cowl of Rupees thirty,000 is
accessible to the eligible beneficiaries. in addition, one in all the salient options of PMJDY
was that when remaining active for six months, the account holder can become eligible
for AN bill of exchange of up to Rs five,000. In recent years, when launch of PMJDY in
august 2014. The reach of banking.

August 15, 2014 and Gregorian calendar month twenty six, 2015, a insurance cowl of

Rupees thirty,000 is accessible to the eligible beneficiaries. in addition, one in all the
salient options of PMJDY was that when remaining active for six months; the account
holder can become eligible for AN bill of exchange of up to Rs five,000. In recent
years, when launch of PMJDY in August 2014, the reach of banking sector has been
extended to almost ninety five per cent of households. As on Gregorian calendar month 2016,
4,52,151 such villages are provided banking services as of Gregorian calendar month 2016,
with majority being coated through BCs.

The aim of this study is to know the success of PMJDY. The strategy was to undertake a
follow-up survey, a sort of longitudinal study, on a similar set of Gram council, wherever we
have a tendency to had earlier conducted interviews in late 2013 and early 2014, before the
launch of PMJDY.
INTRODUCTION TO PRADHAN0MANTRI JAN DHAN YOJANA

Hon'ble Prime Minister, Narendra Modi on fifteenth August, 2014 declared "Pradhan Mantri

Jan-Dhan Yojana (PMJDY)" that could be a National Mission for monetary Inclusion. The
task is mammoth and could be a National Priority. This National Mission
on monetary Inclusion has Associate in Nursing formidable objective of covering all social
units within the country with banking facilities and having a checking account for
every household. it's been emphatic by the Hon'ble PM that this is often necessary for as well
as folks left-out into the thought of the economic system.

The Pradhan Mantri Jan-Dhan Yojana has launched on twenty eighth August, 2014,
across the state at the same time. it's launched formally in metropolis with parallel functions
at the state level and conjointly at district and sub-district levels. Camps are to be organized
at the branch level. The Pradhan Mantri Jan-Dhan Yojana lies at the core of development
philosophy of "Sab Ka weekday Sab Ka Vikas". With a checking account, each social
unit would gain access to banking and credit facilities. this may alter them to come back out
of the grip of moneylenders, manage to stay aloof from monetary crises caused
by aborning desires, and most significantly, take pleasure in a spread of
monetary merchandise. As a primary step, each account holder gets a Rupay open-end
credit with a ` one,00,000/- accident cowl. Further, they cowl by insurance and
pension merchandise. There was got to enter over seven.5 large integer households and open
their accounts. Earlier efforts by the govt. of Asian country embrace putting in a committee
on monetary inclusion underneath the post of Dr. C. Rangarajan. The committee finalized its
report in early 2008. As is clear from the preamble of the report, the
committee taken monetary inclusion as Associate in Nursing instrumentality for social
transformation. "Access to finance by the poor and vulnerable teams could be
a necessity for inclusive growth. In fact, providing access to finance could be a variety
of direction of the vulnerable teams. monetary Inclusion denotes delivery of
monetary services at an inexpensive price to the large sections of the underprivileged and
low-income teams. the assorted monetary services enclosed credit, savings, insurance and
payments and remission facilities. the target of monetary inclusion is to increase the scope of
activities of the organized economic system to incorporate inside its scope folks with low
incomes. Through graduated credit, the try should be to carry the poor from one level to a
different in order that they are available out of poorness."

it's a acknowledged undeniable fact that in Asian country, whereas one phase of the

population has access to assortment of baking services encompassing regular banking
facilities & portfolio substance, the opposite phase of underclass and lower financial
gain cluster is completely bereft of even basic monetary services. Exclusion of
enormous segments of the society from monetary services affects the general economic
process of a rustic. it's for this reason that monetary Inclusion could be a world concern.
In Scandinavian country and France, banks are wrongfully absolute to open Associate in
Nursing account for anybody World Health Organization approaches them. In Canada,
law needs Banks to produce accounts while not minimum balance to all or any Canadians no
matter employment or credit history. within the u. s., the Community Reinvestment Act
(1977) is meant to encourage deposit establishments to assist meet the credit desires of the
communities during which they operate, as well as low and moderate financial gain neigh
bore-hoods, in keeping with safe and sound operations. In India,
the industry has big each horizontally and vertically however the branch penetration in rural
areas has not unbroken pace with the rising demand and also the want for
accessible monetary services. Even once decades of bank nationalization,
whose explanation was to shift the main target from category banking to mass banking, we
tend to still notice exorbitant cash lenders in rural areas and concrete slums continued to
use the poor. once economic reforms of 1991, the country will ill-afford to not embrace the
poor within the growth paradigm. monetary Inclusion of the
poor can facilitate in transportation them to the thought of growth and
would conjointly give the monetary establishments a chance to be partners
in inclusive growth.

Experiences in Asian country and abroad has shown that ancient Banks have struggled to

succeed in the poor with monetary services. Recognizing
this reality, several countries like Brazil, Indonesia, Malaysia, Mexico etc. have allowed non-
banks to supply payments, deposits and cash-in/cash-out services. Similarly, in
India, enabling Associate in Nursing inclusive competitive landscape ought to be
a prime priority. Asian country has many strategic assets providing favourable initial
conditions for transformational modification towards digital monetary inclusion:

• a powerful banking network (1,15,000 branches) joined to Ekberg (RBI's Core Banking

Solution), currently spreading into unbanked rural areas.

• a big stretch of Asian country Post (1,55,000 outlets), POS and ATM terminals which

might facilitate a vivacious cash-in/cash-out network across the country.
• A nation-wide medium network with 886 million mobile connections and seventy
two mobile penetration.
• sturdy Network of laptop based mostly service suppliers within the variety of Common
Service Centres (CSC) promoted by Department of IT.
• a powerful national payments infrastructure that has Associate in Nursing Inter- Mobile
Payments Service/Immediate Payment System (IMPS) to transfer funds over mobile phones.
• A world category national ID system covering the biggest (650M) count and increasing by
30M voters per month.

 Official mission:
Objective of "Pradhan Mantri Jan-Dhan Yojana (PMJDY)" is making certain access to
varied monetary services like accessibility of basic savings checking account, access to
wish based mostly credit, remittances facility, insurance and pension to the excluded sections
i.e. weaker sections & low financial gain teams. This deep penetration at reasonable price is
feasible solely with effective use of technology.
PMJDY could be a National Mission on monetary Inclusion encompassing Associate in
Nursing integrated approach to evoke comprehensive financial inclusion of all the
households within the country. The set up envisages universal access to banking facilities
with a minimum of one basic banking account for each house hold, monetary skill, access to
credit, insurance and pension facility. additionally, the beneficiaries would get Rupay open-
end credit having built-in accident insurance covers of र one large integer. The set
up conjointly envisages channelling all Government advantages (from Centre /
State / native Body) to the beneficiaries accounts and pushing the Direct advantages Transfer
(DBT) theme of the Union Government. The technological problems like poor property, on-
line transactions are going to be self-addressed. Mobile transactions
through medium operators and their established centres as live Points are planned to be used
for monetary Inclusion underneath the theme. conjointly a shot is being created to succeed
in bent on the youth of this country to participate during this Mission Mode Programme.

Scheme  Details:
Pradhan Mantri Jan-Dhan Yojana (PMJDY) is National Mission for monetary Inclusion to
make sure access to financial services, namely, Banking/ Savings & Deposit Accounts,
Remittance, Credit, Insurance, Pension in an inexpensive manner.
Account may 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 desires to induce cheque book, he/she can got to fulfil minimum balance criteria.
 Documents needed to open Associate in Nursing account underneath pradhan mantri jan-
dhan yojana:

• If Aadhar Card/Aadhar variety is offered then no different documents is needed. If address

has modified, then a self-certification of current address is comfortable.
• If Aadhar Card isn't on the market, then anyone of the subsequent formally Valid
Documents (OVD) is required: elector ID Card, license, PAN Card, and Passport & NREGA
Card. If these documents conjointly contain your address, it will serve each as “Proof of
Identity and Address”.
• If an individual doesn't have any of the “officially valid documents” mentioned higher
than, however it's categorised as ‘low risk' by the banks, then he/she will open a checking
account by submitting anyone of the subsequent documents:
a. positive identification with applicant's photograph issued by Central/State Government
Departments, Statutory/Regulatory Authorities, Public Sector
Undertakings, regular industrial Banks and Public monetary Institutions;
b. Letter issued by a gazette officer, with a punctually authenticated photograph of the
person.
 Special advantages underneath PMJDY Scheme:

• Accidental insurance cowl of Rs.1.00 lac

• No minimum balance needed.
• insurance cowl of Rs.30,000/-
• simple Transfer of cash across Asian country
• Beneficiaries of presidency Schemes can get Direct profit Transfer in these accounts.
• once satisfactory operation of the account for six months, Associate in
Nursing draft facility are going to be permissible
• Access to Pension, insurance merchandise.
• Accidental Insurance cowl, RuPay open-end credit should be used a minimum of once
in forty five days.
• draft facility up to Rs.5000/- is offered in mere one account per social unit, ideally girl of
the social unit.
• Interest on deposit.

CURRENT STANDING OF MONETORY INCLUSION WITHIN THE  COUNTRY:

• so as to make sure monetary inclusion numerous initiatives were preoccupied by RBI/ GOI
like Nationalization of Banks, growth of Banks branch network, institution & growth of
Cooperative and RRBs, Introduction of notation loaning, banking company theme, Formation
of SHGs and State specific approach for Govt. sponsored schemes to be evolved by SLBC
etc.
• tally wide Mid-term Review of Annual Policy Statement for the year 2005-
2006, suggested Banks to align their policies with the target of monetary inclusion. Banks
were suggested to create on the market a basic banking 'No frills' account either with 'nil'
or terribly minimum balances similarly as charges that may make such accounts accessible
to large sections of population. Besides, it's been emphasised upon by the tally for deepening
and widening the reach of monetary Services therefore on cowl an oversized phase of the
agricultural & poor sections of population.
• tally within the year 2006, with the target of making certain larger monetary inclusion and
increasing the stretch of the banking alter the banks to use the services of NGOs/SHGs, MFIs
and different Civil Society Organizations as intermediaries in providing monetary and
banking services through use of "e; Business supporter and Business Correspondent Model&
quote;.
• Census 2011 calculable that out of twenty four.67 large integer households within
the country, 14.48 large integer (58.7%) households had access to banking services. Of the
16.78 large integer rural households, 9.14 large integer (54.46%) were availing banking
services. Of the 7.89 large integer urban households, 5.34 large integer (67.68%) households
were availing banking services.
• within the year 2011, Banks coated seventy four,351 villages, with population quite a pair
of,000 (as per 2001 census), with banking facilities underneath the "e; Swabhimaan & quote;
campaign with Business Correspondents as explained later. but the programme had a
awfully restricted reach and impact.
• this banking network of the country (as on thirty one.03.2014) contains of a bank branch
network of one,15,082 Associate in Nursingd an ATM network of one,60,055. Of these,
43,962 branches (38.2%) and 23,334 ATMs (14.58%) are in rural areas. Moreover, there
are quite one.4 large integer Business Correspondents (BCs) of Public Sector Banks and
Regional Rural Banks within the rural areas. BCs are representatives of bank to produce basic
banking services i.e. gap of basic Bank accounts, money deposits, money withdrawals,
transfer of funds, balance enquiries, mini statements etc. but actual field
level expertise suggests that several of those BCs aren't truly purposeful.
• Public Sector Banks (PSBs) as well as RRBs have calculable that by thirty one.05.2014, out
of the thirteen.14 large integer rural households that were allotted to them for coverage, about
7.22 large integer households are coated (5.94 large
integer uncovered). it's calculable that vi large integer households in rural and one.5 large
integer in geographical area has to be coated.
LATEST TREND-PRADHAN MANTRI Jan DHAN YOJANA
• 34.73 large integer accounts opened by public sector banks and one.26 large
integer accounts by major personal banks
• Pradhan Mantri Jan Dhan Yojana (PMJDY) was launched in August 2014 with the target to,
inter-alia give universal access to banking facilities to the folks of the country. As privy by
banks, out of 35.99 large integer accounts opened underneath PMJDY as on twenty
six June 2019, 29.54 large integer accounts are operative accounts.
• personal Banks are allowed to open accounts underneath PMJDY. As apprised by them,
1.26 large integer accounts are opened by major personal banks underneath PMJDY.
• Public sector banks and major personal banks have conjointly apprised that Jan dhan
accounts aren't debited with any banks charges.
• underneath PMJDY, as on twenty six June 2019, while 34.73 large
integer accounts are opened by public sector banks (including sponsored Regional Rural
Banks), 1.26 large integer accounts are opened by major personal banks.
FEATURES & advantages TO THE client
• every family will have a checking account which can facilitate them to avoid wasting their
earnings.
• No minimum balance needed.
• Issue of a Rupay open-end credit from the account through
ATM similarly as B.C. Terminal. Account holder will get Associate in Nursing accidental
insurance of Rs. 1 lakh.
• insurance cowl of Rs.30000/- if accounts are opened before twenty sixth Jan 2015).
• Inter-operability in accounts through Aadhaar based mostly transactions similarly as
through Rupay card.
• Interest on deposit would be received in any case maintained. simple Transfer of
cash across Asian country.
• Beneficiaries of presidency Schemes can get Direct profit Transfer in these accounts
• once satisfactory operation of the account for six months, Associate in
Nursing draft facility is also thought of.
• Access to Pension, insurance merchandise through these accounts
• an individual World Health Organization is already having a checking account with any
bank needn't to open a separate account underneath PMJDY. He/she can simply got to get
issued a rupay Card in his existing account to induce advantage of accidental insurance. .
PRESENT PLAN

Comprehensive FI supported six pillars is projected to be achieved as under:

Phase I

• Universal access to banking facilities

• Providing Basic Banking Accounts for saving & remittal and RuPay open-end
credit with intrinsic accident insurance cowl of one large integer and RuPay Card.
• monetary acquisition Programme

Phase II

• bill of exchange facility of up to 5000/- when six months of satisfactory performance of

saving /credit history.
• Creation of Credit Guarantee Fund for coverage of defaults in bill of exchange A/Cs.
• Micro-Insurance.
• Unorganized sector Pension schemes like Swavalamban additionally, during this section,
coverage of households in rough , social group and tough areas would be disbursed.
Moreover, this section would concentrate on coverage of remaining adults within
the households and students.
• All the agricultural & semi-urban areas of the country are projected to be mapped into
Sub topographic point (SSAs) comprising 1000-1500 households with a median 3-4 villages
with relaxation in NE/Hilly states.
• it's additionally projected that trying to the viability of every centre around 74000 villages
with population quite 2000 that were coated by Business
Correspondents beneath Swabhimaan Campaign are going to be thought of for conversion
into full-fledged Brick & Mortar branches with workers strength of 1+1 / 1+2 within
the next 3 to 5 years.
• All the half-dozen large integer villages across the complete country are to be
mapped consistent with the topographic point of every Bank to possess a minimum
of one mounted point Banking outlet line to one thousand to 1500 households, known as as
Sub topographic point (SSA). it's projected that SSAs shall be coated through a mixture of
banking retailers i.e. branch banking and branch less banking. Branch banking means
that ancient Brick & Mortar
branches. unbranching banking contains of mounted purpose Business Correspondents
agents, UN agency act as representative of Bank to produce basic banking services.
• The implementation strategy of the arrange is to utilize the prevailing banking
infrastructure further as expand a similar to hide all households. whereas the
prevailing banking network would be totally prepared to open bank accounts of the
uncovered households in each rural and concrete areas, the banking sector would even
be increasing itself to line up an extra fifty thousaand Business Correspondents
(BCs), quite 8000 branches and quite 30000 new ATMs within the initial section.
• the excellent arrange is important considering the learning’s from the past wherever an
outsized variety of accounts opened remained dormant, leading to prices incurred for banks
and no advantages to the beneficiaries.

THE IMPORTANCE of 0FINANCIAL INCLUSION IN INDIA

1. the agricultural plenty can get access to banking like money receipts, money payments,

balance enquiry and statement of account are often completed exploitation fingerprint
authentication. the arrogance of fulfilment is provided by issue a web receipt to the client.
2. Reduction in money economy as more cash is brought into the banking scheme
3. It inculcates the habit to save lots of, so increasing capital formation within
the country Associate in Nursinged giving it an economic boost.
4. Direct money transfers to beneficiary0 bank accounts, rather
than physical money0payments against subsidies can0become potential.
This additionally ensures that the funds really reach the supposed recipients rather than being
siphoned off on the method.
5. convenience of adequate and0clear credit from formal banking channels can foster the
entrepreneurial spirit of the plenty to extend output and prosperity within the country.
6. Access to monetary services allows the poorest and most0vulnerable in society
to exit of impoverishment and reduces the difference in society
7. monetary inclusion not solely helps people and0families, however conjointly it develops
entire communities and might facilitate drive economic process
8. monetary inclusion is concerning enabling and0empowering folks and communities:
• enabling folks to possess the power and tools to manage and save their cash
• Empowering folks with the abilities and information to form the proper monetary choices
9. Participation inside the economic system results in every kind of individual advantages,
including:
• Ability to start out and grow a business, which supplies folks a chance through micro-
financing schemes as an example to raised future prospects
• having the ability to get Associate in Nursing education for kids, that successively allows a
replacement generation of educated and au fait people
• the power to handle uncertainties that need unintended and unexpected payments or
‘financial shocks’
10. monetary inclusion through access to0Associate in Nursing account, savings and a
payment system (whatever that maybe)0allows potential and empowers men, ladies and
whole communities.0This successively promotes:
• Investment inside the0community provides jobs and once more0analysis shows that
employment boosts standing, financial0gain and ones outlook on life. Conjointly0this helps
to invigorate economies.
• Equality each inside the community0and within families