The Pradhan Mantri Jan Dhan Yojana (PMJDY) is the NDA government's premier financial inclusion scheme. Under the PMJDY, the government aims to provide basic financial services such as bank accounts and debit cards to all the citizens of India. Introduced to further the National Mission for Financial Inclusion, the PMJDY is meant to be the launch vehicle of economic streamlining and will provide the masses access to a host of financial services including bank deposit accounts, credit, and even insurance. The PMJDY was launched by the NDA government with the motto - "Mera Khata - Bhagya Vidhaata". Securing subsidies, overdraft facilities, and pension schemes for the poorer sections of Indian society are listed among the long term goals of the scheme. The aim is to cover 7.5 crore households (15 crore bank accounts) by the year 2018.
Why is PMJDY a flagship scheme of the NDA government?
On his maiden Independence Day address as the Prime Minister of India, Narendra Modi had promised financial inclusion for the masses. About 42 percent of the country's population lacks access to the banking system making it susceptible to approach loan sharks and money lenders for loans, fly-by-night or Ponzi scheme operators for deposits, lose interest on savings on idle money, and lack any insurance cover. The PMJDY came up as PM Modi's solution to extend such financial services to the entire country and end an era of what he calls "financial untouchability".
The PMJDY is also meant to become a potent tool to combat corruption of any form in government offices. When the bulk of the Indian populace has a bank account, it facilitates direct bank transfer of any funds due to the people from the government averting the need for a bribe. The PMJDY also neatly ties in with PM Modi's vision of a Digital India - a country where the economy shall grow increasingly cashless.
Features of the PMJDY account
All accounts opened under the PM Jan Dhan Yojana will be zero-balance accounts and shall be linked to RuPay debit cards. For opening these accounts, the prospective account holder need not comply with stringent Know Your Customer (KYC) norms but will only need to provide a photograph and a signature/thumb impression specimen. In a bank account opened under the scheme the total deposits must not exceeding Rs 100000 in a year. The total withdrawals may not be over Rs 10000 a month and the account balance should not exceed Rs 50000. The account shall remain active for a period of 12 month within which the account holder must furnish proof of application for a valid identification document such as an Aadhaar card or a PAN. In such a case the account will be allowed to exist for another year.
The account holders are provided a free accident insurance cover of Rs 1 lakh as well. All account holders who open accounts before 26 January 2015, will also be provided a life insurance cover amounting to about Rs 30,000. After about 6 months of the account opening, an overdraft facility of about Rs 5000 shall be allowed. The provision of RuPay debit cards shall promote savings, the Finance Ministry believes.
Launch and implementation
The PMJDY was launched on 28 August 2014. The Prime Minister himself flagged off the scheme with an address to the nation. The Chief Ministers of about 20 states and a number of other prominent Union Ministers participated in launch ceremonies in over 76 cities of the country including Mumbai, Vizag, Patna, Bilaspur, Gandhinagar, Dehradun, Guwahati, Muzaffarpur, Panjim, Raipur, Surat, and Port Blair. Prior to the launch, the Prime Minister's Office had sent out about 7.25 lakh e-mails to bankers across the country entreating their cooperation in making the scheme a success. Over 77,862 enrolment camps were set up nationwide to handle the initial spate of account openings. Thereafter the banks took up the account opening process under the directives of the RBI. On the very day of its launch the PM Jan Dhan Yojana set a record with the opening of over 1.5 crore bank accounts nationwide - the largest such exercise undertaken in any country ever on a single day. Within the first 10 days, about 3 crore accounts were opened under the scheme; the next 20 days saw 2 crore more accounts being added to the kitty, according to reports from the Ministry of Finance. The Bill and Melinda Gates Foundation has offered to assist the Indian government in monitoring of the progress made with regard to the PMJDY.
Concerns and controversy
One of the greatest concerns regarding the PM Jan Dhan Yojana has been bypassing the KYC (Know Your Customer) norms that are mandatory for regular savings accounts according to RBI policy. Banks are concerned that multiple accounts may be opened up by the same individual in various banks and thus an account holder may be able to avail of multiple insurance policies due to the lack of valid documentation. If dispensing of insurance amounts is linked to identification documents such as the Aadhaar cards, the account holders who do not have these documents remain left out.
Another major hiccup that could be faced in the execution of the scheme is in the provision of overdraft facilities to account holders. According to the scheme overdraft facility may only be provided to Aadhaar card linked accounts but if this is a requisite it foils the very need of a bank account without identification documents.