Anurag | Ravi | Shruti

Suppose the government wanted to transfer Rs. 1000 to every

Indian tomorrow. What would that require?

Government must be able to

Governme
nt
identify beneficiaries
transfer money to beneficiaries
make access of money by
beneficiaries easy
Economic Survey, 2015 Beneficiari
Banks
es
M Trinity Jan Dhan, Aadhaar, Mobile (Society) (Business)

Focus Area of the

Study
Pre-Jan Dhan Era
Financial Inclusion is not a new phenomenon
1904 1969 1975 1992 2005 2006 2011 2013 2014
Co- Nationali Establish Self-help RBI Use of Swabhima Ultra Jan-dhan
operativ sation of ment of groups started business an (to Small Yojana
e 14 Regional and using corresponden cover Bank
moveme private Rural banks financial ts for door villages (USB)
nt banks Banks linkage inclusion step delivery with introduc
of services 2000+ ed
No-frills populatio DBT to
account n by LPG
introduc 2012) subsidy
ed introduc
ed but
could not
take off

Branch penetration (BP), Credit Penetration (CP),

Deposit Penetration (DP)
*Source: CRISIL Inclusix Volume III
Pre-Jan Dhan Era: Swabhimaan Scheme
Shortcomings in interaction between B, G
and S
Governme
nt
Government was not closely monitoring the
progress of financial inclusion Absence of systems in place
Lack of infrastructure limits the reach for DBT
of banks to avoid pilferage of benefits
Business of banks were largely free Poor penetration of social
from governmental pressures security schemes like pension,
life insurance
Only Rural population
targeted
Business Society
Only villages with 2000+ population covered under Swabhimaan, limited coverage
Accessibility to banking initiated with BCs and bank Mitr reaching out to rural areas
Poor financial literacy; cumbersome KYC formalities
Credit was not available to poor people even if they had bank accounts
Six Pillars of Pradhan Mantri Jan
Dhan Yojna
PMJDY Launched on 28/8/14

Universal Overdraft Financial Creation of Micro Unorganiz

access to facility & Literacy Credit Insurance ed Sector
banking Rupay program Guarantee Text Pension
facilities Debit card Fund Schemes
Text
Beneficiaries Credit
Every Debit card to
should able to guarantee
household every a/c
increase fund to cover
should have holder
uptake of defaults of
access to financial
banking Overdraft overdraft
products facility up to
within 5 km facility after
range for six months of INR 5000
both Rural satisfactory
and Urban credit history
areas

Phase 1 (2014 Phase 2 (2015

Jan Dhan Dashboard
Benefits Progress Highlights

80
Zero Balance Account No. of Jan Dhan Accounts Text
(Cr)
27.7
1.5 Cr
70 accounts opened
60 Text 21.1 on first day of
50 launch Guinness
40 12 World Record for
30 max a/c open in
20 Text a week
320 Cr
41974 42156 42339 42522 42705
2
41883 42064 42248 42430 42614 Text
Text
Total No. of Rupay Card Issued (Cr) Total Deposits (1000 Text
Cr) Post Demonetization overdraft
25 92 availed by
87
20 0.83 82 25 lacs accounts
PVT

45000
77
15 0.7 RRB
72
PSB 67
10 0.45
62

Cr deposited
57
5
52
47
0
42005 Text42767
42370 42
1-Nov 11-Nov 21-Nov 1-Dec 11-Dec 21-Dec
in 45 days after
Prim ary survey photos/testim onials
Jan Dhan: Government Society
Allthe benefits and salary gets transferred on tim e to the account.
Iuse this account for everything Chandrappa, Coconut vendor

Access to basic Record 1.8 Crore accounts opened in a week (Jan 2015)
Increased access to banking, 27.7 Crore accounts opened

financial services
States with reduced bank accounts pre-Jan Dhan have seen largest growth in Jan
Dhan accounts as % of households. Eg. Chhattisgarh saw rise from 61% to 200%

DBT to be done to Jan Dhan. MNREGA, LPG, NSAP are the primary schemes linked
Reduced leakage Easy identification of beneficiaries through Aadhar (61% accounts seeded)
Reduced corruption by middlemen

Social Security
Insurance cover for debit card holders, Credit available at lower rate
Jan Dhan to Jan Suraksha: APY, PMJJBY,PMSBY
Financial literacy and scheme awareness is lacking

Facilitated easy exchange of notes due to existence of accounts

Demonetization
31% of the total deposits were done post demonetization, 66% increase from 31Oct
to 31 Dec
Misused to deposit money from black money holders
Jan Dhan: Business Society
quotes ---
Fixed point Bank Mitr has increased the reach & convenience
99.8% of the targeted 1,27,198 BMs already setup

Bank Mitr Preferred mode of banking in rural areas(78% of surveyed account

holders)
Functionality of BM & their incentives are questionable

Servicing costs
Capex to banks of Rs.140 per Jan Dhan account versus an estimated
Rs.80
Zero balance accounts reduced from 57.8% in March 2015 to 24.5% in
Feb 2017

Reluctance
On average Rs.1370 OD per account has been availed by 23.85 lakh

account holders
Less than 1% of the Jan Dhan holders availed OD

by banks Private banks have very low number of accounts sanctioned for OD
(0.5% for Axis bank, 6.4% for ICICI)
Jan Dhan: Government Business
quotes --
Credit guarantee fund not set up

Incentives
31.6% of the proposed initial corpus of Rs.1000 crore already lent
as OD
Govt. running deficits makes it difficult to provide incentives to the
bank

Significant upliftment required by DoT to enable mobile and

Infrastructur internet banking

e
50000 villages do not have telecom connectivity
Mobile banking and smooth functioning of BM will be hampered
Delayed implementation of JDY in JK, Himachal, Uttarkhand &
extremist states

Token amount deposited into Jan Dhan by the bank to reduce zero
Govt.
Pressure
balance account
Top 12 banks have 36% accounts with less than Rs.10 deposits (RTI
filed by IndianExpress)
Recommendations
Linkages after recos
Learnings from the project with
respect to course work - Indrani