Politics · Public Policy

Pradhan Mantri Jan Dhan Yojna

Shraddha Tiwari talks about the Pradhan Mantri Jan Dhan Yojna.


After 65 years of independence of India, a vast majority of its rural households were untouched of being enclosed in the veil of bank accounts.[1] This situation acted as the catalyst for the formation of a massive financial inclusion programme for primarily the rural households, i.e., the Pradhan Mantri Jan Dhan Yojana (PMJDY) on 22 August, 2014. The Prime Minister in this context said that PMJDY would enable all households, rural and urban to gain easy and universal access to financial services.[2]

The PMJDY provides for opening of basic banking accounts at least to every household for now not to individually. The basic banking account would provide services comprising quintessence elements, viz., opening a bank account with RuPay debit card and mobile banking facility, secondly cash withdrawals and deposits, thirdly transfers, fourthly balance enquiry and lastly issuance of mini statement. This initiative if implemented rightly will certainly lessen the dependency on money-lenders and stop the working of scam-artists.  Although for optimum utilisation of these and other services under PMJDY the people using it need to be literate and efficient with internet for the least. For tackling this issue the scheme lays down for establishment of separate Financial Literacy Cells at rural banks which was ignored under previous programmes.[3]

Opening of a basic bank account under PMJDY has quite a few requirements as Aadhaar card or number, which would be solely sufficient enough for it, if it’s unavailable then Voter ID or PAN card or Passport or NREGA card will be good enough. And if none of the above is present then any identity card issued by Central or State Dept., or by Statutory or regulatory authority, or by Public sector undertakings, or by scheduled commercial banks, or by Public financial institutions will be fine. This aspect not only maintains the scheme’s easily accessible character but also backs up and strengthens other programmes such as the Aadhaar card by Unique Identification Authority of India (UIDAI), making it more conclusive than controversial. Also, the said accounts need not have any minimum balance, zero balance accounts are also permitted under PMJDY. And the account opening forms are available online too in both English and Hindi for direct approach.

Another important feature of PMJDY is its stance on Direct Benefit Transfers (DBT) scheme. It plans to restart the DBT in LPG scheme and to link the other schemes such as Mahatma Gandhi National Rural Employment Scheme (MGNREGS) to it. This would prevent the recurring leakages in transfer of salaries and other benefits by Govt. to especially the poor and sending it directly in the beneficiaries’ accounts.

The insurance cover to be provided under the PMJDY is also an important feature to look at. The RuPay debit card to be issued will have an inbuilt accident insurance of 1 lakh rupees. It also advocates for providing micro-insurance as envisaged by the Insurance Regulatory Developmental Authority (IRDA)[4] through establishing Bank mitra (business correspondent) which would sell micro-insurance products and propagate schemes like Aam Aadami Bima Yojana. This provision clearly indicates towards implantation of concept of social security in India, which is a dire need of the hour.

Further, the PMJDY provides for overdraft facilities. This facility is given upto the limit of 5000 rupees after six months of satisfactory bank history. It also provides for creation of credit guarantee fund for account defaults. All Govt. benefits would flow into this account facilitating servicing of interest and lessening the chances of account becoming dormant. The PMJDY also mentions that the required training for benefits of the repayment of overdraft will be held in the camps conducted for imparting training for account opening.

Again the cooperative personality of the PMJDY is visible through its outlook towards Swavalamban (a Govt of India programme launched in 2010 to address old age income protection need of hitherto informal workers)[5]. The PMJDY looks forward with full coverage for pension under Swavalamban.

Furthermore, through the PMJDY’s immediate payment system, beneficiaries would be able to perform inter-bank fund transfers by mobile banking, internet banking and ATMs which would be efficient 24×7. This would be monitored by organisations like National Payments Corporation of India (NPCI) etc. which work under the guidance of Reserve Bank of India.

Although, critics to the PMJDY question the working of banks as stated in the scheme and the servicing of zero bank accounts.[6] They add on stating that the some banks have deceptively deposited amount less than INR 1 to these accounts[7], to which the Centre has already announced to conduct an investigation.[8] But with all this one should not underrate the work done till now under the PMJDY. Much has been already said about eradicating poverty, PMJDY is execution of a plan for moving towards it and must be implemented in the righteous manner and in reasonable time frame.



[1] Web access : www.rbi.org.in/scripts/PublicationView.aspx?id=14988 ;PMJDY_BROCHURE_ENG.pdf.

[2] Page 3 of PMJDY_BROCHURE_ENG.pdf accessed from http://www.pmjdy.gov.in/files/E-Documents/PMJDY_BROCHURE_ENG.pdf .

[3] Learning from the past Campaign and Shift in approach in PMJDY_BROCHURE_ENG.pdf accessed from http://www.pmjdy.gov.in/files/E-Documents/PMJDY_BROCHURE_ENG.pdf .


[4] IRDA has created a special category of insurance policies called micro-insurance policies to promote insurance coverage among economically vulnerable sections of society. The IRDA Micro-insurance Regulations, 2005 defines and enables micro-insurance. A micro-insurance policy can be a general or life insurance policy with a sum assured of 50,000 or less.

A general micro-insurance product could be

  • Health insurance contract
  • Any contract covering belongings such as Hut, Livestock, Tools or instruments, or any personal accident contract. These can be on an individual or group basis .A life micro-insurance product is:
  • A term insurance contract with or without return of premium
  • Any endowment insurance contract or • A health insurance contract. These can be with or without an accident benefit rider and either on an individual or group basis ; accessed from: PMJDY_BROCHURE_ENG.pdf accessed from http://www.pmjdy.gov.in/files/E-Documents/PMJDY_BROCHURE_ENG.pdf .

[5] The objective of the scheme is to encourage the informal sector workers to save small amounts during their working years to enable them to draw a pension in their old age. The Swavalamban scheme uses co contributions from the Government of India to incentivize and mobilize savings.

Benefits under the Swavalamban Scheme:

  • The scheme is open to any citizen of India in the unorganized sector, aged between 18 to 60 years. A person is deemed to be in the unorganized sector if he/she is not in regular employment of the central/state government or an autonomous body/PSU having employer assisted retirement scheme, or is not covered by any social security scheme.
  • The Government of India contributes` 1000 p.a for a stipulated period to all eligible NPS Swavalamban accounts where the subscriber deposits a minimum of ` 1000 to maximum of` 12000 p.a. The benefit of the Government of India co-contribution is presently available up to 2016-17
  • Subscribers can exit at the specified age, at which point the built up corpus is given to the subscriber partly as a lump sum and partly as an annuity.
  • The Scheme is regulated and managed by the PFRDA (Pension Fund Regulatory and Development Authority) which is a statutory Body set up by an Act of Parliament.
  • Swavalamban is a low cost, feature optimized model which works on the sophisticated architecture of the National Pension System and is completely IT enabled, has Professional Fund Managers for investment of funds and follows prudential investment guidelines to safeguard the interests of subscribers.; accessed from PMJDY_BROCHURE_ENG.pdf accessed from http://www.pmjdy.gov.in/files/E-Documents/PMJDY_BROCHURE_ENG.pdf

[6]Webaccess:http://www.thehindubusinessline.com/opinion/all%ADyou%ADwanted%ADto%ADknow%ADabout/article6370254.ece .

[7] Web access: http://www.microcapital.org/microcapital-brief-indian-banks-deceptively-reduce-number-of-zero-balance-accounts-under-pradhan-mantri-jan-dhan-yojana-financial-inclusion-effort/ .

[8] Web access: http://www.thehindubusinessline.com/opinion/editorial/the-next-step/article9124875.ece .