Pradhan Mantri Jan Dhan Yojna (PMJDY): A Critique

By | August 28, 2014

Started by the Narendra Modi government on the 100th day of their governance, the Pradhan Mantri Jan Dhan Yojna (PMJDY) is a major step towards financial inclusion. This scheme aims at providing bank accounts to the 60percent of the people who don’t have access to banking services. It provides double security for all Ru Pay credit card holders and for this the government has roped in LIC for Rs 30,000 live cover and HDFC Ergo for Rs 1 lakh personal accident cover.


The big question that this scheme will be a success is yet to be answered by the future but some points that can be argued are that:
The Pradhan Mantri Jan Dhan Yojana (PMJDY) may lead to runaway operators who already have savings bank account and open this bank account to obtain undue benefits and then cease to operate these accounts which can lead to many inactive bank accounts. The financial viability of the Pradhan Mantri Jan Dhan Yojna needs to be prudently accessed so that a long term sustainable model can be chalked out.

The scheme has been made to benefit the poor who may not have sufficient knowledge about banking. In some cases the term ‘banking’ may sound frightening as well because of the income irregularities. So instead of forcing them into making bank accounts, benefits of the same must be clearly told to them.

Under the Pradhan Mantri Jan Dhan Yojna (PMJDY) a lot of frivolous and fake accounts are poised to be opened to avail benefits of all the government subsidies.Also, the already existing account bearers may be looking for opening new accounts under the PMJDY to have an access to over draft facilities as well as the accidental insurance and life insurance incentives. This can lead to possible cost over runs on the part of the government. No exclusive policy measures have been spelt out for such frivolous account bearers.

The major burden for the implementation of the scheme is on the Public Sector Banks even though Private sector Banks have expanded their presence in rural areas. Also under stress it could so happen that bank accounts are enrolled for the poor but there is no watch on whether the poor are actually using the account.

Added to this, the government plans to link this scheme of financial inclusion with the Direct Benefits Transfers scheme linking the account numbers to Aadhar cards of the poor. Many lapses have already been observed in the transfer of funds through the Direct Benefits Scheme, with the subsidies usually being delayed by the government. These lapses need to thought off thoroughly.

The PMJDY though being an ambitious plan of the government has a bit over ambitious targets which needs extraordinary steps and out of the box measures to fulfill these targets. And the government’s emphasis on a time bound completion of the project means that the NDA needs t remain on its toes for the entire period to get the targets achieved. Though optimistic, the implementation needs to be effective so that this ambitious plan doesn’t turn dormant.


2 thoughts on “Pradhan Mantri Jan Dhan Yojna (PMJDY): A Critique

  1. Pingback: Pradhan Mantri Jan Dhan Yojana (PMJDY) | Cognited

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