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Pradhan Mantri Jan Dhan Yojna - A step towards "Ache Din"

CA Nayan Gupta 
on 27 June 2015

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Pradhan Mantri Jan Dhan Yojana is National Mission for Financial Inclusion to ensure access to financial services, namely Banking Savings & Deposit Accounts, Remittance, Credit, Insurance, Pension in an affordable manner. This financial inclusion campaign was launched by the Prime Minister of India, Narendra Modi on 28 August 2014. He had announced this scheme on his first Independence Day speech on 15 August 2014

Major objective of Jan-Dhan Yojana:

The Jan-Dhan Yojana is aimed to provide basic banking accounts with a debit card with inbuilt accident insurance by opening at least one bank account to every family. The Prime Minister, in his speech on the day of launch, said when banks were nationalized in 1969, it was done with the objective of bringing people into the economic mainstream. But that objective had not been achieved till date. After 68 years of independence, not even 68% of India's population had access to banking. He further added it is easy for the rich to get a loan at low interest rates. But the poor are forced to seek loans from money-lenders at five times the rate charged to the rich. He stressed on the responsibility of the banking industry to provide banking access to the poor and fill the gap. This effective scheme has a national mission on financial inclusion in order to cover all households in the country with banking facilities and having a bank account for each household.

PMJDY works on the principles of Sab Ka Sath Sab Ka Vikas. Under the Jan Dhan Yojna anyone who is India citizen above age of 10 years and does not have a bank account, can open the account with zero balance. Account can be opened in any bank branch or Business Correspondent (Bank Mitr) outlet, specially designed for the purpose of opening the accounts under this scheme.

Main features of PMJDY:

The first phase of the mission, which started on 28 August 2014, would end in August this year. The second phase will began from 2015 till 2018 that will cover aspects such as micro insurance and pension schemes like 'Swavalamban'. Rs. 5,000 overdraft facility for Aadhar-linked accounts. PMJDY is more effective schemes as compared to other schemes launched by earlier UPA Govt. Professionals stated that previous scheme did not focus on households and urban financial inclusion.

They maintained that there was a cumbersome Know Your Customer (KYC) formality, restricting account opening. This scheme has relaxed the KYC requirements for account opening. For persons with no valid documents, the account can still be opened by providing self-attested photographs, signature/thumb print in front of bank official. Such account is called Small Account. However this small account would be valid only for one year post that person will have to provide official valid documents. Jan-Dhan Yojana scheme will allow government to return people's money to them.

The main purpose of the scheme is 'Mera Khata Bhagyavidhata', which means 'my account is divine'. Once you become an account holder, you will get Rs 1 lakh insurance immediately without filling any separate form. And if you run the account properly for six months by withdrawing and depositing money at regular intervals, then a loan of Rs 5,000 will be made available to you, said Swaraj. The scheme will be beneficial for the poor.

Every family will have its own bank account. It will help in saving money and keeping it safe and secure. Various political leaders appreciated this scheme. Ravi Shankar Prasad said that the scheme will be followed by economic banking, literacy and education.

There are many advantages of Jan Dhan Yojana.

The account holders will be provided a zero-balance savings account with a RuPay debit card. Account holder will get a kit containing cheque book, financial literacy and pass book. However this would vary from bank to bank and account usage. Person will also get Aadhar number immidiately. The account holder will also be provided life insurance cover of INR 30,000 (for accounts opened before January 26, 2015) and an accidental insurance cover of INR 1 lakh. By 2018, it is likely that all account holders under the PMJDY scheme will have access to an Aadhaar-linked bank account with overdraft facility up to INR 5,000. By allowing direct money transfer into bank accounts, the scheme is likely to cut down on corruption. The Prime Minister also said that by providing debit cards that can be swiped the scheme shall reduce the dependence on credit cards, thereby promoting savings. This scheme, on 20th January 2015, entered into Guinness book of world records setting new record for 'The most bank accounts opened in one week'.

Drawbacks/ Pitfalls:

There are some drawbacks of this scheme. The scheme has been criticized by many experts from the banking sector as an effort to please voters that has created unnecessary work-burden on the public-sector banks. The opposition party Congress alleged that Mr Modi was trying to take credit of the financial inclusion scheme started by UPA government and the new yojana had got nothing new. According to the experts, temptations presented by the Prime Minister like zero balance, free insurance and overdraft facility would result in duplication. Many individuals who already have bank accounts may have had accounts created for themselves, lured by the insurance covers and overdraft facilities.

Lastly, it can be said that The Pradhan Mantri Jan Dhan Yojana is devised to assist people of India, especially the poor sections by providing a bank account, credit facility, insurance cover and debit card. In the long run, the scheme will also permit the poorer sections to avail themselves of subsidies and overdraft facilities through their bank accounts, which are intended to eliminate money-lenders, commission agents and corruption. According to PM Modi, this scheme will boost everyone's confidence.

Hence PM Jan Dhan Yojana is indeed a prosperous venture and we certainly hope the mass economy are both benefited through this new venture.


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