PMJDY: Journey beyond opening of 40 crore bank accounts

(Article by Sh. Debasish Panda, Secretary DFS on the occasion of sixth anniversary of
launch of PMJDY)

Introduction:
Improving access to banking services in rural areas and for the poor was one of
the objectives of the nationalisation of banks in 1977-78 and the setting up of
Regional Rural Banks from 1975 onwards. Since then the banking network
expanded significantly with the number of branches increasing from 28,016 in
1978 to 1,17,881 in 2014. The World Bank Findex Report for 2014 stated that
53% of adult population (43% women) had access to bank accounts.
'Pradhan Mantri Jan-Dhan Yojana (PMJDY)', the National Mission on Financial
Inclusion launched on 28th August 2014, however led to a quantum jump in
improving access to banking and other financial services. PMJDY encompasses
an integrated approach to bring about comprehensive financial inclusion of all
the households in the country. It envisages covering every village with at least
one banking outlet [branch or Business Correspondent (BC)]) within 5
kilometre distance; universal access to banking facilities with at least one basic
bank account for every unbanked adult with RuPay debit cards and inbuilt
insurance coverage; financial literacy; access to credit; and affordable insurance
and pension facilities. The Mission also envisages channelling all Government
benefits (from Centre / State / Local Body) to the beneficiaries’ bank accounts
through the Direct Benefits Transfer (DBT) scheme of the Union Government
and encouragement to digital transactions.
Under this umbrella mission for financial inclusion, while a massive drive for
opening bank accounts of the unbanked started immediately, schemes for
micro-insurance - PM Jeevan Jyoti Bima Yojana (PMJJBY), PM Suraksha
Bima Yojana (PMSBY); scheme for micro-credit PM Mudra Yojana; scheme
for pension – Atal Pension Yojana (APY) etc. were launched subsequently in
the year 2015.
Banking coverage:
To ensure banking services reach to every inhabited village of the country, it
was decided to set a benchmark of having a banking outlet within 5 km of each
inhabited village of the country. As per RBI circulars, a banking outlet includes
a Branch or a fixed point BC.
A GIS based app, namely Jan Dhan Darshak app was also launched to map all
banking outlets. About 1.66 lakh bank-branches, 4.36 lakh BCs and 2.07 lakh
ATMs are mapped on the app. The app is available on the Google play store.
Based on latest data uploaded by banks on the app, out of 5.54 lakh mapped
villages on the app, 5.53 lakh (99.8%) villages are banked either by a branch or
BC within 5 kilometre distance. For areas having poor connectivity in the
Himalayan region, island areas, etc. funding support is provided to banks for
deployment of VSATs under the Financial Inclusion Fund held by NABARD.
Account opening:
The drive to open bank accounts was a tremendous success which was
recognised by the Guinness Book of World Records. Against the initial aim of
having at least one basic saving bank account for every household by opening
7.5 crore bank accounts (6 crore in rural areas and 1.5 crore in urban pockets),
about 18 crore accounts were opened in the first year of the scheme. In 2018,
with PMJDY becoming a mass movement, the objective for account opening
was shifted from ‘every household’ to ‘every unbanked adult’. The banks have
opened over 40 crore accounts under the scheme in last six years. Over 55% of
the accounts under PMJDY are opened by women and 64% of the accounts are
opened in rural or semi-urban areas. To enable digital transactions, over 29.7
crore RuPay debit cards have been issued to the PMJDY accountholders.
In addition to the access to banking services per se, the opening of these bank
accounts, has enabled the account holders to receive benefits under various
Government schemes directly in their bank accounts without any leakage. Also,
the average deposit balance of Rs 3200 per PMJDY account indicates that
people are able to put their savings in the bank accounts. Rs. 1.31 lakh crore
has been deposited by the PMJDY accountholders in their bank accounts.

PMJDY Accounts (in Crores) Average Deposits per a/c (in Rs.)
40.29 3255
36.79
32.54 2783
30.09 2521
24.10 2187
17.90 1747
1279

Aug'15 Aug'16 Aug'17 Aug'18 Aug'19 Aug'20

Aug'15 Aug'16 Aug'17 Aug'18 Aug'19 Aug'20
 Source: Banks
Figure: accounts opened and average deposit per account - PMJDY
Micro-insurance and micro-pension:
With the objective of providing social security to socially deprived and low-
income segments of society, Government launched affordable micro-insurance
and assured pension schemes (PMJJBY, PMSBY and APY). Under PMJJBY,
life insurance coverage of Rs.2 lakh is available for persons aged between 18 to
50 years with annual premium of Rs.330 only. Under PMSBY, accident
insurance coverage of Rs.2 lakh is available for persons aged between 18 to 70
years with annual premium of Rs.12 only. Enrolments under these schemes
could be done by the eligible accountholders at any bank branch or BC point.
Persons aged between 18 to 40 years can enrol under APY with pre-defined
monthly contribution for a guaranteed minimum monthly pension between Rs.
1000 to Rs. 5000, depending on the contribution, after attaining age of 60 years.
The total enrollments since inception under PMJJBY is about 7.27 crore and
that under PMSBY is about 19.24 crore. There are about 2.39 crore subscribers
under Atal Pension Yojana (APY).
Government aims to ensure that more and more persons working in the
unorganised segment get the much needed financial security by enrolling under
the above micro-insurance and assured-pension schemes.

Micro-credit: PM Mudra Yojana (PMMY) was launched in 2015 to provide

access to easy collateral-free micro-credit of up to Rs. 10 lakh to non-corporate,
non-farm small and micro entrepreneurs. The loans under PMMY are provided
by banks, micro-finance institutions and non-banking financial companies.
Under PMMY, 25.16 crore loan accounts have been sanctioned with loans of a
total of about Rs. 12.79 lakh crore. About 68% of the loans under PMMY have
been sanctioned to women entrepreneurs. The scheme also provides for
concessional refinance and Credit Guarantee to lending institutions.
Government sets annual targets for lending institutions and these have always
been achieved.
To ensure that the benefits of PMMY are available to small entrepreneurs across
the length and breadth of the country, lending institutions have been requested
to allocate their respective targets among all the districts in their area of
operation. In addition, to ensure provision of micro-credit to the poor and
vulnerable, banks have been requested to give special focus to eligible PMJDY
accountholders under PMMY.
Digital Transactions: Linking of bank accounts with the account holders’
Aadhar and mobile numbers, of course with consent of the account holders, has
enabled instant transfer of direct benefits under various Government welfare
schemes to the eligible beneficiaries. In FY 2019-20, 234.57 crore DBT
transactions of value Rs. 2.46 lakh crore have been made through NPCI under
various welfare schemes of the Government. It has also enabled Aadhaar based
authorisation of banking transactions including cash withdrawal and remittance,
the benefit of which came into sharp focus during the recent Covid related
lockdown. The beneficiaries of the relief remitted by the Government to bank
accounts of farmers, women, senior citizens and divyangjan under the Pradhan
Mantri Garib Kalyan Package, could withdraw the money during the period of
lockdown, mainly because of the Aadhaar enabled Payment System (AePS)
operated by BCs. During April to July 2020, inter-bank transactions of about
Rs. 70,809 crore have been made through AePS.
With the issue of over 29.72 crore RuPay debit cards under PMJDY, installation
of ___ PoS/mPoS machines and the introduction of mobile based payment
systems like UPI, the total number of digital transactions have gone up from
____ in 2014 to ___ in 2019. The total number of UPI financial transactions
have increased from 1.79 crore in FY 2016-17 to 1,252 crore in FY 2019-20.
Similarly, total number of RuPay card transactions at PoS have increased from
19.52 crore in FY 2016-17 to 82.26 crore in FY 2019-20.
Apart from the other benefits of digital transactions such as greater ease,
convenience etc., adoption of digital payment modes by small traders and
entrepreneurs would create their digital footprint with the banks. This could be
used by lending institutions to assess their credit worthiness and accordingly
offer customised credit products to meet their credit requirements.
To encourage and assist more and more accountholders including the small
traders and entrepreneurs, to make digital transactions, Public Sector Banks are
running a campaign called “Digital Apnayen” from 15 August 2020 to 15
October 2020.
Conclusion: On the sixth anniversary of launch of PMJDY, while one looks
back with satisfaction on all that has been achieved, one is also excited about
the possibilities that have emerged of rapidly broadening and deepening
financial inclusion towards financial empowerment of the people. To this end
the focus would be on the following:
 to provide access to banking and social security in all geographies in the
country including in Aspirational Districts and LWE affected areas.
 To ensure that PMJDY account holders have convenient access to social
security schemes such as PMJJBY, PMSBY and APY.
 To leverage technology and Fintech companies in providing efficient and
convenient access to financial services including micro-credit, innovative
savings instruments etc.
 To provide innovative and customized savings, investment and credit
products for the poor and marginalized segments