How India Is Driving Financial Inclusion Through Jan Dhan Accounts?

India’s journey toward financial inclusion has reached a significant milestone. Under the Pradhan Mantri Jan Dhan Yojana (PMJDY), over 540.3 million bank accounts have been opened nationwide, showcasing a remarkable step toward economic empowerment and digital financial literacy. According to the Ministry of Finance, these accounts collectively hold deposits worth ₹2,37,575 crore.

Interestingly, women lead this financial revolution, with 55.7% of the accounts, equivalent to 307 million, opened by women. Furthermore, 66.6% of these accounts originate from rural or semi-urban areas, demonstrating the initiative's success in bridging financial gaps across diverse demographics. To facilitate digital transactions, 369.2 million RuPay cards have been issued under the scheme.

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How Jan Dhan Accounts Are Transforming Lives Across India?

The PMJDY accounts offer numerous benefits that have made them a game-changer for millions:

1. Zero Maintenance Cost: No charges for opening or maintaining the accounts.
2. No Minimum Balance Requirement: Ensures accessibility to the economically weaker sections.
3. Free RuPay Debit Cards: Providing accident insurance coverage of up to ₹2 lakh.
4. Interest on Deposits: Encourages savings among account holders.
5. Government Scheme Benefits: Direct Benefit Transfers (DBT) to account holders under various welfare schemes.
6. Access to Micro-Insurance and Pension Plans: Enhancing financial security.
7. Overdraft Facility: Eligible account holders can avail up to ₹10,000.

The Challenge of Dormant Accounts

However, challenges remain. Minister of State for Finance Pankaj Chaudhary recently revealed that 113 million accounts under PMJDY are currently inactive, holding a balance of ₹14,750.27 crore. Efforts to reduce dormancy have been promising, with the inactivity rate dropping from 39.62% in 2017 to 20.91% in November 2024.

• State-wise Insights:
  • Uttar Pradesh leads with 96.3 million accounts, of which 23.4 million are inactive.
  • West Bengal follows, with 52.5 million accounts, including 7.85 million inactive accounts.

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Other Financial Inclusion Initiatives

1. Stand-Up India Scheme

Aimed at fostering entrepreneurship among women and marginalized communities, this scheme has approved 2.52 lakh accounts and sanctioned loans worth ₹56,975 crore as of November 2024. Impressively, 76% of the beneficiaries (1.91 lakh accounts) belong to women entrepreneurs. The scheme offers loans ranging from ₹10 lakh to ₹1 crore for businesses in manufacturing, services, trading, and allied sectors.

2. Pradhan Mantri Mudra Yojana (PMMY)

This flagship scheme has approved 503.1 million accounts, disbursing loans worth ₹30.55 lakh crore by November 2024. Women entrepreneurs dominate here too, accounting for 68% (340.1 million) of the total accounts. Loans of up to ₹20 lakh are available for various sectors, including agriculture, services, and manufacturing.

3. NPS Vatsalya

Launched on September 18, 2024, to ensure financial security for children, this scheme has already opened 67,974 accounts. Parents or guardians can deposit between ₹1,000 and unlimited amounts until the child turns 18. The account automatically converts into an NPS account upon maturity.

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Insurance and Pension Coverage

Pradhan Mantri Suraksha Bima Yojana (PMSBY)

This low-cost insurance scheme has enrolled 475.9 million beneficiaries, providing accident insurance cover of ₹2 lakh for an annual premium of just ₹20.

Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)

With 216.7 million enrollments, this scheme offers ₹2 lakh life insurance at a premium of ₹436 annually. As of October 2024, 860,575 claims have been settled, amounting to ₹17,211.50 crore.

Atal Pension Yojana (APY)

This scheme, aimed at providing retirement security, has 71.5 million enrollments, of which 47% are women. Subscribers receive pensions between ₹1,000 and ₹5,000 monthly after the age of 60. The scheme ensures financial protection for the nominee in case of the beneficiary's demise.

Digital Payment Revolution: UPI Sets Global Standards

India’s digital payment ecosystem has gained global recognition, driven by Unified Payments Interface (UPI). In 2024, UPI processed ₹223 lakh crore through 15.5 billion transactions from January to November. The platform's success has extended internationally, with countries like France, UAE, Singapore, Bhutan, Sri Lanka, Mauritius, and Nepal adopting UPI for seamless cross-border transactions.

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India's ambitious financial inclusion and digital revolution efforts have profoundly impacted its socio-economic landscape. Whether through the PMJDY's foundational accounts, Mudra loans empowering small businesses, or UPI transforming payments, the country is steadily moving toward a financially inclusive future. With women's participation at the forefront and innovative schemes addressing the needs of diverse groups, India’s financial empowerment story is both inspiring and impactful.

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