The Pradhan Mantri Jan Dhan Yojana (PMJDY), the flagship financial inclusion scheme of the NDA Government, is nearing completion of Phase I. The scheme endeavours to include all the citizens hitherto excluded from the mainstream banking system and provide them bank accounts, debit cards, and accident insurance coverage. Additional life insurance is being provided to those signing up for savings accounts under this scheme before the Republic Day of 2015.
The PMJDY was launched by Prime Minister Narendra Modi on August 28, 2014 to provide financial empowerment to the poor masses by providing them access to formal banking system. The initial target of the scheme was to open 7.5 crore bank accounts in the first phase. This target was later revised to 10 crore bank accounts. This revised target has been achieved within four months.
As of December 26, 2014, the number of accounts opened under the Jan Dhan Yojana was estimated at about 10.09 crore. According to official reports banks had issued over 7.28 crore RuPay debit cards by December 22. The contentious matter of life insurance has also been discussed extensively and dealt with by the Government. “Banks and the LIC have been asked to make claim forms readily available on their website. The LIC has been asked to settle claims within 15 days from the date of receipt of claim, if otherwise in order,” said an official statement.
A number of States and Union Territories such as Chandigarh, Goa, Kerala, Lakshadweep, Madhya Pradesh, Puducherry and Tripura have reported opening at least one bank account in each of the targeted households for the scheme. Following the tremendous success of the scheme, the Government of India is also eyeing an entry into the Guinness World Records.
Zero balance accounts worry FM
On the one hand, opening of 10.09 crore bank accounts within a span of about four months was a great success. But on the other, there is disappointment to find that 75 percent of these accounts have no balance. Most of these are lying dormant. The Finance Ministry is worried that this trend will not only damage the image of the scheme but also keep its benefits out of the reach of the account holders. Since the launch of the scheme, the Government of India has added a few conditions for availing the benefits of the scheme. The insurance, for one, can only be claimed if the debit card has been swiped at least once in the past month and a half. Dormant accounts may thus become ineligible.
As of December 26, 2014, public sector banks had reported opening about 8.09 crore accounts, regional rural banks had opened about 1.8 crore accounts, and private sector banks had been able to open up only about 27.13 lakh accounts. The total money moped up by these accounts is estimated at INR 7,778.42 crore.
Lack of ATMs a major setback
The promise of a bank account, a free debit card with ATM access, insurance coverage – the NDA Government did aim high with the launch of the PMJDY. One of the major concerns that have come up now, however, is the lack of infrastructure to translate these dreams into reality.
According to the National Payments Corporation of India, the card acceptance infrastructure in India is far from robust. The country is in need of about 3 lakh ATMs to support all the RuPay cards issued under the scheme while there are only about 1.8 lakh ATMs countrywide at present. Add to this the high charge for a cap on the number of free ATM transactions and a low interchange fee restricting banks from servicing other banks’ card holders, and the system seems to be far from ideal. “How do we build the acceptance infrastructure?
That is where the big challenge is. With so many cards being issued, where will they be used unless ATMs are installed? Once the ATM infrastructure is in place, the card usage will increase,” said the MD and CEO of the NCPI, Hota. The NPCI was the developer of the domestic card payment system, RuPay as an Indian alternative to global systems such as MasterCard and Visa.
Jan Dhan Yojana accounts for Tihar inmates
Inmates of the Tihar Jail in Delhi are now set to get their own bank accounts under the Jan Dhan Yojana. About 4,500 inmates of the jail, including under-trial inmates and convicts, are set to get their wages earned for work in the jail projects deposited in these newly-opened accounts. Inmates with Aadhar cards will be first in line to get their bank accounts due to the administrative ease and the rest will be up next depending on the identity documents provided by the jail authorities. This scheme has been tied up with the issue of Aadhar cards in Tihar. Jail authorities have approached Indian Bank to help in the account opening process. Bank officials will meet inmates in person within the jail premises to manage opening the accounts. This also means that the Tihar inmates will be eligible for all the benefits of the scheme such as accident insurance coverage.