PMJDY: Time to review

shishir

Shishir Tripathi | May 25, 2015


#PMJDY   #jan dhan yojana   #pradhan mantri jan dhan yojana   #bank accounts jan dhan   #jan dhan guiness record   #arun jaitley   #naredra modi  


One year into office, prime minister Narendra Modi is still in a mission mode – to launch new or revamped government schemes. Even as he launched three new schemes on May 9, one of his first, the pradhan mantri jan dhan yojana (PMJDY), remains the flagship scheme – its success hinged to the success of the NDA government.

From his speech at the Madison Square Garden in the US to election rallies to his statements on social media, the scheme, touted as a game changer, has been top on Modi’s mind, but has it changed anything in its first eight months?

The scheme envisages universal access to banking facilities with at least one basic banking account for every household, along with financial literacy and access to reasonable credit, to be complemented by insurance and pension. The beneficiaries get a RuPay debit card having an inbuilt accident cover of '1 lakh and after six months an overdraft facility of '5,000, provided the account is ‘active’ during the period. Those who opened their first bank accounts between August 15, 2014 and January 26, 2015 also got a life cover of '30,000.

Amid all the cheering, there have been discerning voices of bankers and experts who have raised concerns. Reserve Bank of India (RBI) governor Raghuram Rajan was the first to raise a red flag when he said mere opening of accounts will not help and the real aim should be to keep these accounts operational or else it will lead to large amount of dormant accounts.

The concerns raised by Rajan almost came to be true. On revising the target (from the earlier 7.5 crore to 10 crore by January 26, 2015) in November, finance minister Arun Jaitley admitted the problem and said efforts should be made to raise the deposit level in the zero balance accounts through financial literacy programmes. He asked the mission to take up financial literacy.

Even as questions were raised on the viability of the scheme, PMJDY on January 20 entered the Guinness Book of World Records for opening the maximum number of bank accounts in the shortest possible time. The number of zero balance accounts came down from 71 percent in the first week of January to 57.9 percent on March 31, after the launch of direct benefit transfer (DBT).

Three more social security schemes have now been launched as extensions to the PMJDY. The pradhan mantri suraksha bima yojana (PMSBY) and pradhan mantri jeevan jyoti bima yojana (PMJJBY) would provide insurance cover in the event of death or disability due to an accident. The third, the Atal pension yojana (APY), would address old-age income security needs.

The real success of the PMJDY will, however, depend on how many people are accessing institutional credit or how effective the insurance cover will be as a social security net. As of now figures are far from impressive, rather they are dismal. According to the department of financial services, the total number of accidental insurance claims received is 174, out of which 79 have been settled. Further, 158 claims under life insurance were received by the department, out of which 93 have been settled. The insurance benefit has shown almost no results, as the scheme has several riders.

Similarly, whether the RuPay card leads to a cashless economy will be yet another denominator in assessing the success of the scheme. Jaitley had said the '5,000 overdraft facility could be used as an instrument of microfinance. In spite of clarifications by the government, bankers say, it is still unclear who can avail this benefit.

Another pain point is the communication infrastructure of banks, with most yet to be fully computerised. Then there is the issue of manpower crunch and lack of training of banking staff to cater to this particular segment that had never been to a bank.

Eight months may be too short a period to gauge the full impact of the PMJDY, but is enough to indicate the need for a review.

Comments

 

Other News

Sowing wheat earlier can help increase yields in India: US researcher

Yield gaps in wheat production in India can be countered with an earlier sowing date, says a University of Michigan researcher.   Using a new way to measure wheat yields, Meha Jain, assistant professor at the U-M School for Environment and Sustainability, found that the wheat yie

Giving birth as a Baiga

Kharpariya village, about 50 km from the headquarters town of Madhya Pradesh’s Mandla district, is like many villages in the region, home to the Baiga, deemed a particularly vulnerable tribal group (PVTG) for whom permanent contraception methods are banned to prevent extinction. However, care for p

Being the prime minister’s brother

Somabhai Modi says he remembers only one occasion when he offered his younger brother prime minister Narendra Modi advice regarding work. This, he says, was when Modi was chief minister of Gujarat. After one of his weekly grievance redressal sessions, the then chief minister had enquired after the well-b

Should ration cards not linked to Aadhaar be rendered ineligible?

Should ration cards not linked to Aadhaar be rendered ineligible?

INS Kiltan commissioned into Indian Navy

 INS Kiltan, the third anti-submarine warfare (ASW) stealth corvette built under project 28 (Kamorta class), was commissioned into the Indian Navy by defence minister Nirmala Sitharaman at the naval dockyard in Visakhapatnam.    The anti-submarine warfare stealth corvet

SAIL`s special grade steel used to build stealth corvette

Maharatna enterprise, Steel Authority of India Ltd. (SAIL) has supplied defence grade micro-alloyed grade of steel (DMR 249A) steel plates for the indigenously built anti-submarine warfare (ASW) stealth corvette INS-Kiltan commissioned into Indian Navy.    SAIL’s integ



Video

Grand Diwali celebrations in Ayodhaya on eve of diwali

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter