Why this matters now
PMJDY is the foundation of India’s digital-welfare architecture — without mass bank accounts, DBT and JAM would not work. It is examined for its design (the account benefits) and its role in financial inclusion and welfare delivery.
Key features
- Zero-balance (no minimum balance) basic savings account for any unbanked person;
- A RuPay debit card with built-in accident insurance cover;
- An overdraft facility (a small short-term credit line) for eligible account holders;
- Eligibility for DBT, Jan Suraksha insurance/pension schemes and access to micro-credit and remittances.
Impact
Over 50 crore Jan Dhan accounts have been opened, a large share held by women and rural residents, with substantial deposits accumulated. It dramatically reduced the unbanked population, enabled leak-proof DBT, and supported emergency relief (e.g., direct cash transfers to women account-holders during COVID-19).
Challenges
Issues include dormant/zero-activity accounts, the cost of servicing low-value accounts, the need for deeper financial literacy, and moving customers from basic accounts to active use of credit and insurance. The next phase emphasises usage and the full suite of financial services, not just account-opening.
UPSC angle
Tie PMJDY to the JAM trinity and DBT. Remember the account benefits (zero balance, RuPay + accident cover, overdraft) and the shift in focus from opening accounts to active usage and credit.
Frequently asked questions
What is the Pradhan Mantri Jan Dhan Yojana?
A 2014 financial-inclusion scheme that provides the unbanked with zero-balance bank accounts, a RuPay debit card with accident cover, and an overdraft facility — the world’s largest such programme.
What benefits come with a Jan Dhan account?
A zero-balance savings account, a RuPay debit card with built-in accident insurance, an overdraft facility for eligible holders, and access to DBT and Jan Suraksha schemes.
How is PMJDY linked to JAM and DBT?
Jan Dhan accounts are the “J” of the JAM trinity (Jan Dhan-Aadhaar-Mobile); they are the destination for Direct Benefit Transfers of welfare.
What are the challenges with PMJDY?
Dormant accounts, the cost of servicing low-value accounts, financial literacy, and moving holders from basic accounts to active use of credit and insurance.