PradhanMantri Jan DhanYojana : A Critical Appraisal
The objective of the Eleventh Five Year Plan (2007-12) was to achieve a faster and more inclusive growth in order to make the poor and downtrodden people a participant in the growth process while allowing the fruits of growth to percolate to the lowest strata of the society. Though eleventh five year plan achieved the faster growth but progress in making the benefits of growth reach the lowest strata of the society has remained far from being satisfactory. Until and unless financial inclusion is made an inalienable part of the growth process, dream of inclusive growth is hard to achieve.
For that matter, Government of India on August 28, 2014, launched one of its most ambitious schemes, the PradhanMantri Jan DhanYojana (PMJDY), to provide bank account to each poor in every corner of the country and thus wipe out the financial untouchability from the country. Till January 31, 2015, as many as 12.547 crore bank accounts of poor have been opened under the scheme and balance under such accounts has reached more than INR10,500crores.
Salient Features of the Scheme
- Under the scheme, account holders will be provided zero-balance bank account with RuPay debit card, in addition to accidental insurance cover of INR100,000
- After six months of opening of the bank account, holders can avail INR5,000 loan from the bank.
- 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.
- Mobile banking for the poor would be available through National Unified USSD Platform (NUUP) for which all banks and mobile companies have come together.
- The scheme has simplified the Know Your Customer (KYC) norms making it easy to open an account at private as well as public sector banks.
- Other benefits of the scheme includes easy transfer of money across India, beneficiaries of Government Schemes will get Direct Benefit Transfer in these accounts, access to pension and insurance products etc.
PMJDY focuses on coverage of households as against the earlier financial inclusion plan (Swabhiman) which focused on coverage of villages. PMJDY focuses on coverage of rural as well as urban areas. Earlier plan targeted only villages above 2000 population while under PMJDY whole country is to be covered by extending banking facilities in each Sub-Service area consisting of 1000 – 1500 households such that facility is available to all within a reasonable distance, say about 5 Km.
Undoubtedly, PMJDY turns out to be revolutionary scheme and was placed in the Guinness Book of World Records for opening 1.80 crores bank accounts in a week after the launch of the scheme. Though scheme is doing well even after the six months of its launch, still, there are several challenges which may erupt in the course of time –
- Public Sector Banks (PSBs) are mainly responsible for the scheme implementation. The scheme will increase the burden of PSBs which are already plagued with inefficiencies and bad loans.
- Monitoring of such a large scheme is a very cumbersome task. With lack of monitoring, it is very likely that inefficiencies and red tapism may cripple the scheme in long run making it similar to its predecessors.
- Just like MNREGA was the most ambitious programme of UPA government, PMJDY is flagship programme of NDA government. Until and unless, discrepancies in MNREGA are resolved through social audits or other measures, ultimate objective of PMJDY is hard to achieve as wages of MNREGA will now be transferred into PMJDY account.
- Level of financial literacy in India is far from being satisfactory. Financial illiteracy is a significant challenge in the path of success of the scheme.
- Availability of bank branches and ATMs in rural areas poses another challenge. Though banking has been made easy but unavailability of banks and ATMS in nearby areas may force rural folks to go to the local money lender who usually charges exorbitant rate of interest.