Pradhan Mantri Jan-Dhan Yojana (PMJDY) | UPSC

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PMJDY | UPSC

Pradhan Mantri Jan-Dhan Yojana (PMJDY) | UPSC

      HEADLINES:

National Mission for Financial Inclusion, completes six years of successful implementation

      WHY IN NEWS:

PMJDY has been the foundation stone for the Modi government’s people-centric economic initiatives –Finance Minister

MINISTRY? :-Ministry of Finance
SYLLABUS COVERED: GS 3: Scheme :

      LEARNING: 

For PRELIMS this is important scheme . Go through each bit of it . Aim ,significance , beneficiaries and also the timeline.

For MAINS can you recall ten challenges of this scheme ?

      ISSUE: 

More than 40.35 crore beneficiaries banked under PMJDY since inception, amounting to Rs. 1.31 lakh crore

PRADHAN MANTRI JAN DHAN YOJNA (PMJDY)

  • Ministry of Finance is committed to provide financial inclusiveness and support to the marginalized and hitherto socio-economically neglected classes.

Financial Inclusion is a national priority of the Government as it is an enabler for inclusive growth. 

  • It is important as it provides an avenue to the poor for bringing their savings into the formal financial system.
  • This also allows to remit money to their families in villages besides taking them out of the clutches of the usurious money lenders.
  • A key initiative towards this commitment is the Pradhan Mantri Jan Dhan Yojna (PMJDY), which is one of the biggest financial inclusion initiatives in the world.

AIM

Pradhan Mantri Jan-Dhan Yojana (PMJDY) is National Mission for Financial Inclusion

  • This is to ensure access to financial services, namely, Banking/ Savings & Deposit Accounts, Remittance, Credit, Insurance, Pension in an affordable manner.

LAUNCH

  • PMJDY was announced by Prime Minister, Shri Narendra Modi in his Independence Day address on 15th August 2014.

Prime Minister had described the occasion as a festival to celebrate the liberation of the poor from a vicious cycle. 

  • PMJDY has brought the unbanked into the banking system, expanded the financial architecture of India and brought financial inclusion to over 40 crore account holders.

FOCUS

Ensure access of financial products & services at an affordable cost.

  • Use of technology to lower cost & widen reach.

BENEFICIARIES

  • 63.6% Rural PMJDY accounts; 55.2%Women PMJDY accounts.
  • Under PM Garib Kalyan Yojana, a total of Rs. 30,705 crore have been credited in accounts of women PMJDY account holders during April-June, 2020.
  • About 8 crore PMJDY accountholders receive Direct Benefit Transfer (DBT) from the Government under various schemes.
  • In Aug’20, out of total 40.35 crore PMJDY accounts, 34.81 crore (86.3%) are operative.

PILLARS OF THE SCHEME

The scheme was launched based upon the following 6 pillars:

  • Universal access to banking services  – Branch and BC

Basic savings bank accounts with overdraft facility of Rs. 10,000/- to every household 

  • Financial Literacy Program– Promoting savings, use of ATMs, getting ready for credit, availing insurance and pensions, using basic mobile phones for banking
  • Creation of Credit Guarantee Fund – To provide banks some guarantee against defaults
  • Insurance – Accident cover up to Rs. 1,00,000 and life cover of   Rs. 30,000 on account opened between 15 Aug 2014 to 31 January 2015
  • Pension scheme for Unorganized sector

PMJDY USPC

FEATURES

  • BANKING THE UNBANKED – Opening of basic savings bank deposit (BSBD) account with minimal paperwork, relaxed KYC, e-KYC, account opening in camp mode, zero balance & zero charges
  • SECURING THE UNSECURED – Issuance of Indigenous Debit cards for cash withdrawals & payments at merchant locations, with free accident insurance coverage of Rs. 2 lakh
  • FUNDING THE UNFUNDED – Other financial products like micro-insurance, overdraft for consumption, micro-pension & micro-credit.

APPROACH

  • Accounts opened are online accounts in core banking system of banks, in place of earlier method of offline accounts opening with technology lock-in with the vendor

Inter-operability through RuPay debit card or Aadhaar enabled Payment System (AePS)

  • Fixed-point Business Correspondents
  • Simplified KYC / e-KYC in place of cumbersome KYC formalities.

SIGNIFICANCE

  • DBT TRANSACTIONS: As informed by banks, about 8 crore PMJDY accountholders receive direct benefit transfer (DBT) .
  • RUPAY CARD INSURANCE – Free accidental insurance cover on RuPay cards increased from Rs. 1 lakh to Rs. 2 lakh for PMJDY accounts opened after 28.8.2018.
  • WOMEN EMPOWERMENT : A majority of the beneficiaries are women and most of the accounts are from rural India.

CHALLENGES

  • MULTIPLE ACCOUNTS : People may open multiple accounts using different ID proofs on the lure of getting insurance covers.
  • CENTRALISATION : All banks must have a centralised information sharing system so that this loophole can be countered.

ZERO BALANCE ACCOUNT : Even if it is a zero balance account, credibility of the account holder has to be checked. 

  • DIGITAL LITERACY : The financial literacy centre is to be held by the banker so as to keep customer aware of the services available.

      IASbhai WINDUP: 

Endeavour to ensure coverage of PMJDY account holders under micro insurance schemes.

  • Eligible PMJDY accountholders will be sought to be covered under PMJJBY and PMSBY.
  • Promotion of digital payments including RuPay debit card usage amongst PMJDY accountholders through creation of acceptance infrastructure across India
  • Improving access of PMJDY account holders to Micro-credit and micro investment such as flexi-recurring deposit etc.
  • Average Deposit per PMJDY per account is Rs. 3239.
SUGGESTED READING : https://www.pmindia.gov.in/en/ 
     SOURCES:THE HINDU & PIB | PMJDY | UPSC

DISCOVER MORE : SCHEMES

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