Jan Dhan Yojna – An effective financial inclusion scheme

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Jan Dhan Yojna – An effective financial inclusion scheme

India is a developing country where 42% of the households still have no access to banking services. The current need of the hour is proper implementation of financial inclusion programs to bring down this number.

Jan DhanYojna, popularly known as PradhanMantri Jan DhanYojna, is a financial inclusion scheme to provide banking services to the unbanked segment of the Indian society. The aim of the scheme is to open over 7.5 crore bank accounts by the start of the next year. The financial camps spread across 77000 locations provided the individuals to open bank accounts in any bank of their choice.

Benefits to individuals under this scheme:

There are numerous benefits to individuals by opening an account under this scheme. Easing the Know Your Customer (KYC) rules for the customers is the most attractive feature of this scheme. Simpler KYC norms allow the individuals to open a bank account just by having an Aadhar card copy. Even a voter ID card, attested NREGA cards are other allowed documentary proofs.

Individuals can open no-frills account under this scheme. These accounts also offer few supplementary benefits like, accidental insurance up to Rs. 1 Lakh and a life cover of Rs. 30000. Another added feature is the provision of over draft facility which is available to accounts that are active for a six months period. The overdraft facility is offered in two legs, first one is for Rs. 2500 and the second one is for Rs. 5000.

Impact on the Indian economy:

The financial independence of individuals coupled with the overdraft facility would significantly lower the dependency of the rural people on money lenders and sahukars. As a result, either the money lenders would reduce the magnitude of interest rates demanded or the entire money lending market could become extinct.

An another impact would be an increase in the deposits of the banking sector which in turn can be put to some good use like financing infrastructure projects. This would result in an increase of the GDP of the country.

What lies ahead?

Although the scheme has started progressing in the desired direction but large number of accounts would put an excessive burden on the entire banking sector by servicing even those accounts where the balance would be zero. This would mean incurring more cost than the amount received for it. Hence, proper strategies are to be formulated for efficient implementation of such a beneficial scheme.

Sunita dohare

Management Editor at IHL News