Introduction:
Launched on August 28, 2014, the Pradhan Mantri Jan Dhan Yojana (PMJDY) aimed to expand financial access across the nation. This landmark initiative has played a crucial role in enhancing financial inclusion, empowering women, youth, and marginalized communities.
PMJDY sought to provide unbanked citizens with Basic Savings Bank Accounts without requiring a minimum balance, offering interest on deposits like standard bank accounts. This effort marked an unprecedented scale of financial inclusion in India.
Body:
How has PMJDY accelerated financial inclusion?
- Financial inclusion is a key tool used globally by policymakers to address inequality, improve living standards, and promote economic growth.
- PMJDY increased formal financial account ownership from about 50% in 2011 to over 80% of the population.
- The program significantly reduced the gender gap in account ownership, promoting women’s financial independence.
- PMJDY streamlined the transfer of government benefits, reducing leakages and promoting direct benefit transfers (DBT). This has supported digitalization, e-commerce, and modern payment systems.
Measures to address barriers to financial inclusion:
- Strengthen the financial ecosystem by fostering greater private-sector involvement through strategic partnerships, ensuring wider participation in financial inclusion.
- Expand affordable access to essential financial services, such as micro-insurance, credit, and savings, particularly for marginalized communities.
- Enhance consumer protection by focusing on regulations that balance innovation with safeguarding user trust in digital financial products.
- Design customer-centric financial products to cater to PMJDY users, many of whom have irregular incomes or different savings needs than traditional banking customers.
Conclusion:
As of August 2024, over 53 million PMJDY accounts have been opened, with a total balance of Rs 2.31 lakh crore, compared to 14.7 crore accounts with Rs 15,670 crore deposits in March 2015, reflecting significant growth led by public sector banks.
The average balance in PMJDY accounts has increased more than fourfold, from Rs 1,065 in 2015 to Rs 4,352 in August 2024, demonstrating the success of the program in promoting financial inclusion across India.