Pradhan Mantri Jan-Dhan Yojana
Pradhan MantriJan-Dhan YojanaA National Mission on Financial InclusionDepartment of Financial ServicesMinistry of FinanceDepartment of Financial ServicesMinistry of FinanceGovernment of IndiaGovernment of ices.gov.in
" Economic resources of the country should beutilised for the well-being of the poor.The change will commence from this point."Shri Narendra ModiHon’ble Prime Minister of India
MessageMessageI am happy to launch this booklet on theI am glad that we have undertaken thePradhan Mantri Jan-Dhan Yojana.Pradhan Mantri Jan-Dhan Yojana as a NationalInclusive Growth – “Sab Ka Sath Sab Ka Vikas”Mission on Financial Inclusion to provide allis central to our development philosophy. Thishouseholds in the country with financial services,Mission would enable all households, urban andwith particular focus to empower the weakerrural to gain easy and universal access to financialsections of society, including women, smallservices. Exclusion from the banking systemand marginal farmers and labourers, both ruralexcludes people from all benefits that come from aand urban.modern financial system. In this Mission, householdsThe necessity of launching such a mission was felt inwill not only have bank accounts with indigenousview of the fact that less than two-thirds of theRuPay Debit cards but will also gain access to credithouseholds in the country have access to bankingfor economic activity and to insurance and pensionfacilities even after 67 years of independence.services for their social security. I am happy to noteThe Mission seeks to provide all households in thethat the Mission has a strong focus on the use ofcountry, both rural and urban, with access to thetechnology and incorporates lessons learnt fromfinancial services, like bank account with RuPayearlier efforts.Debit card, access to credit, remittance, InsuranceI congratulate the Finance Minister and his team& Pension. Thus, the Mission not only brings thefor their excellent effort in undertaking thisexcluded sections into the financial mainstream butambitious task.makes the transfer of benefits of various subsidyI wish them all the success.schemes of the government more efficient.To achieve the objectives of the Mission we wouldrequire full support from Banking and other FinancialInstitutions, private service providers and above all,citizens. I am sure together we shall succeed in22 August, 2014Shri Narendra ModiHon’ble Prime Minister of Indiaimproving the financial status of the downtroddenand poor of our country.Shri Arun JaitleyMinister of Finance, Corporate Affairs and Defence
MessageForewordIt gives me immense pleasure to be an active part ofthe Government's initiative of the Pradhan MantriJan-Dhan Yojana which is a National Mission onFinancial inclusion by the Hon'ble Prime Minister.Financial Inclusion is a national priority of the Government as it is an enablerfor inclusive growth. Financial Inclusion is important as it provides an avenueto the poor for bringing their savings into the formal financial system, anavenue to remit money to their families in villages besides taking them out ofthe clutches of the usurious money lenders. The efforts to include thefinancially excluded segments of the society in India are not new. In thecampaign launched in the year 2011 by Government of India, about 74,000villages with population more than 2,000 (as per 2001 census) were coveredwith banking facilities.Financial Inclusion is an important priority of theGovernment as it is an enabler for inclusive growth.The main objective of the Yojana is to ensureuniversal access to banking facilities with at least onebasic banking account for every household.It is my firm belief that inclusive growth is crucial forachieving sustainable economic development. I amsure the Pradhan Mantri Jan-Dhan Yojana will go along way in achieving the goal of complete financialinclusion across the country.I am confident that we shall succeed in thisendeavour.Smt. Nirmala Sitharaman,MoS (IC) for Commerce & Industryand MoS for Finance & Corporate AffairsThe earlier campaign however was limited in its approach in terms of reachand coverage. Convergence of various aspects of comprehensive FinancialInclusion like opening of bank accounts, access to digital money, availing ofmicro credit, insurance and pension was lacking. The campaign focused onlyon the supply side by providing banking facility in villages of populationgreater than 2000 but the entire geography was not targeted. There wasno focus on the households. Also some technology issues hampered furtherscalability of the campaign. Consequently the desired benefits could not beachieved and a large number of bank accounts remained dormant.A comprehensive plan is necessary to keep the accounts active and use themas an instrument of some economic activity leading to livelihoods.In order to provide the much needed thrust a flagship programme called the'Pradhan Mantri Jan-Dhan Yojana' was announced by Hon'ble PrimeMinister in his Independence Day address on 15th August, 2014. This is aNational Mission on Financial Inclusion encompassing an integratedapproach to bring about comprehensive financial inclusion of all thehouseholds in the country. The plan envisages universal access to bankingfacilities with at least one basic banking account for every household,financial literacy, access to credit, insurance and pension facility. In addition,the beneficiaries would get RuPay Debit card having inbuilt accidentinsurance cover of 1 lakh. The plan also envisages channeling allGovernment benefits (from Centre / State / Local Body) to the beneficiariesaccounts and pushing the Direct Benefits Transfer (DBT) scheme of theUnion Government. The technological issues like poor connectivity, on-linetransactions will be addressed. Mobile transactions through telecom
operators and their established centres as Cash Out Points are also plannedto be used for Financial Inclusion under the Scheme. Also an effort is beingmade to reach out to the youth of this country to participate in this MissionMode Programme.We are extremely grateful to Hon'ble Prime Minister who not only providedhis strong support to the scheme but guided us extensively in re-framing itand making it more meaningful and all inclusive. I am also thankful to Hon'bleFinance Minister for his continued guidance and support in drafting of thescheme. Our thanks are due to Hon'ble Minister of State for Finance whotook an active interest in the finalization of the scheme and helped us onseveral issues particularly in soliciting support of the States. I would like toexpress our appreciation to the Ministry of Rural Development, Ministry ofCommunications and Information Technology, Ministry of Information andBroadcasting, Department of Posts, Ministry of Labour and other Ministriesand Organizations for providing their active support in this initiative. I mustplace on record my deep appreciation to Reserve Bank of India, Indian Banks'Association (IBA) and various Banks / State Level Bankers Committees andthe Insurance Companies for their whole-hearted contribution in theformulation of the scheme. Our thanks are due to the States and UnionTerritories for committing their full support in the implementation of thescheme. Last but not the least I must thank all concerned officersof Department of Financial Services who worked tirelessly to put in place anew programme meeting the expectations of the new Government. Animportant feature of the present plan is that it will be implemented in MissionMode. A web based monitoring tool for the Mission has been developed.I would also like to express my thanks to all members of the public andvarious organizations bodies who provided their valuable inputs andsuggestions. The name of the Scheme, the logo design and the tagline arebased on suggestions received through crowd sourcing. With the support ofall stakeholders, I am sure we will make the scheme a grand success fulfillingthe national aspirations for an economically strong and vibrant country.Dr. Gurdial Singh SandhuSecretaryDepartment of Financial ServicesMinistry of FinanceGovernment of India
CONTENTSS.NoContentExecutive SummaryPagesS.NoContentPages(i) to (v)8.Role of Technology in Financial Inclusion281.Introduction19.Administrative Structure for Monitoring342.Financial Inclusion – Background410.Monitoring Mechanism/MIS363.Financial Inclusion: Current Status – India611.Media and Publicity384.Mission Mode Objectives (6 Pillars)1012.Challenges identified in the implementation of the Mission405.Timeline for Financial Inclusion Plan1213.Roles of major stakeholders426.Strategy for achievement of Objectives1414.Launch Function467.Implementation of PMJDY in Mission Mode15.Timelines for Implementation477.1 Reaching out – Network expansion andgeographical coverage of the banks177.2 Opening of Basic Saving Bank Account ofevery adult citizen207.3 Financial Literacy and Credit Counselling (FLCC) Establishing adequate number of Financial LiteracyCentres (FLC) & Mechanism to increase financialliteracy among the financially excluded sections237.4 Credit Guarantee Fund247.5 Micro-Insurance257.6 Unorganized sector Pension scheme- Swavalamban26
BCs are not actually functional.EXECUTIVE SUMMARYsector, decided in public interest toenable the banks to use the services ofNGOs/SHGs, MFIs and other CivilSociety Organizations as intermediariesin providing financial and banking servicesthrough use of "Business Facilitator andBusiness Correspondent Model".1. Current status of financialinclusion in the country: iIn order to ensure financial inclusionvarious initiatives were taken up by RBI/ GoIlike Nationalization of Banks, Expansionof Banks branch network, Establishment& expansion of Cooperative and RRBs,Introduction of PS lending, Lead BankScheme, Formation of SHGs and Statespecific approach for Govt. sponsoredschemes to be evolved by SLBC etc.RBI vide Mid-term Review of AnnualPolicy Statement for the year 2005-2006,advised Banks to align their policies withthe objective of financial inclusion. Bankswere advised to make available a basicbanking 'No frills' account either with 'nil'or very minimum balances as well ascharges that would make such accountsaccessible to vast sections of population.Besides, it has been emphasized upon bythe RBI for deepening and widening thereach of Financial Services so as to cover alarge segment of the rural & poor sectionsof population.RBI in the year 2006, with the objective ofensuring greater financial inclusion andincreasing the outreach of the banking 2. The task at hand: Census 2011 estimated that out of 24.67crore households in the country, 14.48crore (58.7%) households had access tobanking services. Of the 16.78 crore ruralhouseholds, 9.14 crore (54.46%) wereavailing banking services. Of the 7.89crore urban households, 5.34 crore(67.68%) households were availingbanking services.In the year 2011, Banks covered 74,351villages, with population more than 2,000(as per 2001 census), with bankingfacilities under the "Swabhimaan"campaign with Business Correspondentsas explained later. However theprogramme had a very limited reachand impact.The present banking network of thecountry (as on 31.03.2014) comprises ofa bank branch network of 1,15,082 and anATM network of 1,60,055. Of these,43,962 branches (38.2%) and 23,334ATMs (14.58%) are in rural areas.Moreover, there are more than 1.4 lakhBusiness Correspondents (BCs) of PublicSector Banks and Regional Rural Banks inthe rural areas. BCs are representativesof bank to provide basic banking servicesi.e. opening of basic Bank accounts, Cashdeposits, Cash withdrawals, transfer offunds, balance enquiries, mini statementsetc. However actual field levelexperience suggests that many of thesePublic Sector Banks (PSBs) includingRRBs have estimated that by 31.05.2014,out of the 13.14 crore rural householdswhich were allocated to them forcoverage, about 7.22 crore householdshave been covered (5.94 croreuncovered). It is estimated that 6 Crorehouseholds in rural and 1.5 Crore inurban area needs to be covered. To provide Bank Account to everyhousehold in the country and makeavailable the basic banking servicesfacilities i.e. (i) Opening of Bank Accountwith RuPay Debit Card & Mobile Bankingfacility, (ii) Cash Withdrawal & Deposits,(iii) Transfer, (iv) Balance Enquiry & (v)Mini Statement. Other services are alsoto be provided in due course in a timebound manner apart from financialliteracy which is to be disseminated sideby side to make citizens capable to useoptimum utilization of available financialservices. To provide these bankingservices banking outlets to be providedwithin 5 KM distance of every village.Necessary infrastructure also needs to beplaced to enable e-KYC for accountopening and AEPS for withdrawal of cashbased biometric authentication fromUIDAI data base.Putting the PSBs and RRBs numberstogether implies that about 5.92 crorerural households are yet to be covered.Considering field level data mismatches insome instances, it is estimated that thereare about 6 crore uncovered householdswhich would need to be covered in therural areas. Assuming a minimum of one account perfamily, this translates into opening of 6crore accounts in villages. In addition account opening of uncoveredhouseholds in urban areas would also berequired. These households areestimated at 2.55 crore as per Census,2011. However, the exact number ofhouseholds without bank accounts arenot available but estimated to be 1.5 croreimplying opening of about 1.5 croreaccounts in urban areas.3. Present plan:Comprehensive FI based on six pillars isproposed to be achieved as under:Phase I (15th Aug, 2014 - 14th Aug, 2015) Universal access to banking facilities Providing Basic Banking Accounts forsaving & remittance and RuPay Debit cardwith inbuilt accident insurance cover of 1 lakh and RuPay Card Financial Literacy ProgrammePhase II (15th Aug, 2015 - 15th Aug, 2018) Overdraft facility of upto 5000/- aftersix months of satisfactory performance ofsaving / credit history. Creation of Credit Guarantee Fund forcoverage of defaults in overdraft A/Cs Micro-Insurance Unorganized sector Pension schemes likeSwavalambanIn addition, in this phase, coverage ofhouseholds in hilly, tribal and difficultareas would be carried out. Moreover,this phase would focus on coverage ofremaining adults in the households andstudents. All the rural & semi-urban areas of thecountry are proposed to be mapped intoSub Service Area (SSAs) comprising1000-1500 households with an average3-4 villages with relaxation in NE/Hillystates. It is also proposed that looking to theviability of each center around 74000villages with population more than 2000which were covered by BusinessCorrespondents under SwabhimaanCampaign will be considered forii
conversion into full fledged Brick &Mortar branches with staff strength of1 1 / 1 2 in the next three to five years. iiiAll the 6 lakh villages across the entirecountry are to be mapped according tothe Service Area of each Bank to have atleast one fixed point Banking outletcatering to 1000 to 1500 households,called as Sub Service Area (SSA). It isproposed that SSAs shall be coveredthrough a combination of banking outletsi.e. branch banking and branch lessbanking. Branch banking meanstraditional Brick & Mortar branches.Branchless banking comprises of fixedpoint Business Correspondents agents,who act as representative of Bank toprovide basic banking services.The implementation strategy of the planis to utilize the existing bankinginfrastructure as well as expand the sameto cover all households. While theexisting banking network would be fullygeared up to open bank accounts of theuncovered households in both rural andurban areas, the banking sector wouldalso be expanding itself to set up anadditional 50,000 Business Correspondents(BCs), more than 7,000 branches andmore than 20,000 new ATMs in the firstphase . The comprehensive plan is necessaryconsidering the learnings from the pastwhere a large number of accountsopened remained dormant, resulting incosts incurred for banks and no benefitsto the beneficiaries.The plan therefore proposes to channelall Government benefits (fromCentre/State/Local body) to thebeneficiaries to such accounts andpushing the Direct Benefits Transfer(DBT) scheme of the Union Governmentincluding restarting the DBT in LPGscheme. MGNREGS sponsored byMinistry of Rural Development (MoRD,GoI) is also likely to be included in DirectBenefit Transfer scheme. Keeping the stiff targets in mind, in thefirst phase, the plan would focus on firstthree pillars in the first year starting from15th August, 2014. The target for setting up additional50,000 BCs is quite challenging given theconstraints of telecom connectivity. In order to achieve this plan, phase wiseand state wise targets for Banks havebeen set up for Banks for the period15th August, 2014 to 14th August, 2015. In order to achieve a "demand" side pulleffect, it would be essential that there isBranding and awareness of BusinessCorrespondent model for providing basicbanking services, Banking Productsavailable at BC outlets and RuPay Cards. Amedia plan for the same is being workedout in consultation with banks. A Project Management Consultant /Group would be engaged to help theDepartment implement the plan. It is proposed to launch the programmesimultaneously at National level in Delhi,at every State capital and all districtheadquarters. A web-portal would be created forreporting/monitoring of progress. Roles of various stakeholders likeother Departments of the CentralGovernment, State Governments, RBI,NABARD, NPCI, UIDAI and others havebeen indicated. Gram Dak Sewaks in rural areas areproposed as Business Correspondent ofBanks. Department of Telecom has beenrequested to ensure that problems ofpoor and no connectivity are resolved.They have informed that out of the 5.93lakh inhabited villages in the country(2011 census) about 50,000 villages arenot covered with Telecom connectivity. In the recent past there is substantialimprovement on Technological frontafter adoption of CBS by Banks likeelectronic payment, NEFT, RTGS, mobilebanking, internet, IMPS etc. After arrivalof Aadhaar, Aadhaar enabled productslike e-KYC for opening of accounts,Aadhaar Enabled Payment System(AEPS), Micro-ATMs, ABPS for Aadhaarbased centralised credit based onbiometric authentication of customerfrom UIDAI data base. Similarly, NPCI haslaunched new products like USSD basedmobile banking, IMPS etc. which havepotential to change the entire landscapeof Financial Inclusion. There would befocus to use these products in a large wayto ensure coverage of hitherto excludedsection in a time bound manner. In the present plan, based on the learningof the past, a holistic approach isproposed to provide all the citizens of thecountry with a basket of financialproducts to enable them financiallysecure. An illustration showing shift inapproach is appended hereunder:iv
Learning from the past Campaign and Shift in approachvS.No.Earlier Approach (Swabhimaan)New Approach (PMJDY)1.Villages with population greater than 2000covered; thus limited geographical coverageFocus on household; Sub Service Area (SSA) forcoverage of the whole country.2.Only ruralBoth rural and urban3.Bank Mitr (Business Correspondent) was visitingon fixed days onlyFixed point Bank Mitr (Business Correspondent)in each SSA comprising of 1000-1500 households(3 to 4 villages on an average) to visit othervillages in the SSA on fixed days4.Offline accounts opening - Technology lock-inwith the vendorOnly online accounts in CBS of the Bank5.Focus on account opening and large number ofaccounts remained dormantAccount opening to be integrated with DBT,credit, insurance and pension6.Inter-operability of accounts was not thereInter-operability through RuPay Debit Card, AEPS etc.7.No use of Mobile BankingMobile wallet and USSD based mobile bankin
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