Research Note

Pradhan Mantri Jan-Dhan Yojana:

An Effort Towards Financial Inclusion

n the modern era of liberalization,

globalization, and privatization,
growth and development depends on the
ability of any nation to use its financial
resources through proper funds mobilization
and disbursements. In a country like India, where
a big population lives in rural areas and do not
have sufficient access to financial services,
financial inclusion assumes paramount
importance indeed. Greater financial inclusion
presents opportunities to enhance financial
stability (Hannig and Jansen, 2010).
According to Kunt and Klapper (2012),
50% of adults worldwide have an account at
a formal financial institution, though account
penetration varies widely across regions,
income groups and individual characteristics.
Although half of adults around the world
remain unbanked, at least 35% of them report
barriers to account use that might be addressed
by the public policy. Among the most
commonly reported barriers are high cost,
physical distance, and lack of proper
documentation, though there are significant
differences across regions and individual
characteristics. Allen et al. (2012) highlighted
that policies to reduce barriers to financial
inclusion may expand the pool of eligible
account users and encourage existing
accountholders to use their accounts with
greater frequency and for the purpose of saving.

2015 IUP
. All Rights Reserved.
Research
Note

Over the years, the Indian government has

been taking many steps to make financial
services accessible to all the people in the
country. The recent scheme, Pradhan Mantri
Jan-Dhan Yojana (PMJDY), launched by the
Indian Prime Minister, is a step ahead for
strengthening financial inclusion practices in
the country.
PMJDY is a national mission for financial
inclusion to ensure access to financial services,
namely, banking/savings and deposit accounts,
remittance, credit, insurance, pension, etc. in
an affordable manner. PMJDY is an ambitious
program with a target of covering 7.5 crore
unbanked households in the country by
January 26, 2015. It was launched on August
28, 2014.
Accounts can be opened in any bank
branch or Business Correspondent (BC) (Bank
Mitra) outlet. PMJDY accounts are being
opened with zero balance. However, if the
accountholder wishes to get a check book, he/
she will have to fulfill minimum balance
criteria.
The Yojanas main focus areas are creating
awareness regarding account opening among
all households in rural and urban areas; and
financial literacy.
The Yojana will be implemented in two
phases:
49

Phase I (August 15, 2014 to August 14, 2015):

Universal access to banking facilities for
all households across the country through
a bank branch or a fixed point BC within
a reasonable distance, except areas with
infrastructure and connectivity constraints.
Covering all households with at least one
basic banking account with RuPay Debit
Card having inbuilt accident insurance
cover of 1 lakh. Further, an overdraft
facility up to 5,000 will also be permitted
to Aadhaar-enabled accounts after
satisfactory operation in the account for 6
months.
Financial literacy program which aims to
take financial literacy to village level.
Envisaging expansion of Direct Benefit
Transfer under various government
schemes through bank accounts of the
beneficiaries.
Issuance of Kisan Credit Card (KCC) as
RuPay Kisan Card is also proposed to be
covered under the plan.
Phase II (August 15, 2015 to August 14, 2018).
Providing micro-insurance to the people.
Unorganized sector pension schemes like
Swavalamban through the BCs.

observed that the total number of banking

outlets has been increased to 3,83,804,
indicating 467% change. Moreover, the
contribution of BCs is also remarkable. The
figure has increased to 135 times in the last
five years. Additional 257.28 bn have been
collected through 169.55 million accounts.
Further, 2,444.43 bn and 1,061.79 bn of
additional money has been disbursed via 15.59
and 6.01 million of KCCs and General Credit
Cards (GCCs), respectively.
The monthly progress of account opening
and issuance of RuPay cards during the study
period is shown in Figure 1. A total of 7.27
and 4.87 crore accounts have been opened in
rural and urban areas. Further, a total of 10.72
crore of RuPay cards have been issued.
Figure 2 indicates that the public sector
banks opened more number of accounts both
in rural and urban areas compared to private
banks and Regional Rural Banks (RRBs).
Moreover, the percentage of account opening
is higher in rural areas than urban areas.
Further, RRBs have performed five times better
than private banks in account opening in rural
areas only. Approximately, 82% of RuPay
cards have been issued by the public sector
banks only during the study period.

Against this background, this research note

examines the progress in financial inclusion
plans over the last five years; analyzes the
progress made by PMJDY from August 15,
2014 to January 26, 2015; identifies the
contribution of the banks towards achievement
of goals set under PMJDY; and studies the
impact of PMJDY towards the achievement
of financial inclusion objectives.

Figure 3 shows that deposits collected in

accounts have increased from 1,107 cr to
10,113 cr in five months. 39,301,671
accounts have 1,011,316.69 lakh of
mobilized deposits. While 82,132,710
accounts have still zero balance,
approximately, 36% of the accounts have
balances. Public sector banks have mobilized
79% ( 7,947.725 lakh) of cash through 81%
(316.6 lakh) of accounts opening.

The progress in financial inclusion plan over

the last five years is presented in Table 1. It is

With regard to Aadhaar-seeded account,

out of 36 states and union territories, only

50

The IUP Journal of Bank Management, Vol. XIV, No. 2, 2015

Research Note

51

67,694

Banking Outlets in Villages Total

bn)

bn)

bn

ICT a/cs-BC Transactions amount in

6.92

26.52

ICT a/cs-BC Transaction no. in million

GCCs (amount in

35.11

1.39

1,240.07

24.31

0.1

0.18

55.02

73.45

bn)

GCCs (no. in million)

KCCs (amount in

KCCs (no. in million)

OD Facility Availed in Basic Savings Bank

Deposit a/c (amount in bn)

OD facility Availed in Basic Savings Bank

Deposit a/c (no. in million)

BSBDA Total (amount in

BSBDA Total (in million)

447

34,316

Banking Outlets in Villages Other Modes

Urban Locations Covered Through BCs

33,378

March-10

Banking Outlets in Villages Branches

Particulars

58

84.16

35.07

1.7

1,600.05

27.11

0.26

0.61

76.12

104.76

3,771

1,16,208

81,397

34,811

March-11

97.09

155.87

41.84

2.11

2,068.39

30.24

1.08

2.71

120.41

138.5

5,891

1,81,753

1,44,282

37,471

March-12

233.88

250.46

76.34

3.63

2,622.98

33.79

1.55

3.95

182.92

182.06

27,143

2,68,454

2,27,617

40,837

March-13

524.4

328.6

1,096.9

7.4

3,684.50

39.9

16

5.9

312.3

243

60,730

3,83,804

3,37,678

46,126

March-14

466.97

884.02

38.19

3,177.78

467.61

230.84

517.48

302.08

1,061.79

6.01

2,444.43

15.59

7,478.03

1,139.06

3,024.18

432.37

197.12

64.13

15.90 15,900.00

5.72

257.28

169.55

60,283 13,486.13

3,16,110

3,03,362

12,748

Progress
% Change
from 2010
(Progress)
to 2014

Table 1: Financial Inclusion Plan Summary Progress of All Banks, Including RRBs

10,71,,82,523

8,46,30,731

5,25,69,874

3,53,05,254

1,78,48,949

4,87,50,992

4,21,33,595

3,37,32,820

6,23,48,872

200,00,000

2,81,13,748

400,00,000

2,17,13,191

600,00,000

3,12,65,366

800,00,000

4,06,04,949

1000,00,000

4,95,01,384

1200,00,000

7,26,83,389

Figure 1: Monthly Progress of Account Opening and Issuance of

RuPay Cards During the Study Period

September

October

No. of RuPay Debit

Cards (Cumulative)

Urban

Rural
November

January

December

Figure 2: Status of Accounts Opened by Various Public, Private and Rural

Regional Banks in Rural and Urban Areas at the End of the Study Period
(in lakh)
1,000

882.67

800
600

515.91

436.2

400
179.45

200

145.73

31.47

19.36 31.96

Rural

Urban

43.45

Public Banks

Private Banks

16 states have opened more than 50%

Aadhaar-seeded accounts. Out of all
Aadhaar-seeded accounts, public sector
banks have contributed 88% of accounts,
followed by RRBs contributing 10% of
52

RuPay Debit Cards

RRBs

accounts. Further, public sector banks have

more than 40% of their accounts as
Aadhaar-seeded accounts.
Bank-wise contribution towards account
opening and deposit mobilization during

The IUP Journal of Bank Management, Vol. XIV, No. 2, 2015

August 15, 2014 to January 26, 2015, is

Figure 3: Progress in Deposits During the
presented in Table 2 and Figure 4,
Study Period
(in cr) respectively.
It is observed that State Bank of India
had opened maximum number of accounts
8,353
in rural and urban areas. Further, as per
6,494
Figure 4, Punjab National Bank had mobilized
5,181
maximum deposits under PMJDY during the
3,972
study period. More than 50% of the deposits
have been mobilized by just six banks, wherein
1,107
Punjab National Bank and State Bank of
India have collected 20% of 10,217.48 cr,,
Aug. Sep.
Oct.
Nov. Dec. January
i.e., the total amount mobilized by all banks
31
31
31
24
29
30
till January 28, 2015.
10,113

Table 2: Bank-Wise Highest Account Opening Status

Rank

Bank

Rural

Bank

Urban

(in lakh)

Bank

Total

State Bank of India

134.12 State Bank of India 151.18 State Bank of India

(18.45)
(31.01)

285.30
(23.49)

Punjab National Bank

73.00 Bank of Baroda

(10.04)

Central Bank of India

60.07 Bank of India

(8.26)

36.34 Bank of Baroda

(7.45)

Canara Bank

43.64 Canara Bank

(6.00)

21.55 Central Bank of India 75.77

(4.42)
(6.24)

United Bank of India

41.46 UCO Bank

(5.70)

19.15 Bank of India

(3.93)

42.37 Punjab National Bank 89.34

(8.69)
(7.36)
83.47
(6.87)

72.10
(5.94)

Note: Percentage values are shown in parentheses.

Research Note

cr)

942.56

872.83

852.25

834.18

735.94

513.92

459.09

420.62

400.44

State Bank of
India

Oriental Bank
of Commerce

United Bank of
India

Canara Bank

Bank of Baroda

State Bank of
Bikaner and
Jaipur

Central Bank
of India

UCO Bank

Punjab & Sind

Bank

Others

1,040.60
Punjab
National Bank

3,500
3,000
2,500
2,000
1,500
1,000
500
0

(in
3,040.74

Figure 4: Bank-Wise Highest Deposit Mobilization Status

53

Table 3 indicates proportionate

contribution of top five states in account
opening under PMJDY during the study period.
Percent contribution for account opening in
rural and urban areas, and collectively for the
whole country has been studied and top five
have been listed in the table. Uttar Pradesh
had opened the maximum number of bank
accounts in urban and rural areas. Moreover,
maximum deposits have been mobilized in
Uttar Pradesh (see Figure 5), which is 15% of
the total deposits. Other than this, Bihar,
Rajasthan and West Bengal are included in
the top 5 positions for opening of accounts
and deposit mobilization via savings account
opening under PMJDY.

the districts have covered almost 100% target.

Survey of just 63 Sub Service Areas (SSAs)
are pending out of 226,197.

Out of 677 districts, only four districts have

household coverage less than 98%. Rest of

The findings of the study reveal the

following:

The ratio of total accounts to population

is maximum in Chhattisgarh, i.e., 21%
(as per Census 2011).

Public sector banks are leading RRBs and

private sector banks in account opening and
deposit collection in both rural and urban
areas under the scheme. 81% of urban area
accounts and 71% of rural area accounts
have been opened by public sector banks.

Out of all the accounts, 39,301,671

accounts have 1,011,316.69 lakh of

Table 3: State-Wise Highest Account Opening Status

Rank

Rural

State

15.58

Urban

State
Uttar Pradesh

15.01

(in %)
Total

State

Uttar Pradesh

Bihar

8.32

Madhya Pradesh

9.85

Madhya Pradesh

Uttar Pradesh

15.35
7.89

West Bengal

7.94

Maharashtra

8.81

West Bengal

7.29

Rajasthan

7.10

Rajasthan

7.07

Rajasthan

7.09

Madhya Pradesh

6.58

West Bengal

6.31

Bihar

6.95

Figure 5: State-Wise Funds Mobilization

54

792

609

589

432

394

Punjab

Haryana

Maharashtra

Karnataka

Gujarat

Others

827
West Bengal

2,924

cr)

393

864
Rajasthan

Tamil Nadu

872
Bihar

1,522
Uttar Pradesh

3,500
3,000
2,500
2,000
1,500
1,000
500
0

(in

The IUP Journal of Bank Management, Vol. XIV, No. 2, 2015

mobilized deposits till the end of the study

period.

Private sector banks have opened

maximum number of accounts with
balances. The total number of accounts
opened by private sector banks included
41% accounts with deposits, while the
percentage of accounts with deposits in
case of public sector banks was 33%.
Therefore, the focus of public sector banks
was more on account opening, while
private sector banks were focusing on
account opening with deposit amount.
Among all banks, State Bank of India,
and among all states/union territories,
Uttar Pradesh, have contributed most
towards the achievement of objectives laid
by the Prime Minister in this financial
inclusion plan.

Compared to the various other efforts

enforced by the government in the previous
years for building a platform for all unbanked
people in India, the new scheme, PMJDY, has
created new horizons for people for using
banking facilities. On January 20, 2015, the
scheme had entered into Guinness Book of
World Records setting a new record for The
most bank accounts opened in one week.
Undoubtedly, 12 crore accounts have been
opened in just five months, but more than
two-thirds of the accounts are still with zero
balance. Even attractive offers presented by
the Prime Minister like zero balance, free
insurance and overdraft facility may have
resulted in duplicity of accounts. The claimed
overdraft facility has been completely left to
the banks. According to the government notice,
only those people whose transaction record is

satisfactory as per the banks would get the

overdraft facility.1 It is quite unlikely that many
people would get this facility, as the banks
would avoid potential NPAs. So, further new
approaches should be invented to ensure
financial inclusion so as to make the economy
stronger and more transparent and effective.
The idea behind financial inclusion is not
new, since 2005 many policies have been
framed to make financial service base stronger
for all the unbanked villages, households and
people. Still there is a huge scope for
refinement in schemes to avoid duplicity in
accounts and make all accounts active. H

Bibliography
1. Allen F, Kunt A D and Klapper L F and
Martinez Peria M S (2012), The
Foundations of Financial Inclusion:
Understanding Ownership and Use of
Formal Accounts, World Bank Policy
Research Working Paper No. 6290.
2. Hannig A and Jansen S (2010),
Financial Inclusion and Financial
Stability: Current Policy Issues, ADBI
Working Paper 259, Asian Development
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Research Note

55

11. http://www.pmjdy.gov.in/accountstatistics-country.aspx

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56

12. http://www.sify.com/finance/is-thereanything-new-at-all-in-pm-modi-s-muchtouted-jan-dhan-yojana-imagegallery-2economy-ojdrb9cdgjdci.html
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Varsha Gupta*
* Assistant Professor, School of Management Studies,
Baddi University of Emerging Sciences and
Technology, Baddi, Solan 173205, Himachal Pradesh,
India. E-mail: varshagarg2083@yahoo.co.in

Reference # 10J-2015-05-04-10

The IUP Journal of Bank Management, Vol. XIV, No. 2, 2015

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