Indian Government’s Financial Inclusion Dream Still Unrealized
“Never before in economic history would 15 million bank accounts have been opened on a single day. Never before has the Government of India organised a programme of such scale,” Prime Minister Narendra Modi said on August 28, 2014, launching the Pradhan Mantri Jan Dhan Yojana (Prime Minister’s People’s Wealth Programme/PMJDY).
Seventeen months later, in January 2016, the scheme reached all Indian households, according to official data, bringing 200 million additional families to the banking system.
But the primary goal, direct transfer of government subsidies to people, has not overcome two challenges: linking the unique identification (Aadhaar) card to PMJDY; and getting beneficiaries to use the bank account. The speed of adding accounts, as IndiaSpend reported earlier, was outpacing the delivery of benefits, and Reserve Bank of India (RBI) governor Raghuram Rajan, in 2014, cautioned banks against focussing on numbers alone.
Less than half the 210 million Jan Dhan accounts were seeded with Aadhaar as of January 31, 2016, the data indicates. More than 30 percent of these accounts have been at “zero balance”, meaning the account holder was not using the account.