3. Pradhan Mantri Jan-Dhan Yojana (PMJDY) is necessary for bringing unbanked to the institutional finance fold. Do you agree with this for financial inclusion of the poorer section of the Indian society? Give arguments to justify your opinion.

3. Pradhan Mantri Jan-Dhan Yojana (PMJDY) is necessary for bringing unbanked to the institutional finance fold. Do you agree with this for financial inclusion of the poorer section of the Indian society? Give arguments to justify your opinion. (UPSC Mains 2016)GS-III 2016

            Financial inclusion denotes access to institutional credit and banking facilities.

           Since 1960’s various schemes have targeted at achieving financial inclusion. Pradhan Mantri Jan Dhan Yojana (PMJDY) is part of a Comprehensive Financial Inclusion Plan whose first phase aims at universal access to basic banking facilities. The programme got listed in Guiness World Record for enrolling 1.8 crore bank accounts in its first week.

           PMJDY is necessary for bringing unbanked to the intuitional finance fold. It aims to enhance banking coverage and retain customers through specific targeting.

           Financial inclusion can be addressed only by creating awareness and special targeted schemes. PMJDY has done both. Various features which have distinguished and increases the chances of successful inclusion are

• Increased co-ordination between banks, states and central government .
• Relaxation and extension of Know Your Customer (KYC) norms.
• Targeting of households:

Earlier schemes had targeted individuals. PMJDY follows Sub Service Area (SSA) Approach. Each business correspondents (BC’S) are allotted an area of 100-150 households.(SSA) need based credit facilities.

• Rupay Smart Cards are issued to PMJDY account holders. These include,
• Overdraft facility.  
• Social security provisions - life, personal accident insurance and pension facilities.
• Tackling dormant account problem.

There have been a trend of some bank accounts just opened and left dormant .PMJDY encourages usage of its credit facilities.

Also, Direct Benefit Transfer (DBT) of Subsidies for various Schemes are also made to the bank accounts of the beneficiaries.

    PMJDY has increased awareness and the drive for less cash India (aided by Demonitisation). There has been more banking transactions. The Global Findex report by World Bank has acknowledged the increased coverage of formal bank accounts in India.

    Thus PMJDY not aims at successful financial inclusion of the poor section of society but targets them specifically for last mile delivery of government benefits. The government has relied  on JAN ( Jan Dhan, Aadhar, Mobile) Trinity as the base of its anti-poverty programme and this has served the nation  well.