10 years of banking the unbanked: How PM Jan Dhan Yojana changed 53 crore lives

On August 28, 2024, India celebrates a decade of the Pradhan Mantri Jan Dhan Yojana (PMJDY), a landmark initiative in financial inclusion spearheaded by Prime Minister Narendra Modi. Launched in August 2014, PMJDY was designed as a National Mission for Financial Inclusion, aiming to integrate the vast unbanked population into the formal financial system. The primary objectives of this scheme were to provide every citizen with access to banking services, enhance financial literacy and ensure that the benefits of economic growth reached even the most marginalised communities.

Objectives and features of PMJDY

The core objectives of PMJDY include the enhancement of financial inclusion, provision of basic financial services to every household and the empowerment of economically weaker sections. The scheme focuses on four main principles: banking the unbanked, securing the unsecured, funding the unfunded and serving the underserved. To achieve these goals, PMJDY offers a range of features such as zero-balance accounts, free RuPay debit cards with accident insurance, overdraft facilities and access to various government schemes.

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Milestones and achievements

As of August 14, 2024, PMJDY has reached several significant milestones. The scheme has successfully opened 53.13 crore bank accounts, marking a substantial increase in banking penetration across India. Among these accounts, 29.56 crore have been opened by female beneficiaries, highlighting the scheme’s role in promoting gender equality in financial access. The total deposits in these accounts have surged to Rs 2,31,236 crore, demonstrating the growing trust of beneficiaries in the formal banking system. Additionally, 36.14 crore RuPay debit cards have been issued facilitating cashless transactions and providing accident insurance coverage.

In 2018, the scheme was extended to focus on “every unbanked adult” rather than just “every household,” reflecting a renewed commitment to reaching the most marginalised sections of society. This extension has helped deepen the impact of PMJDY by ensuring that the benefits of economic growth are accessible to all.

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Benefits and services

PMJDY offers a suite of benefits aimed at improving financial security and inclusion. Key features include:

Basic Savings Bank Deposit Account (BSBDA): This account type does not require a minimum balance making it accessible to everyone. Account holders can use bank branches, ATMs and Banking Correspondents (BCs) for transactions, though cash withdrawals are limited to four times a month.

Small Account/Chota Khata: These accounts, which do not require legal documents, are valid for twelve months. If proof of applying for official documents is provided, the account can be extended.

RuPay debit card with inbuilt accident insurance: Beneficiaries receive a free RuPay debit card with accident insurance coverage of Rs 2 lakh (or Rs 1 lakh for accounts opened before August 28, 2018), enabling cashless transactions and financial protection.

Overdraft facility: Beneficiaries can access an overdraft facility up to Rs 10,000, providing emergency funds for unforeseen expenses.

Business Correspondents (BCs)/Bank Mitras: These retail agents offer banking services in areas with limited access to branches or ATMs, ensuring that even remote communities can engage in financial transactions.

Eligibility for additional government schemes: PMJDY accounts are integrated with Direct Benefit Transfer (DBT) and other schemes like Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY), Atal Pension Yojana (APY) and the Micro Units Development & Refinance Agency Bank (MUDRA) scheme.

Impact and global comparisons

The success of PMJDY has garnered international attention. The scheme has been praised by organisations like the World Bank, the International Monetary Fund (IMF) and the United Nations Development Programme (UNDP) for its role in reducing poverty and enhancing financial stability. Countries such as Bangladesh and Kenya have implemented similar financial inclusion strategies, inspired by the principles of PMJDY. In Bangladesh, mobile banking and microfinance initiatives reflect similar goals, while Kenya’s M-Pesa service complements PMJDY by extending banking through mobile technology.

Challenges and future directions

Despite its achievements, PMJDY faces challenges, including the need for improved financial literacy among beneficiaries, infrastructure limitations in remote areas and concerns about fraud and misuse. Addressing these challenges is crucial for maintaining the scheme’s effectiveness and ensuring that it continues to serve its intended purpose.

The Pradhan Mantri Jan Dhan Yojana has significantly transformed India’s financial landscape over the past decade. By opening over 53 crore accounts, empowering millions and integrating financial services with government schemes, PMJDY has made substantial progress in promoting financial inclusion. As India looks to the future, the scheme provides a strong foundation for continued economic growth and inclusivity, with a focus on overcoming existing challenges and deepening its impact across all sectors of society.