Pradhan Mantri Jan Dhan Yojana (PMJDY) Introduction
- The Government of India launched the Pradhan Mantri Jan Dhan Yojana (PMJDY) in 2014, a landmark initiative aimed at bringing the unbanked population into the formal financial system.
- As the scheme completes 11 successful years, it continues to play a pivotal role in strengthening financial inclusion, empowering vulnerable communities, and promoting inclusive economic growth.
What is Pradhan Mantri Jan Dhan Yojana (PMJDY)?
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- Pradhan Mantri Jan Dhan Yojana is a National Mission on Financial Inclusion which has an integrated approach to bring about comprehensive financial inclusion and provide banking services to all households in the country.
- Operating under the slogan “Mera Khata, Bhagya Vidhata” (My Account, Fortune Maker), PMJDY has been instrumental in integrating millions into the formal banking system, ensuring they actively participate in India’s economic growth.
- National Mission for Financial Inclusion:
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- Comprehensive Banking Access: PMJDY aims to provide access to a basic savings bank account for every household in India.
- Inclusive Financial Services: Beyond accounts, the scheme ensures availability of credit, remittance facilities, insurance, and pension schemes, all at affordable costs.
- Targeted Approach: The scheme prioritizes women, rural populations, and historically marginalized groups, helping them join the mainstream financial ecosystem.
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- Historic Launch and Nationwide Outreach:
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- On the day of its launch, banks organized 77,892 camps across the country.
- Around 1.8 crore bank accounts were opened on August 28, 2014, marking one of the largest financial outreach initiatives in India’s history.
- The initiative set the stage for a massive drive in financial literacy and inclusion, connecting the unbanked population with formal financial institutions.
What have been the Benefits of Pradhan Mantri Jan Dhan Yojana (PMJDY)?
- Universal Account Accessibility:
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- Every Household Covered: PMJDY aims to ensure that each household has at least one bank account, bridging the gap between unbanked citizens and formal financial institutions.
- Ease of Banking: By opening access to basic banking services, the scheme facilitates financial inclusion at the grassroots level, helping citizens save, transact, and access government benefits.
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- Zero Balance Accounts:
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- No Minimum Balance Requirement: PMJDY accounts can be opened without maintaining any minimum balance, making banking affordable and convenient for low-income individuals.
- Earns Interest: These accounts function like regular savings accounts, allowing interest accumulation on deposits while ensuring financial accessibility.
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- Overdraft Facility:
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- Financial Support for Women: Account holders, particularly women, can avail of an overdraft facility of up to Rs. 10,000.
- Promoting Empowerment: This feature provides short-term financial support, encouraging women’s economic participation and entrepreneurship.
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- Accident Insurance Cover:
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- Insurance Benefits: Free accidental insurance cover on RuPay cards was increased from Rs 1 lakh to Rs 2 lakh for PMJDY accounts opened after August 28, 2018.
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- Direct Benefit Transfers and Linked Schemes:
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- Seamless Government Transfers: PMJDY accounts are eligible for Direct Benefit Transfers (DBT), facilitating smooth and timely delivery of subsidies and welfare benefits.
- Linked Schemes: Beneficiaries can also access Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY), Atal Pension Yojana (APY), and the Micro Units Development & Refinance Agency Bank (MUDRA) scheme.
- Financial Inclusion: These linkages enhance access to insurance, pension, and credit facilities, ensuring a holistic approach to financial empowerment.
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- Financial Literacy:
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- Promoting Responsible Banking: PMJDY emphasizes financial education, helping account holders understand savings, investment, credit, and insurance products.
- Awareness Initiatives: Campaigns and programs are conducted to enhance knowledge and encourage responsible financial behavior among citizens, especially in rural areas.
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- Bank Mitras for Branchless Banking:
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- Extending Reach to Remote Areas: PMJDY employs Bank Mitras, trained representatives who provide branchless banking services in rural and underserved regions.
- Inclusive Service Delivery: Bank Mitras help citizens open accounts, deposit and withdraw money, and access other financial services without visiting a bank branch.
What have been the Achievements of Pradhan Mantri Jan Dhan Yojana?
- Massive Expansion of Bank Accounts:
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- Total Accounts Opened: As on 13th August 2025, total number of PMJDY Accounts have reached 56.16 crore.
- Women Beneficiaries: Out of these, 55.7% (31.31 crore) Jan-Dhan account holders are women.
- Bank-Wise Distribution of Accounts: The majority of PMJDY accounts are held in public sector banks, indicating the central role of government banks in financial inclusion:
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- State-Wise Analysis of PMJDY Accounts:
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- Highest Number of Accounts: Uttar Pradesh leads the way with 9.45 crore accounts, reflecting the state’s population size and concerted outreach efforts.
- Lowest Number of Accounts: Lakshadweep reports the lowest, with only 9,256 accounts, primarily due to its small population.
- Expanding Banking Access to the Unbanked:
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- Historical Growth in Account Ownership: As per the World Bank Findex Database, account ownership among Indian adults (15+ years) rose from 53% in 2014 to 78% in 2021.
- Global Comparison: Between 2014 and 2017, India recorded a 26% growth in account ownership, four times higher than the global rate and three times higher than other developing nations.
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- Narrowing the Rural-Urban Financial Divide:
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- Rural Penetration: Approximately 67% of PMJDY accounts have been opened in rural and semi-urban areas.
- This initiative has significantly reduced disparities in access to banking services between urban and rural populations, promoting inclusive financial growth.
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- Strengthening Banking Infrastructure: The surge in account openings under PMJDY has driven expansion in banking infrastructure:
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- Facilitating Direct Benefit Transfers (DBT):
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- JAM Trinity Integration: PMJDY accounts are a core component of the JAM (Jan Dhan–Aadhaar–Mobile) trinity, enabling efficient direct benefit transfers.
- Financial Reach: The government has transferred a cumulative Rs 38.5 lakh crore through JAM-enabled accounts.
- Leakage Prevention: DBT ensures elimination of ineligible beneficiaries, saving Rs 3.48 lakh crore in schemes such as MGNREGA and PM-Kisan.
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- Providing Timely Support During Crises:
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- Pandemic Relief: During COVID-19, the government transferred Rs 500 to 20 crore women PMJDY account holders, offering rapid financial assistance in times of distress.
- Outcome: PMJDY facilitated prompt social security delivery, especially to vulnerable groups.
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- Promoting Digital Payments and a Cashless Economy:
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- UPI Integration: PMJDY accounts form an integral part of Unified Payments Interface (UPI), which has revolutionized digital transactions in India.
- Impact on Low-Income Households: Widespread adoption of low-value digital payments reflects ease of access for everyday financial transactions, boosting the digital economy.
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- Positive Socio-Economic Externalities:
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- Consumption Smoothing: A 2022 study, Access to Banking, Savings & Consumption Smoothening in Rural India, found that access to banking improves consumption stability by reducing savings constraints.
- Crime and Substance Reduction: An SBI Research report (2021) observed that states with higher PMJDY penetration reported lower crime rates and reduced consumption of alcohol and tobacco.
- Implication: PMJDY not only enhances financial access but also positively influences social behavior.
Obstacles in Pradhan Mantri Jan Dhan Yojana (PMJDY)
- Dormant and Inactive Accounts:
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- Current Status: Despite opening over 53 crore accounts by 2023, many accounts remain inactive. Approximately 86.3% of PMJDY accounts are operational, implying a significant proportion of accounts remain unused.
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- Risk of Misuse as Mule Accounts:
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- Some PMJDY accounts have been misused for fraudulent activities, including money laundering and black money storage.
- For instance, post-demonetization in 2016, reports highlighted large sums deposited in dormant accounts, raising concerns about the scheme’s vulnerability to financial fraud.
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- Infrastructure Constraints:
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- Inadequate physical and digital infrastructure, especially in rural areas, limits account usage.
- For instance, villages in Bihar and Uttar Pradesh often lack functional bank branches or ATMs, creating barriers to accessing banking services.
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- Technological Barriers:
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- Poor internet connectivity and outdated banking technology affect account management.
- Remote account holders face difficulties in conducting transactions, hampering financial inclusion objectives.
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- Lack of Financial Literacy:
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- Many beneficiaries are unaware of PMJDY features, such as overdraft facilities and insurance cover.
- Limited financial literacy prevents effective utilization of banking services provided under the scheme.
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- Duplication of Accounts:
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- Multiple accounts under different schemes lead to duplication, complicating data management.
- The actual number of beneficiaries is skewed, affecting the accuracy of policy assessment and monitoring.
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- Exclusion of Marginalized Populations:
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- Certain groups, such as tribal populations or people in remote regions, remain excluded due to social and geographical barriers.
- Low banking penetration is observed in the tribal areas of Chhattisgarh and Jharkhand, limiting the scheme’s reach and impact.
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- Persistent Gender Disparity:
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- In conservative rural areas, women are less likely to use PMJDY accounts independently due to social norms.
- Restricted mobility and financial autonomy limit the scheme’s potential to empower women financially.
Way Forward
- Enhancing Financial Literacy:
- Large-scale financial literacy campaigns should be implemented in collaboration with local community leaders, NGOs, and educational institutions.
- This will improve awareness and encourage more effective use of Jan Dhan accounts.
- Promoting Active Use of Accounts:
- The active usage of PMJDY accounts can be encouraged by linking them with various government schemes, subsidies, and welfare benefits.
- For example, introducing incentives such as interest on savings, overdraft facilities, or cashback for digital transactions can motivate account holders to use their accounts regularly.
- Integration of Financial Services:
- Jan Dhan accounts should be integrated with services like microcredit, pension schemes, and insurance products.
- This will add value for account holders and increase the functional use of these accounts.
- Strengthening Banking Infrastructure:
- Expansion of the banking network in underserved rural and remote regions is essential.
- This can be achieved by setting up more branches, ATMs, and digital touchpoints.
- Greater use of Business Correspondents (BCs) and mobile banking units will also help extend services to remote populations.
- Regular Monitoring and Feedback:
- A structured system for monitoring and evaluating the progress of PMJDY should be established.
- Feedback from beneficiaries must be incorporated to adapt the scheme to emerging needs and challenges.
