Pradhan Mantri Jan Dhan Yojana (PMJDY) in Financial Inclusion of Marginalised

community

Saravana K
Research Scholar
&
Dr.Lokesha M.U
Assistant Professor
Department of Studies and Research in Social Work
Tumkur University

Abstract:
Financial untouchability prevents the poor and marginalised accessing formal financial
systems. Financial inclusion is becoming more appropriate in achieving inclusive growth of the
community. Connecting unbanked households to the mainstream banking services helps both
marginalised and economy growth. Financial inclusion is the delivery of financial services at
affordable cost to sections of disadvantaged and low income marginalised unit of society. An
estimated 2.5 billion working age adults globally have no access to the different types of formal
financial services (CGAP, 2017) . The major intension of Pradhan Mantri Jan Dhan Yojana
(PMJDY) is to include the marginalised people to share the benefits given by the government.
Against this background the present research note examines the impact of PMJDY in
empowering marginalised and analysis progress made by PMJDY, takes into account the visible
contribution of the banks towards the achievement of goals set under PMJDY and studies the
impact of PMJDY towards achievement of financial inclusion objection.

Key words: Marginalised, financial inclusion, financial untouchability, PMJDY,

economic development, mainstream, bank accounts, deposit mobilization

Introduction:

Population census 2011 highlights that a sizeable population both in rural and urban was
financially excluded, highlighting limited success or achievement of existing financial inclusion
programmes for the poor and marginalised. The previous schemes focused on reaching the
village through business correspondents, technology enabled banking etc. Pradhan Mantri Jan
Dhan Yojana (PMJDY) concentrates a “one house one account”. These are declared keping the

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interst of marganised and provide additional benefits like accident and life insurance, debit card,
overdraft and mobile banking facility. PMJDY drive launched on 28th August 2015 has given a
new hope of life to the poor and marginalised by providing better banking services. PMJDY
facilitated by banks has been opening more than 12.5 crores bank accounts which is a Guinnes
Book World Record (Ministry of Finance, 2015).

Some structural issue may emerge in the meantime like infrastructural issues pertaining within
India, aptitude to keep the accounts ‘live’, lack of monetary and technological literacy between
the masses, duplication of accounts etc. The strength of tackling these challenges will decide the
success of PMJDY (Vaishali, 2017). The different stake holders like banks, local bodies, central
and state government and agencies like NABARD, MPCL, etc., will have to struggle hard to
keep the accounts live (Achala & Geetanjali, 2015).

Financial Inclusion

Financial inclusion should not only serve the purpose of providing credit but it should also
ensure services like saving, insurance and other facilities. All the activities can be achieved
through either by advice by bank officials or by promoting literacy (Jerold, 2008).

Empowerment of Marginalised People

Empowerment is an active multidimensional process to enable women to realise their identity

and power in all spheres of the. Empowerment provides the marginalised a greater access to
knowledge and resources, more autonomy in decision making, greater ability to plan lives, more
control over the circumstances which influences lives, and freedom from customs, beliefs and
practices. It is a process which gives freedom in decision making (Arun, 2009). Rangarajan
Committee (2008) committee expressed that financial inclusion is a vital favorable instrument
for social transformation. A number of steps were taken by GOI in order to materialize the
concept of social transformation (Rangarajan, 2008). The main objective of launching PMJDY
is to implement the findings of 2011 census of India. Population census 2011 revealed that out of
a total of 250 million households, only about 145 millions or about three fifths of the total had
access to banking services (RBI, 2015). The introduction of PMJNY also brings equity among
the people across the nation. It is reported that 70% of people in extreme poverty are women
(Chestan et al., 2002). In developing countries that how poor households are managing their

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financial lives in order to achieve their multiple objectives (The Rabobank view, 2015). Further,
some research studies reveals that there is a positive correlation between access to finance and
firm creation, economic growth and poverty alleviation (Honhan, 2004). Census 2011 estimated
that out of 24.07 crores household in the country, 14.48 crores (58.7%) households had access to
banking services of the 16.78 crore rural households, 9.14 crores (54.46%) were availing
banking services of the 7.89 crore urban households, 5.34(67.68%) households were availing
banking services. During the year 2011 banks covered 74351 villages with population more than
2000 (as per 2001 census), with banking facilities under “Swabiman” campaign.

Present status of financial inclusion

Year Rural Urban

(%)
2001 30.1 49.5
2011 54.4 67.8
Source: ministry finance

Objectives of the study

1. To understand the need of providing banking services to the marginalised in the society.
2. To understand the path of empowering the marginalised.
3. To understand the need of empowerment through financial inclusion.

Research Methodology

Researcher carried out this study based secondary data available in Government reports and
other significant research reports.

Research Findings

Financial inclusion of Women

The level of financial inclusion among Indian adults increased by 20 percentage between 2014 and 2015,
an unparalleled rate of growth across the eight countries tracked by InterMedia’s financial inclusion
insights (FII) research programme. PMJDY is facilitating greater financial inclusion for the traditionally
under-banked segments of Indian society those living below the poverty line (BPL), those in rural areas
and women. Due in large part to PMJDY, the rate of financial inclusion for Indian women, for example,

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increased by 24 percent between 2014 and 2015, compared with an increase of 14 percent among men.
Despite not explicitly targeting women, it’s evident that PMJDY was particularly impactful for enabling
women’s ability to access financial services.

Jan Dhan Yojana reflects poverty at beginning

At least, 5.3 crore of the total 7.1 crore bank accounts opened under the Pradhan Mantri Jan-Dhan Yojana
(PMJDY) have 'zero balance' even as the government has deposited Rs 5,400 crore in accounts under the
scheme. According finance ministry in response to a Right to Information (RTI) query to Subhash
Agrawal that, out of 7.1 crore bank accounts opened, 5.3 crore had zero balance as on November 7
(2014). This clearly reflects the level of poverty in the country as people do not enough money to spare
for opening a bank account. Public sector banks normally ask for minimum Rs 1,000 as a mandatory
deposit which has to be maintained to retain the account. In the case of private sector banks, the minimum
sum is much higher at Rs 10,000 (Mail Today, 2014).

Current Status of Number of Accounts opened under PMJDY

Highest Deposit Mobilisation States
Bank (Rs. in Crores)
PNB 1040.6
SBI 942.36
Oriented Bank of Commerce 872.83
United Bank of India 852.25
Canara Bank 834.18
Bank of Baroda 735.94
State Bank of Bikaner, Jaipur 513.92
Central Bank of India 459.09
UCO Bank 420.62
Punjab and Sind Bank 400.62
Others 3040.74
Source: concern bank website report

The above table reveals that PNB had mobilised maximum deposits under PMJDY during the
study period. More than 50% of the deposits mobilised by the banks, where in PNB and SBI
have collected 20% of 10113.17 crores i.e., the total amount mobilsed by all banks.
Table 1: Statewide Funds Mobilization

Beneficiaries at
Beneficiaries at
rural/semi-urban Total
S.No State Name urban/metro centre
centre bank Beneficiaries
bank branches
branches
Total 42,084 401,880 443,964
1 Uttar pradesh 4,359 167,338 171,697

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 2 Karnataka 260 38,596 38,856
3 Haryana 12,933 10,130 23,063
4 Maharashtra 3,629 19,121 22,750
5 Madhya pradesh 4,862 16,129 20,991
6 Andhra pradesh 1,132 19,636 20,768
7 West bengal 837 16,988 17,825
8 Rajasthan 720 16,407 17,127
9 Punjab 2,675 13,738 16,413
10 Gujarat 4,434 10,966 15,400
Source: https://pmjdy.gov.in/statewise-statistics (PMYD, 2017)

The above reveals that Uttar Pradesh mobilized maximum deposits which are 15percentage of
total deposit mobilization. Other than this Karnataka, Hariyana, Maharashtra, Madyapradesh are
included in top 5 positions as far as deposits mobilization is concerned.

Linking Social Protection with Financial Services

Digitized social protection payments, also called Government-to Person-Payments (G2P) can
play in financially including chronically poor households. Before digitizing benefit payments,
easier access to bank accounts for all of society, especially poor households, has to be ensured
(William, Lucy, & Andrew, 2015) . India has taken various steps in this direction. In 2005 the
Reserve Bank of India (RBI), India’s central bank, introduced no- or minimum balance accounts,
so called ‘no-frills’ accounts, and lowered Know Your Customer (KYC) requirements. Seeing
that the poor often do not hold government-issued identification cards, the Government of India
introduced unique IDs, so called Aadhaar card, in 2010. Recent survey data shows that in 2015,
ownership of Aadhaar cards among individuals living below poverty line was evening out
relative to that of individuals living above poverty line (81percentage vs. 87 percentages). As an
additional feature, Aadhaar cards are linked to the digitization of G2P payments. In 2015, nearly
27percentage of surveyed individuals receive G2P. Gunther (forthcoming) shows that after
controlling for individual and household characteristics, the marginal effect of G2P on bank
account ownership is 19 percentage points. Of those who receive G2P, about 59 percentages
receive it in their bank account. Figure 4 shows that this is still proportionally larger for higher
income quintiles. The marginal effect on account use (defined as any financial transaction in the
past 90 days) is, however, smaller with an increased likelihood of 9 percentage points (Günther,
2016)

Conclusion

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Compared to the various welfare programmes and efforts put by the governments in previous
years, for building a common platform for all the unbanked people in India PMJDY, has created
new horizons for people who are marginalised for using banking services. Since rural
marganised population’s general perception have comparatively less level of awareness on
finacial and banking service, the same trend will be addressed by PMJDY in India. Financial
inclusion is going to play a significant role in empowerment of marginalised. Poverty is a bane
for the growth in India, which needs quick attention to address it. Since government transfer the
benefits of government sponsored project to he account householders directly, no avenue for
corruption. Inclusion can emerge as super power 2030 if poverty is arrested on time bond
schedule by 2026. Financial untouchability may be defined as inaccessibility to formal financial
system. In India, there are more than 1.15 lakhs branches of different banks but still majority of
people has no access to formal banking system. Different studies have shown that there is a
positive correlation between poverty and financial untouchability. Majority of rural and semi
urban people are dependent on local money lender for fulfilling their financial needs. These
money lender charges multiple times interest rate as compared to market price. This leads to a
situation of financial non-equilibrium in the society. Banks play a very important role in the
economic life of a nation. The health of the economy is closely related to the soundness of its
banking system. India cannot stand among the best economy of world until it fights with issue of
financial untouchability. Financial inclusion is the road map to fight against the issue. Financial
inclusion is the process of delivering access to financial facilities to all in transparent manner at
affordable cost.

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