Union Finance Minister, Arun Jaitley, has done well by asking four state-run banks to check the facts on The Indian Express exposé that bank staff deposited amounts as low as Re 1 in Jan Dhan Yojana accounts to reduce the number of zero balance accounts in their branches.
It shows the Narendra Modi-government isn’t in a denial mode on the serious implementation flaws of one of the biggest bank account opening drives that has ever happened in the country since Independence. The Jan Dhan scheme was launched by Prime Minister Narendra Modi in August, 2014.
Jaitley admitted that bankers in some branches of Punjab and Sind Bank, Punjab National Bank, Bank of Baroda and Bank of India may have possibly deposited Re 1 in the Jan Dhan accounts to reduce the number of zero-balance accounts.
"In case of few accounts, this issue has arisen and there are names of four banks. We have asked them. The banks are investigating from their branches whether account holders have put in money or business correspondents have done it. After that the banks will give their report to the Department of Financial Services," Jaitley said.
According to the Indian Express report, “bank officials are quietly making ‘one-rupee’ deposits, many from their own allowances, some from money kept aside for office maintenance,” to show lesser number of zero balance accounts in their branches to their bosses (in the case of state-run banks, the boss is the government).
The report, quoting information received from an RTI query, had said that 18 public sector banks and their 16 regional rural subsidiaries held Rs 1.05 crore Jan Dhan accounts with deposits of one rupee.
As Firstpost noted in an earlier article, it is critical that the government comes clean on the allegations and fact-misrepresentation on Jan Dhan given the revolutionary nature of the scheme. It has the potential to introduce millions of unbanked population to the formal world of banking, besides laying out a bank account network to enable the larger subsidy reforms based on the Aadhaar-based Direct Benefit Transfer (DBT).
Many beneficiaries, who have opened accounts under the Jan Dhan programme, have started receiving subsidy money in their accounts under DBT, especially in LPG. This will be followed up by food, fertilizer subsidies in the future. International agencies too have lauded the initiative as a revolutionary one. In this context, FM Jaitley’s willingness to take note of the factual anomalies in the scheme details is to be welcomed. Corrective actions needs to be taken to restore the credibility of the entire Jan Dhan drive.
So far, the story is fine.
What is not right is the way Jaitley has defended the allegations on the ‘One-rupee’ accounts.
Jaitley said that Rs 42,000 crore deposits in Jan Dhan accounts cannot have come from One-rupee deposits. “Those 24 crore accounts mostly have people from weaker sections. Now those people have deposited Rs 42,000 crore in these accounts. The figure of Rs 42,000 crore cannot be arrived at by adding Re 1,” Jaitley was quoted as saying in the PTI report.
However, the issue here is not about the quantum of deposits generated in the Jan Dhan accounts but the pressure the government allegedly passed on to mid level staff in public sector banks to technically manipulate the number of zero balance accounts. That is what the Express report exposed. It didn’t appear to contest the amount of deposits in Jan Dhan accounts.
According to latest government data, the percentage of zero balance accounts currently stands at 24.43 percent, compared with the peak of 76.81 percent recorded in September, 2014. The fundamental question raised was about the accuracy of the zero balance account data shown by the government in the backdrop of the Express report.
Ever since the Jan Dhan scheme was launched, Firstpost had highlighted the possibility of massive duplication of accounts -- several accounts that are technically active but in reality are dormant with very low value transactions or, sometimes practically no transactions—-due to the tight deadlines banks were given.
In many banks, the mid-level staff were in a state of panic and resorted to all sorts of jugaad, including filling these accounts with One rupee balance from their own pockets to fool the computer. By doing so, these accounts would no longer be shown up as no-balance accounts, but this is akin to fraud because such an exercise is undertaken to fool the system.
Jaitley is either missing the point here or making a vain attempt to divert attention from the actual issue.