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
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:
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.
- 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
- 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.
- 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
- 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
- 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
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
- 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.
- 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.
SOURCES:THE HINDU & PIB | PMJDY | UPSC
DISCOVER MORE : SCHEMES
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