Assessment Of Modi's Jan Dhan Yojna

Pradhān Mantrī Jana Dhan Yōjanā is National Mission for Financial Inclusion to ensure access to financial services, namely Banking Savings & Deposit Accounts, Remittance, Credit, Insurance, Pension in an affordable manner.

This financial inclusion campaign was launched by the Prime Minister Narendra Modi on 28 August 2014 He had announced this scheme on his first Independence Day speech on 15 August 2014.

Pradhan Mantri Jan - Dhan Yojana (Statistics as on 30 March 2016)

(All Figures in Crores)

S.No		No Of Accounts			No Of RuPay Debit Cards	Aadhaar Seeded	Balance In Accounts	% of Zero Balance Accounts
		Rural	Urban	Total
1	Public Sector Banks	9.43	7.42	16.85	14.32	8.04	28139.17	27.74
2	Regional Rural Banks	3.26	0.54	3.79	2.69	1.16	6178.12	23.15
3	Private Banks	0.48	0.30	0.79	0.74	0.30	1354.72	40.34
	Total	13.17	8.26	21.43	17.75	9.50	₹35672.01 crore (US$5.3 billion)	27.39

The scheme has been criticized by opposition as an effort to please voters that has created unnecessary work-burden on the public-sector banks. it has been claimed that the poor deserves food more than bank accounts and financial security.

But I totally differ with this allegation. Because bank staff has whole-heartedly participated in scheme of opening of accounts under Jan Dhan Yojna and it is outcome of their continued hard labour that these banks could create a world record by opening as many as 21 crore accounts in less than two years of time. Some of  employees of  bank may complain of rise in work load, but this is not true for all and for each branch. Moreover account opening is the basic work of each bank and this cannot be avoided.

Further,opponents of Mr. Modi say that  these accounts have not yet added considerable profits to PSU banks According to the experts, offers like zero balance, free insurance and overdraft facility would result in duplication.

I would like to say here that whenever any work is done in large scale in shortst period of time, there is possibility of commission of some mistakes or some cases of duplication might have taken place. This is nothing unusual and so much wrong , this is as usual and normal as it used to happen even before JDY .

It is not appropriate to expect profit by opening of accounts of poor and neither it was exptected by planners when they advised banks to open accounts of each individual under PMJDY. It is however also true that bankers have got a fund of Rs.31000 crore through these accounts of poor people and this indirectly contribute a lot in increasing profit of these banks.

Furhter JDY was meant to bring all in banking fold, it may be zero balance or some balance. At least poor people will learn to go bank and get rid of Chit fund who usually cheat them and they fly away. Poor people will then get benefits of overdraft facility of Rs5000 if they transact through account and fulfil the norms set in this regard by planners. It is a great boon for poor people that they can get financial assistance upto Rs.5000 in case of need.

Many individuals who already have bank accounts may have had accounts created for themselves, lured by the insurance covers and overdraft facilities. Some of them might have opened more than one account. To aovid risk of multiple financing , there is a National Payment Corporation of India (NCPI) which will help banks in fixing of one account out of many accounts for allowing Direct Benefit Transfers and for Overdarft facility. 

As per the scheme, a very few people are eligible to get the life insurance worth ₹30,000 with a validity of just five years.

However, these 'secret' conditions were not shown in the TV advertisements of the scheme.The claimed overdraft facility has been completely left upon the banks. As per the government notice, only those people would get the overdraft facility whose transaction record is satisfactory and financially

Under the scheme:

1. Account holders will be provided zero-balance bank account with RuPay debit card, in addition to accidental insurance cover of 1 lakh (to be given by 'HDFC Ergo').
2. Those who open accounts by 26 January 2015 over and above the 1 lakh  accident claim will also be given life insurance cover of ₹30,000  (to be given by LIC).
3. After Six months of opening of the bank account, holders can avail ₹5,000  overdraft from the bank.
4. With the introduction of new technology introduced by National Payments Corporation of India (NPCI), a person can transfer funds, check balance through a normal phone which was earlier limited only to smart phones so far.
5. Mobile banking for the poor would be available through National Unified USSD Platform (NUUP) for which all banks and mobile companies have come together

Performance of Jan Dhan  Yojna is overall satisfactory . Still some of opponents have criticised the Yojna for their political advantage. Following are some of points which come in domain of criticism and which has been explained by me above.

One of the most ambitious projects taken up by the central government of India in the year 2015 is the Jan Dhan Yojana. The scheme is actually aimed for opening bank accounts for all the inhabitants of India and also to remove the bank untouchability completely. The most important benefit of opening accounts in such a large number is that poor people who used to afraid of entering into branches of banks ,are now freely and fearlessly approaching banks for benefits of  overdraft facilities, for DBT, for Mobile banking, for keeping their extra money in safe bank and for getting RuPay cards. These innocent poor people will no more become victim of cheater agents  associated with Chit Fund Companies called as Non-Banking Finance companies who use to lure villagers by offering higher interest for getting money deposited with them and then use to fly away from the area without giving back hard earned money to poor villagers.

It can be said to be a move towards the nation’s biggest financial achievement. But at the same time, it has been reported that this Jan Dhan Yojana can cause different issues and challenges for both the individuals and government in the future. It has to be investigated and whereever problem is genuine, bankers with the help of concerned government officials have to resolve it and punish the real guilty.

A huge number of farmers, who are not properly educated, do not understand why the government wants to open the new bank accounts or how they are going to access the overdraft and many other facilities. Bankers and other NGO bodies have to undertake training programme to develop awareness about the scheme. Good work is being done at various level to minimise misunderstanding as also difficulties faced by  account openers.

This is undoubtedly a huge task and a lot of bankers feel that this project is going to drain a lot of resources of the already economically affected industry. But it is not right to say that it will drain out resources of bankers , rather it has added to resources of banks and indirectly added to their profit .It is important to mention here that deposits received in these accounts is low interest deposit for which bankers move door to door.

There are a few points that are not in favor of the inhabitants of rural areas.

For instance, the insurance coverages on the name of the account holder are linked with the transaction history of the account holder. But if transaction history is not taken into account, there is possibility of misuse of this facility and hence some check points are necessary .

People in rural areas in most of the times, do not have any major transaction records to show and this can inhibit the insurance coverages.

There are a lot of instances that a huge number of accounts are just frozen because of no transactions since a lot of account users are there who are really poor to have the income of making bank transactions.

And thus, the re-activation of old accounts takes several weeks or months. The number of accounts might increase in banks, but it cannot be said that there will be any increase in the number of transactions.

Consider the logistics before

A lot of blames have been put on the factors like the rural areas do not have proper connectivity, electricity, internet and the ATM facilities. This results in the improper activation of the RuPay cards issues by the government since those cards need to be activated in ATMs.

The PIN numbers of the card becomes useless since it reaches a long time after it should be activated. Account activation requires these factors. It cannot be denied that there are such issues but while conducting the project of Jan Dhan Yojana, these factors were necessary to consider before taking up the project..

Dormant and Multiple accounts

• MicroSave has been following the PMJDY by conducting surveys in three rounds. The first wave of survey was conducted in December 2014, while the second wave culminated in June 2015.
• During this period it came into light that as many as 31 per cent of the account holders with PMJDY were already using bank accounts. In fact, these 31 per cent of the beneficiaries were using multiple accounts.
• The survey said that “Customers believed that these accounts will remain active at zero-balance also and there was not much of trigger observed to use them.”

The presence of these multiple accounts is extremely harmful to the program as this will prohibit those who really need the help of this program, from getting benefitted by it. Dormant accounts on the other hand will be bad for the economy since the banks need some fund to be up and running. The deposition of funds will; affect the liquidity of the entire economy and therefore this is a concern not limited to just a handful of people.

The experts are now of the view that the architects of this scheme (PMJDY) must now look at the different loopholes in it. Unless the different facets are considered and fixed, these problems are going to create problems for our economy.

The unused accounts could be linked to the disorganization in the banks. The poor people are not aware of the regulations of the banks and are often not adequately educated to do so. The rules and regulations of the bank are therefore thrust upon them. To check the causes of unused accounts, Banks and the government have to do a thorough investigation. ‘

A gist of the whole issue:

Serial no.	Incidents in a gist	Points to be noted
1	The survey	42 districts across the nation were surveyed
2	Dominant and multiple accounts	28% of the accounts lie dominant while 31% have duplicate accounts
3	Present Challenges	The accounts if not used, will be a waste of resources.