Answer:

The Pradhan Mantri Jan Dhan Yojana (PMJDY), launched in 2014, aims to provide universal access to banking facilities, particularly for the unbanked and underserved populations. With over 53 crore bank accounts opened by 2023, including 55.5% held by women, PMJDY represents a significant step towards financial inclusion in India, fostering economic participation and empowerment across various demographics.

Effectiveness of PM Jan Dhan Yojana in Promoting Financial Inclusion:

• Expanding Banking Access to the Unbanked: PMJDY has significantly increased banking access by opening accounts for individuals who previously had no access to formal financial services, promoting a culture of saving and financial security.
• Facilitating Direct Benefit Transfers (DBT): The scheme has enabled the seamless transfer of government subsidies and benefits directly into the bank accounts of beneficiaries, reducing leakages and ensuring targeted delivery.
  For example: Over ₹39 lakh crore has been transferred directly to beneficiaries through PMJDY accounts, reducing dependency on intermediaries.
• Empowering Women through Financial Inclusion: PMJDY has empowered women by opening bank accounts for them, enabling financial independence and participation in economic activities, thereby promoting gender equality.
  For example: Nearly 30 crore women have been brought into the banking system under PMJDY, constituting about 55.5% of the total accounts opened.
• Enhancing Financial Literacy and Inclusion: The initiative has increased financial literacy among marginalised communities by providing access to banking facilities, fostering a better understanding of financial management.
  For example: The financial literacy programs under PMJDY have educated millions on banking operations, leading to a 3.8-fold increase in average deposits per account.
• Reducing Informal Borrowing: With access to formal banking services, individuals are less reliant on informal credit sources, which often come with exploitative terms, thereby enhancing their financial security.
  For example: Access to overdraft facilities up to ₹10,000 for PMJDY account holders has reduced dependence on informal moneylenders, improving financial security for the poor.

Success of PM Jan Dhan Yojana in Increasing Access to Banking Services:

• Widespread Reach in Rural and Semi-Urban Areas: PMJDY has successfully extended banking services to rural and semi-urban areas, ensuring that financial inclusion reaches those most in need.
  For example: About 67% of PMJDY accounts are in rural and semi-urban areas, significantly broadening financial inclusion beyond urban centres.
• Growth in Digital Transactions and Financial Technology Adoption: The scheme has facilitated a surge in digital transactions, promoting a cashless economy and integrating underserved populations into the digital financial ecosystem.
  For example: The launch of the JAM trinity (Jan Dhan, Aadhaar, Mobile) has boosted digital transactions, with over 36 crore RuPay cards issued to PMJDY account holders.
• Increase in Bank Infrastructure: The increased demand for banking services under PMJDY has led to a substantial expansion of bank branches and ATMs, particularly in underserved areas.
• Reduction in Zero-Balance Accounts: The initiative has seen a significant decline in zero-balance accounts, indicating increased usage and engagement with banking services among new account holders.
  For example: Zero-balance accounts have reduced to 8% of total PMJDY accounts by August 2023, down from 58% in 2015, showing active engagement.
• Integration of Marginalised Communities into Formal Banking: PMJDY has successfully brought marginalised communities, including Scheduled Castes, Scheduled Tribes, and Other Backward Classes, into the formal banking system, promoting inclusive growth.

Limitations of the PM Jan Dhan Yojana in Increasing Access to Banking Services:

• Inadequate Financial Literacy: Despite increased access to bank accounts, many underserved populations lack the financial literacy to utilise banking services effectively, limiting their financial inclusion.
  For example: According to the Reserve Bank of India, many Jan Dhan account holders in rural areas remain unaware of benefits like overdraft facilities and direct benefit transfers, resulting in dormant accounts.
• Limited Physical Bank Infrastructure: Many rural and remote areas still suffer from a lack of physical bank branches and ATMs, impeding easy access to banking services even if people have accounts.
  For example: The NABARD Financial Inclusion Survey found that many Jan Dhan accounts in certain tribal areas of Odisha are infrequently used due to the long distances to the nearest bank branch.
• Technical and Connectivity Issues: Poor digital and network infrastructure in rural areas often results in connectivity issues, hampering digital transactions and access to financial services for Jan Dhan account holders.
  For example: A 2019 survey by the Ministry of Electronics and IT highlighted that many rural banking correspondents face challenges in executing transactions due to network failures.
• Lack of Tailored Financial Products: Jan Dhan Yojana accounts often do not cater to the specific financial needs of underserved populations, such as micro-loans or insurance, which limits the scheme’s overall utility.
• Dormant Accounts: A significant portion of Jan Dhan accounts remains dormant, with no transactions over extended periods, indicating that simply opening accounts does not equate to financial inclusion.
  For example: As per data from the Ministry of Finance, around 19% of Jan Dhan accounts were inoperative as of 2023, showing that many beneficiaries are not regularly using their accounts for financial transactions.

Way Ahead for Enhancing Financial Inclusion through PMJDY:

• Strengthening Financial Literacy Programs: Enhancing financial literacy initiatives will empower individuals to make informed financial decisions and fully utilise banking services, promoting sustained financial inclusion.
  For example: Expanding initiatives like the National Centre for Financial Education (NCFE) to cover more rural areas can improve financial literacy rates.
• Leveraging Technology for Greater Reach: Utilising digital platforms and mobile banking can further extend the reach of financial services to remote and underserved regions, ensuring comprehensive inclusion.
• Enhancing Account Utilisation and Reducing Dormancy: Policies aimed at encouraging active use of bank accounts, such as linking more government services to banking activities, can reduce account dormancy rates.
• Strengthening Regulatory Oversight and Monitoring: Implementing robust monitoring and evaluation mechanisms will ensure that PMJDY meets its objectives and addresses any emerging challenges effectively.
• Promoting Inclusive Growth through Customised Financial Products: Developing tailored financial products and services for different segments, such as women and small farmers, can promote broader and more effective financial inclusion.
  For instance: Introducing specialised credit products for small farmers and women entrepreneurs under schemes like MUDRA can promote economic participation and empowerment.

As PMJDY continues to evolve, its focus must shift towards enhancing financial literacy, reducing account dormancy, and leveraging technology to deepen financial inclusion. Future reforms should emphasise creating a sustainable and inclusive financial ecosystem, ensuring that all sections of society benefit from economic growth, and furthering resilience against economic shocks, thus contributing to a more equitable India.

DOWNLOAD PDF