Analysis of Jan Dhan Yojna - success or failure?

The BJP government led by Narendra Modi launched the Jan Dhan Yojna amid much fanfare as soon as it assumed power. Aimed at being an all inclusive financial scheme, it envisaged bringing all sectors of the society into banking services. Has it really been successful? Let us analyse the finer details here.


The Pradhan Mantri Jan Dhan Yojna, an ambitious financial inclusion scheme launched by the Modi government, has been touted as a roaring success. With the target of achieving 7.5 Crore accounts being accomplished, the scheme looks a great success on paper. But has it really achieved what it was aiming at? A million dollar question indeed.

What is Jan Dhan Yojna

It is a financial scheme that has targeted at the lower economic strata of the society to provide universal banking facilities. It is aimed at bringing the poor to the banking fold - a layer of the society hitherto untouched by the banking sector. To make the scheme more attractive, banks were made to bundle other facilities like insurance and overdraft.
Under the scheme
  • Account holders will have a zero balance account and a RuPay debit card along with accidental insurance cover of Rs. 1 Lakh.
  • Overdraft of upto Rs.5000 after six months of satisfactory operation of account.
  • Mobile banking through National Unified USSD Platform.

How did it perform?

The scheme was given a massive build up before the launch. The PM personally emailed the PSU banks chairmen claiming that "a bank account for each household is a national priority". A huge target of 7.5 Crore bank accounts was drawn. Nationalised banks were pressed into bringing more members into the fold of the scheme. A record 1.5 crore accounts were opened on the inaugural day!
  • By September, 20143.02 crore accounts were opened. Highest share was among the PSU banks with State Bank of India registering 30 Lakh accounts.
  • An estimated 7 crore accounts were opened by November, 2014 totalling around Rs. 5000 crore in deposits.
  • Seeing the target getting met, the government revised the target to 10 crore accounts by 26th January, 2015.
  • The scheme entered the Guinness Book of Records by setting a new record for "Highest Number of bank accounts opened in a week"

Has it really achieved what it aimed at?

The scheme was actually intended to encourage the unbanked sector of the country to use bank accounts for cash transactions. This objective has completely failed. Based on the records from PMJDY website, out of 7.5 Crore accounts opened so far around 5.48 crore accounts have zero balance! This amounts to around 75% of the total accounts opened. The scheme does not appear anything different from the similar schemes by previous governments. The banks were pressed to meet the target, thereby making them offer accounts to anyone no matter whether they fulfil the minimum KYC requirements. It has also been expected to aid Hawala operators to transfer funds.

Another point that should be noted here is that the drive is being used to gain political advantage by using PSU banks. An astonishing 5.84 crore accounts have been opened by PSU banks. Regional rural banks have opened around 1.2 crore and private banks have achieved just around 20 lakh accounts. Of the PSUs, SBI has opened 1.2 Crore accounts followed by Bank of Baroda with around 39 Lakh. The irony is that 91% of these accounts are devoid of any cash balance.

Most of the features of the scheme are ambiguous. The promised overdraft facility has been left to the decision of the banks concerned. Only those accounts having satisfactory operation (as per bank's discretion) will get overdraft facility. Banks will avoid getting into this fearing NPAs. The insurance schemes announced have no any kind of documentation available with the account holders. How can one be sure of what will happen at the time of claim settlement? I am not claiming that the scheme is an unnecessary exercise. It has the potential to relieve many poor families from the clutches of the local money lender. What has gone wrong is the hasty implementation and unusually illogical targets. What has added to this is the lack of proper education about the scheme.

My take on the scheme

Given the fact that banks have to incur costs to maintain accounts, more than 75% inoperative or zero balance accounts are a huge liability for the banks. It will further add up to the already existing problem of dormant accounts. Though the scheme has good potential and can be a great means of achieving financial inclusion, the implementation has completely failed. On that point, I will assume the scheme to be a failure despite the fact that the target has been achieved.

Read Pradhan Mantri Jeevanjyoti Bima Yojna - bringing insurance to common man's doorstep

Article by Timmappa Kamat
Timmappa Kamat is a technology enthusiast. He has an active interest in newer technological developments. He is fond of new gizmos & gadgets. He loves to share his knowledge through tech-savvy websites as a freelancer. A Mechanical Engineer by profession, he is equally interested in blogging, with his own blog. He wants to carve a name for himself in blogging arena one day! If you need any clarifications about his articles,please respond here below or get in touch with him through his profile.

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Author: Paresh Gujarati22 May 2015 Member Level: Gold   Points : 2

I agree with you what you have said with respect to the target of PM Jan Dhan Yojna. But the other side is very good as far as I know. Recently PM announced three schemes namely Pradhanmantri Suraksha Bima Yojna and Jeevan Jyoti Yojana which will provide insurance and personal accident cover. To take part in, one need to have saving account in any nationalized bank. Thus, PM Jan Dhan Yojna will serve this purpose. So, I do not consider this as a complete failure.

Author: Timmappa Kamat22 May 2015 Member Level: Gold   Points : 6

I am talking about the kind of implementation of the scheme. The scheme is better placed to make it an all inclusive finance initiative. Yet, the haste with which the targets are met, or the kind of lack of proper communication tend to lead to the real goal not being accomplished. More than 75% accounts having no transactions is definitely a burden on banks.

As for the newer schemes of PMJJBY, PMBSY and APY you just mentioned, even though they have been getting huge response - I am not seeing any demand for them from the very section of the society it is aimed at. The poor section is still far away from taking benefits of the schemes. Instead. it is the middle class or affluent that are opting for it.

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