Viewpoint: The Modi Years: Have banking services become more accessible for Indians?

Tuesday, March 5, 2019

By Mridula Chari

On his first Independence Day speech from Red Fort in Delhi in 2014, newly elected Prime Minister Narendra Modi announced the launch of the Pradhan Mantri Jan Dhan Yojana. He claimed it would enable poor Indians to access the banking system through zero-balance accounts, thereby increasing financial inclusion in India.

The idea itself was not novel. The Reserve Bank of India had first announced “no frills” accounts in 2005, renaming them Basic Savings Bank Deposit Accounts in 2012. These accounts can be opened without much paperwork and do not require the holder to maintain a minimum balance, unlike savings accounts.

Where the Modi government scored over previous governments was the rapid scaling-up of the accounts. It set targets for states governments and banks, which in many places resulted in accounts being opened without the informed consent of people.

Photo courtesy of Satish Krishnamurthy.

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financial inclusion