One Among Five Jan Dhan Accounts Inoperative: What Does It Mean?

The Central Government recently revealed that 18 to 20 percent of Prime Minister’s Jan Dhan Yojana(PMJDY) bank accounts are inactive, contradicting earlier claims of success. The disclosure was made by Bhagwat Karad, the Minister of State for Finance, in his reply to a letter by Trinamool MP Jawahar Sircar questioning the efficacy of the much celebrated financial inclusion mission. Over 50.09 crore accounts have been opened under the scheme so far, with deposits exceeding Rs 2.03 lakh crore.

Experts from the banking sector insist on the need for a comprehensive review of implementation of the scheme to ensure if its impact aligns with intended objectives. PMJDY was launched in 2014 as a flagship financial inclusion initiative by Prime Minister Narendra Modi.

Launched on August 28, 2014, PMJDY aimed to provide universal banking services by opening zero-balance accounts for unbanked households. As of August 2023, the Finance Ministry reports that 33.98 crore RuPay cards have been issued, with zero balance accounts decreasing from 58% in March 2015 to 8% in August 2023. Average deposits in Jan Dhan accounts increased from Rs 1,065 in March 2015 to Rs 4,063 in August 2023, a 3.8-fold rise.

However, as per the Reserve Bank of India guidelines, a savings as well as current account should be treated as inoperative or dormant, if there are no customer induced transactions in the account for over a period of two years. As per this criteria, the recent revelation means one in five Jan Dhan bank accounts is not regularly used by the beneficiary/account holder.

According to CP Krishnan, a former banker and an active trade union leader based in Chennai, the revelation signifies the concerns raised by banking unions and opposition parties for long. “The actual matter of concern should not be the number of accounts opened, but to what extent these accounts helped the deprived sections to access financial services. The real purpose of Jan Dhan accounts has already been lost. There are so many terms and conditions, making it almost impossible for the underprivileged sections to make use of the scheme”, he told Kanal.

However, the recent revelation indicates a significant gap between the government's previous assertions and the ground reality. The stark contrast raises questions about the effectiveness of the financial inclusion drive and the actual impact it has had on the lives of the beneficiaries. Earlier, Kanal had reported the reluctance of Private Banks to avail Jan Dhan accounts as reflected from the official data.