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Universal access to financial services

How the Pradhan Mantri Jan Dhan Yojana (PMJDY) has worked over the past decade
03:18 AM Nov 18, 2023 IST | Guest Contributor
universal access to financial services
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Dr. Firdous Ahmad Malik

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Khair ul Samar

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The Pradhan Mantri Jan Dhan Yojana (PMJDY) has undergone a significant and noteworthy trajectory since its initiation. As of January 2022, a significant number of bank accounts, exceeding 430 million, were established throughout the nation, with a special emphasis on rural and underbanked regions, as part of this initiative. The initiative sought to extend financial services to each household in India, and it achieved notable advancements in pursuit of this objective. The Pradhan Mantri Jan Dhan Yojana (PMJDY), initiated in 2014, with the objective of ensuring universal access to financial services for all households in India. The initiative constituted a crucial milestone in promoting financial inclusivity and exerted a substantial influence on enhancing the economic agency of underprivileged segments of the population. In the subsequent parts, an in-depth exploration will be conducted on the decade-long trajectory of the Pradhan Mantri Jan Dhan Yojana (PMJDY), encompassing an examination of its concerns, obstacles, prospects, and a critical assessment of its results.

A Journey Spanning a Decade, since its start, the Pradhan Mantri Jan Dhan Yojana (PMJDY) has experienced a noteworthy trajectory. Within this framework, a substantial number of bank accounts were established throughout the nation, with a specific emphasis on rural and underbanked regions. The provision of fundamental banking services, such as savings and deposit accounts, facilitated the inclusion of those who were previously marginalized from the established financial infrastructure. Additionally, the system implemented several financial goods, such as overdraft facilities and insurance coverage, for the account users.

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The Pradhan Mantri Jan Dhan Yojana (PMJDY) initiative aimed to promote financial inclusivity but faced challenges such as insufficient financial literacy, inadequate infrastructure, misuse of accounts, and insufficient insurance coverage. A significant portion of account users, around 0.1%, engaged in misuse, and as of January 2022, around 40% of PMJDY accounts still exhibit dormancy with low average balances. The lack of adequate banking infrastructure, such as ATMs and bank branches, and the misuse of accounts for money laundering and fraudulent activities raise concerns about the sustainability of the system. The initiative’s sustainability challenges highlight the need for enhanced financial education and improved infrastructure.

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The Pradhan Mantri Jan Dhan Yojana (PMJDY) initiative has significantly benefited the economy and people by enabling the direct transfer of government subsidies and benefits to recipients. This has resulted in significant savings of approximately INR 100,000 crore annually, attributed to reduced leakages and enhanced operational efficiency. Overdraft facilities have also contributed to the disbursement of over INR 1.39 lakh crore in credit to various sectors, including small companies, farmers, and entrepreneurs. The initiative has also promoted financial inclusion, enabling millions of previously unbanked or underbanked individuals to access banking services. The introduction of savings and investment options has fostered a culture of financial discipline and responsible financial behavior. The Women Empowerment scheme has played a pivotal role in promoting women’s empowerment through the establishment and management of personal bank accounts. However, the initiative requires further focus on enhancing the utilization and involvement of these accounts, enhancing financial literacy, investing in infrastructure development, preventing misuse, reassessing insurance coverage, and preserving the sustainability of PMJDY accounts. The initiative has also facilitated women’s empowerment through encouraging them to establish bank accounts, but further efforts are needed to ensure their active involvement in financial decision-making and economic endeavors.

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Critical Evaluation: In this analysis, we will critically evaluate the subject matter at hand. The statistical data provides insights into both the accomplishments and obstacles encountered by the Pradhan Mantri Jan Dhan Yojana (PMJDY) initiative. Ongoing endeavors are vital to augment financial literacy, increase infrastructure, mitigate misuse, and guarantee sustainability. In the current digital transaction era, the importance of data security and privacy cannot be overstated. To thoroughly assess the impact of a particular scheme, it is imperative to incorporate statistical indicators such as poverty reduction, income generation, and economic development.

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In conclusion, it can be inferred that The Pradhan Mantri Jan Dhan Yojana has made substantial progress in promoting financial inclusion and enhancing economic empowerment throughout the course of its ten-year implementation. Although India encountered numerous obstacles, it concurrently generated prospects for millions of its citizens. A comprehensive assessment underscores the imperative of enhancing financial literacy, infrastructure, and sustainability, with the imperative of tackling concerns like as misuse and insufficient insurance coverage.

Dr. Firdous Ahmad Malik, Assistant Professor of Economics, University of People, Pasadena, California, United States

Khair ul Samar, Doctoral Fellow, Department of Economics, Islamic University Science and Technology, J&K

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