Prajwal Gugnani

Student ID Number: 18010837

JINDAL GLOBAL LAW SCHOOL

A research Paper
On the topic

(Project towards the fulfillment of assessment in the subject

Of Law, Development and Public Policy)

ABSTRACT:
From the ramparts of the Red Fort, the Prime Minister of India Sh. Narendra Modi Ji
announced the much awaited Financial Inclusion Policy (known as the Pradhan Mantri Jan
Dhan Yojna) on the occasion of the 67th Indian Independence Day as a present to the people
of India to include the vulnerable population which is unacquainted with the financial
banking sector to enable the inclusive growth of economic development in India. The main
research objective of the paper is to deeply analyze and study the impact on the intended
beneficiaries of the Financial Inclusion Scheme,2014 with an element of social welfare.
Moreover, the paper would try to determine the rate of success of the scheme and whether the
benefits of the scheme have reached its intended beneficiaries or not.
The objective of the policy illustrates that the inclusion of the large unbanked population into
the banking sector will aid in strengthening the overall economic development and welfare of
the people at large. This Public Policy aims at providing banking and credit facilities like
financing, savings, and other bank-related amenities apart from the government subsidies
which were not being availed because of lack of knowledge.
The paper would attempt to endeavour the benefits and the reach of this scheme through a
statistical approach by taking the inferences from the reports by Niti Aayog and other central
authorities dwelling in this sphere of financial services. Further, the paper will compare the
Financial Inclusion Scheme,2014 with the financial policies rolled out by other nations like
Canada, Australia, and New Zealand to comparatively analyze the drawbacks and the
potential hindrances the policy has faced from the time of its implementation. For instance,
The Financial Inclusion Action Plan( FIAP) by Australia, The Safer Credit and Financial
Inclusion Strategy of New Zealand, and Canada’s Financial Literacy Strategy are some of the
potential competitors of the scheme.
The Critical analysis of the financial policy reveals a fruitful result for a steady and
developing economy like India to grow at a better pace with the inclusive development of the
people at the lower strata of the society. Keeping in view that the policy aims to take every
adult individual onboard into the financial banking sector will also adhere to the overall

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development notion of “Sabka Sath Sabka Vikas”. Further, the scheme must focus on the
rural labour force residing and working in the urban parts of the country to include in the
scheme to make it more successful. The focus of the study is centered all around the
Financial Inclusion Scheme and its benefits reaped by the people excluded from the financial
and social system.
INTRODUCTION:
A progressive financial and monetary system is the foundation pillar for the growth and
development of an economy in a country. The Indian Financial system has been growing
steadily over the past few decades providing banking and credit facilities to the citizens of the
country. However, our current financial policy does not cater to the rural poor people who
have always been excluded and are not covered under the baking system. Therefore, the
Prime Minister of India launched the Pradhan Mantri Jan Dhan Yojna (Financial Inclusion
Policy) to include the unprivileged sections of the society into the banking and financial
domain so that they can attain the benefits of banking facilities and government services and
subsidies, leading to their overall growth and development. The scheme is focused on
spreading awareness among the rural and urban people about the overdraft and other
amenities offered by the policy so that this sector can be included in the financial system. The
scheme has been equally applauded and criticized by many which will be assessed in this
paper.

LITERATURE REVIEW:
 Dr. K.C. Chakravarty, Financial Inclusion- Issues in Measurement and Analysis
In the article, the author has concluded that Monetary inclusion is the conveyance of banking
administrations at a moderate expense to the tremendous areas of burdened and low pay
population. A few nations across the globe currently take a gander at financial inclusion as
the methods for more complete development, wherein, every resident of the nation can utilize
his/her income as a monetary asset that they can put to work to improve their future monetary
status and all the while add to the country's advancement1.
 Sonu Garg and Parul Agarwal, Financial Inclusion in India- a Review of
Initiatives & Achievements
In this article, the authors have contemplated the different methodologies adopted by the
Government of India to accomplish monetary incorporation and proposed the utilization of
Data Communication Technology just as the advancement of innovative items for monetary
incorporation2.

1
Dr. K.C. Chakravarty, Financial Inclusion- Issues in Measurement and Analysis, Reserve Bank of India
(Nov.09, 2012), https://www.rbi.org.in/scripts/BS_SpeechesView.aspx?Id=749.
2
Sonu Garg ,,&” Parul Agarwal, Financial Inclusion in India- a Review of Initiatives & Achievements, Vol.16,
Issue 6. Ver.1, 52-61 (2014).

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  Neha Dangi, Current Situation of Financial Inclusion in India and Its Future
Visions
In this article, the authors have considered different drives of the Reserve Bank of India and
Government of India furthermore, has inferred that monetary incorporation shows positive
and significant changes due to change in strength and innovative changes3.
 Cole, Sampson, and Zia, Financial Literacy, Financial Decisions, and the Demand
for Financial Services: Evidences from India & Indonesia
In this article, the authors have examined the monetary proficiency in India and Indonesia;
they have seen that monetary education is a significant indicator of monetary conduct in the
present world. They have exhibited that demand for bank accounts is profoundly delicate to
little monetary impetuses4.
OBJECTIVES:
 To analyze the impact of the scheme on the intended beneficiaries.
 To study the performance and progress of the policy.
 To compare PMJDY with other financial policies of other nations to find out the
deviations.

RESEARCH METHODOLOGY:
This research methodology adopted in this paper is purely practical and statistical. This paper
makes use of primary and secondary data to collect information. It also undertakes to locate
and interpret the relevant sources of government data and utilizing those sources to come
down to a conclusion. A step further in the project evaluation and critical analysis of various
sources were required, and thus it looks at various statistical resources, articles, and
commentaries to support the research.

STATISTICAL APPROACH
3
Neha Dangi ,,&” Pawan Kumar, Current Situation of Financial Inclusion in India and Its Future Visions,
Volume 2., Aug. 2013, at 155, 158.
4
Shawn Cole ,,&” Thomas Sampson ,,&” Bilal Zia, Financial Literacy, Financial Decisions, and the Demand for
Financial Services : Evidences from India & Indonesia , HARV. BUS. REV., Feb.2009, at 1, 22.

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 Bank Type Number of Number of Number of Deposits in
Beneficiaries at Beneficiaries at Total Accounts (in
rural centre urban metro Beneficiaries crores)
bank branches centre bank
branches

Public Sector 20.59 12.88 33.46 111574.76

Regional Rural 6.65 0.94 7.59 27322.77
Private Sector 0.69 0.56 1.25 4400.31
Grand Total 27.92 14.38 42.31 143297.84
Table No.1 depicting the total no. of beneficiaries under the PMJDY Scheme as of May 28,
2021.
(Progress-Report as per the Department of Financial Services, Ministry of Finance,
Government of India)
Table 1 depicts that Public Sector Banks have contributed the most towards the successful
implementation of the scheme with around 33.46 crores beneficiaries at the rural and urban
level. Regional Rural Banks stands at second with 6.65 crores at the rural level and 0.94
crores at the urban level. Private Sector Banks have contributed the least with only 1.25 crore
beneficiaries. However, the Financial Inclusion Policy has surpassed its expected account
openings with more than 42 crore mark with deposits amounting to 143297.84 crores in its
financial policy under the PMJDY. The present data shows the progress of beneficiaries
under the PMJDY with 42 crore beneficiaries in the year 2021 and only 16 crore total
beneficiaries in the year 2015. Therefore, it can be concluded that the policy has been
successful in including a large no. of the population in the banking sector.
It is also seen that most of the people have deposited their money with Public Sector Banks
followed by regional banks and then the least deposits in the Private Sector Banks. Therefore,
it is inferred that people have established their trust and faith in the Public Sector Banks
which can act as a significant tool in the success of the policy.

SAMPLING:
Around 200 rural families living in the urban city of Delhi have been chosen to evaluate and
assess the reach and success rate of the scheme. These families include 1207 individuals with
only 170 households that possess a bank account. The questions that were asked mainly
include the educational literacy present within the respondents, the awareness of the scheme,
the sources of financial information, the annual income, and whether the benefits of the
scheme were availed or not?

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Variable Name Codes/Values %
1 Education 1: Illiterate 81.5
2: Literate 56.5
3: Primary education 34
4: Above primary education 90.5

2 Annual Income 1: upto 1 lakh 4

2:1lakh- 2lakh 17
3:2lakh- 3lakh 32
4:Above 3 lakh 47

3 Bank Account 1: Yes 85.5

2: No 14

4 Sources of Financial Info 1: Bank Mitr 2

2: Media (TV) 25.5
3: Newspaper 5.5
4: Others 5

5 Awareness of PMJDY 1: Yes 35.5

2: No 64.5

6 Receipt of Govt. Benefits 1: Yes 25.5

2: No 5.5

Table No. 2 depicting the questionnaire answers

ANALYSIS:
Around 85% of the household respondents are within the network of the financial system. It
is surprising to find out that around 81% of the people within the households were illiterate
with just 56.5% as literate population. The annual income among the respondents in the
households is generally more than 3 lakhs per annum with just a few percentages earning less
than 1 lakh per annum. In terms of sources of providing financial information, Media has
been the most successful platform for providing awareness to the people followed by

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newspapers and then other means of information. However, it is disappointing to note that
Kisan Mitr has not been much successful in spreading information about the initiative in the
present case of Delhi. Moreover, about 35% of the households were aware of the scheme.
Further, it is good to see that around 25% of the respondent households have received the
benefits of the scheme under the PMJDY.

SWOT ANALYSIS:
 Strengths:

The beneficiaries under the scheme are provided with zero balance accounts that can be
opened with any private or public sector banks with an additional accident insurance cover of
Rs.1 Lakh. The account beneficiaries can avail of an overdraft facility of Rs. 5,000 after six
months of opening the basic savings account. The account holders can check balances,
transfer funds, and access other information through normal mobile phones which were
earlier restricted to only smartphones with the help of the National Payments Corporation of
India (NPCI). Special camps are being run by banks participating in the scheme so that
people can come and register their accounts to avail the banking facilities provided. The easy
procedure needs to be followed now where accounts can be opened with simple
documentation like Aadhar Card. Therefore, the Direct Fund transfers and subsidies can be
smoothly transferred in the beneficiaries accounts as the accounts are Aadhar-linked. The
account beneficiaries can deposit money in their accounts and receive interest on the amount,
thereby making a safe passage for their savings.

 Weaknesses:

The financial inclusion scheme is a megaproject that requires an extensive infrastructure of

Banks, ATM’s which the country does not possess at the current time. There are several
stakeholders who are responsible for the successful implementation of this scheme.
Therefore, constant coordination between government departments is required to maintain
efficiency and efficacy. In today’s world, most banking transactions are done through
Information technology. Therefore, stable internet connectivity must be available at the bank
branches at the rural and urban level which acts as a hindrance for the scheme. Inadequate
Financial Literacy Centres may prove as a limitation of the scheme as awareness and
acquaintance of the people with the scheme is an essential element for the successful
implementation. There is an ambiguity in the public sphere whether people already having an
account needs to open an account under the scheme or not. This confusion may result in
duplication of accounts and resources. Lack of full contribution by Private Sector Banks may
act as an obstacle in achieving 100% efficacy of the scheme.

 Opportunities:

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The scheme can be seen as a significant measure to eradicate poverty to some extent by
including the population in the financial domain. The policy can help strengthen the
insurance aids and subsidies by the government to the rural and urban poor. With the help of
Aadhar- card linked direct transfers, subsidies can be reached to the direct beneficiaries
thereby reducing corruption during the process. A large no. of bank branches operating in the
country can be used for the effective implementation of the scheme. This will, in turn,
provide employment opportunities to the people in rural and urban areas as support staff is
needed in the administrative working of the policy. The PMJDY through its overdraft and
credit facilities may invoke a spirit of entrepreneurship among the rural and urban youth to
start-up businesses.

 Threats:

There is a direness to put together PMJDY adequately as any remaining turn of events and
exercises will be impeded without fruitful execution of this single policy. Uneducated rural
poor must be acquainted with the scheme otherwise anyone can utilize the benefits of the
scheme for oneself, thereby defeating the main purpose of the scheme. Budgetary
arrangements have not been made by the Government to give motivating incentives,
consequently, the monetary situation of banks might be in a tough situation. The main
challenge the Government might face is to encourage continuous transactions in the bank
accounts. The network of ATMs in India, predominantly in the rural areas is not sufficient for
the successful implementation of the scheme. Therefore, it may act as an obstacle in the
expansion of the policy.

COMPARISON:
If we look at other financial policies being run by different nations, we would find a
significant change in the methods being used in the process of financial inclusion. For
instance, the Financial Inclusion Action Policy (FIAP) of Australia focuses on inculcating
financial literacy and access to other aids and facilities. The government of Australia has
collaborated with 30+ organizations from different sectors and has partnered with EY & CSI
to achieve financial inclusion. Unlike the PMJDY which focuses only on the financial
inclusion aspect, the FIAP is seeking Sustainable development goals of reducing inequalities
and promoting inclusive growth. Further, the FIAP is subjected to regular audits for better
enhancement of the plan.
The Safer Credit and Financial Inclusion Strategy of New Zealand are applauded for
taking different levelled and varied organizations on board for the easy and speedy inclusion
of people at large, with the main objective of removing hardships from the lives of the
people. It is pertinent to note that, unlike the PMJDY which is essentially being run only by
the Government of India in partnership with the baking sector, the safer credit and financial

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inclusion strategy focuses on shared success by working together and hence is supported by
people at large.
Lastly, Canada’s Financial Literacy Strategy is another financial policy started with the
vision to strengthen the financial well-being of Canadians and their families. The
Government of Canada has started this initiative so that people can manage money and debt
wisely, plan & save for the future and prevent & protect against fraud and financial abuse.
Similar to other initiatives mentioned above, this policy also includes all organizations to
make it a success.
CONCLUSION:
After analyzing the statistical and practical data on the Pradhan Mantri Jan Dhan Yojna, we
can conclude that it is a far-reaching policy with immense benefits for the people of the
country to be included in the financial inclusion well-being. On comparing PMJDY with
other international financial policies, it can be said that the Indian Government must include
private and public organizations to contribute their part in the successful implementation of
the scheme at the ground level keeping in mind the large unbanked population of India.
Further, the progress report of the PMJDY and the statistical data report conducted on
different households of Delhi reveals that the scheme has reached its intended beneficiaries to
a certain extent.