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FINANCIAL INCLUSION IN INDIA: THE ROLE OF PRADHANMANTRI JAN DHAN
YOJANA (PMJDY
Article · May 2022
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E-NATIONAL CONFERENCE ON
“Promoting Financial and Inclusive Growth”
Supported By NABARD
International Journal of Multidisciplinary Research and Technology
ISSN 2582-7359
Peer Reviewed Journal
Impact Factor 6.328
Publisher
Taran Publication
www.Taranpublication.com
www.ijmrtjournal.com
1
International Journal of Multidisciplinary Research and Technology
ISSN 2582-7359
Peer Reviewed Journal (Impact Factor 6.328)
FINANCIAL INCLUSION IN INDIA: THE ROLE OF PRADHAN
MANTRI JAN DHAN YOJANA (PMJDY)
1
Mohammed Nabeel. K, 2Dr. M. Sumathy
1
Ph.D Research Scholar, Junior Research Fellow, School of Commerce, Bharathiar University, Coimbatore, 641046, India.
2
Professor & Head, School of Commerce, Bharathiar University, Coimbatore 641046, India
Abstract
Financial inclusion, also known as inclusive finance, is the provision of financial services at little or no cost to
disadvantaged and low-income parts of society, as opposed to financial exclusion, which occurs when those services are
neither available or affordable. The government of India launched the "Pradhanmantri Jan Dhan Yojna" as part of its
financial inclusion efforts. The current study seeks to investigate the influence of PMJDY in increasing financial
inclusion in India. According to the report, PMJDY expanded the number of bank accounts for disadvantaged and poor
persons by weakening KYC, however transactions in the accounts are quite restricted. Many accounts remain dormant
due to a lack of adequate income to route via that account or a lack of savings to deposit. It is suggested that policymakers
focus on promoting financial literacy among residents, particularly those living in rural areas, in order to make better use
of PMJDY accounts.
Keywords: Financial Inclusion, PMJDY, Rural Development, financial literacy, NABARD
Introduction
Financial inclusion guarantees that every individual has access to a variety of acceptable financial services and
that they understand and use those services. An inclusive financial system is one of many countries' top concerns,
and it is regarded as critical to attaining equitable prosperity. Despite the fact that India has taken various steps to
improve financial inclusion, a sizable portion of the population still lacks access to even basic financial services.
As a result, financial inclusion is not only an economic necessity for India, but also a sociopolitical one.
According to the CRISIL financial inclusion index Inclusix 2016, India has a financial inclusion rating of 58.0 out
of 100. Financial inclusion is an important concern when providing financial goods and services to a larger
proportion of the population (Joshi & Rajpurohit, 2016). It has been characterized as the inexpensive provision of
a wide variety of financial services to underserved and low-income people. While the need for financial inclusion
was recognised with the beginning of the cooperative movement in the early twentieth century, rural India
remains mostly unbanked. Following the cooperative movement, a considerable number of banks were
nationalised, with a concentration on priority sector lending and the establishment of branches in outlying areas.
However, the outcomes left a lot to be desired. Lack of education, poor income, poverty, and so on are some of
the causes for exclusion on the demand side, whereas inadequate branch penetration and burdensome paperwork
are some of the supply side restrictions.
In August 2014, the government launched the Pradhan Mantri Jan Dhan Yojana (PMJDY), a National Mission for
Financial Inclusion (NMFI), to provide universal banking services to every unbanked household, based on the
guiding principles of banking the unbanked, securing the unsecured, funding the unfunded, and serving unserved
and underserved areas. The PMJDY scheme's goal is to ensure that no household is left without a bank account.
There are 9.98 crore MGNREGA worker accounts at banks and post offices. There are 3.66 crore accounts in Post
Offices and 0.75 crore accounts in Co-operatives. As a result, all banks were coordinated to strive toward this
route of greater inclusivity.
Review of Literature
(Ramakrishna, 2018) investigated the function of regional rural banks in promoting financial inclusion. The
research was descriptive as well as analytical in character. The necessary secondary data were gathered from the
yearly reports of NABARD and RRBs. The study concludes that the importance of RRBs in financial inclusion is
inextricably linked to their expansion into rural India.
Online Multidisciplinary E- National Conference on PROMOTING FINANCIAL AND INCLUSIVE GROWTH
76 Supported by NABARD
International Journal of Multidisciplinary Research and Technology
ISSN 2582-7359
Peer Reviewed Journal (Impact Factor 6.328)
In another study by (Kumar & Venkatesha, 2014) explored the efficiency of the PMJDY plan in terms of financial
inclusion. According to the report, financial inclusion is an innovative idea that offers alternative approaches to
encourage banking habits and functions as a facilitator in poverty reduction, and the establishment of the Pradhan
Mantri Jan Dhan Yojana (PMJDY) by the Government of India is a step in that direction (Bijoy, 2018; Raval,
2015; Tewari, 2015).
(Maity & Sahu, 2020) used secondary data gathered from 2011 to 2018 to examine the performance of public
sector banks in financial inclusion prior to and after the implementation of PMJDY. The study discovered that
overall average efficiency toward financial inclusion grows dramatically throughout the post-phase, despite the
fact that not all public sector banks perform similarly. The level of effectiveness varies significantly across them
and even between the two times.
(Singh et al., 2020) investigated the influence of financial inclusion, as promoted by the Pradhan Mantri Jan Dhan
Yojna (PMJDY) plan, on economic performance in Indian states. According to the study's findings, most Indian
states have a low or medium degree of financial inclusion. The results demonstrate that the PMJDY plan boosted
the speed of economic growth but did not raise the overall degree of economic prosperity across states
(Raichoudhury, 2019).
Research Methodology
The present study attempts to examine the role of Pradhan Mantri Jan Dhan Yojna (PMJDY). The study is based
on Secondary data collected from PJDY annual report for the period of 2018 to 2022. Combined Annual Growth
Rate being used to measure the growth happened in the period.
Analysis and Discussions
According to table 1, the number of PMJDY recipients in 2008 was 337281675.00. It climbed at a 5.88 percent
CAGR to 448818224.00 in March 2022. It demonstrates Indian residents' faith in the Central Government. In
2008, a total of 8703342.18 lacs rupees were placed in PMJDY accounts; in 2022, it increased to 16271842.06
lacs, representing a 13.33 percent increase. Under the PMJDY plan, 268796863.00 debit cards were distributed to
the public; by 2022 March, this figure had risen to 315225671.00 cards, with a CAGR of 3.24 percent.
Table: 1 Growth of PMJDY
Number of Number of
Number of
Beneficiaries at Beneficiaries at Number of Deposits in
Rupay Debit
Year rural/semiurban urban metro Total Accounts(In
Cards issued to
centre bank centre bank Beneficiaries lac)
beneficiaries
branches branches
2018 199599705 137681970 337281675 8703342.18 268796863
2019 221961230 156289571 378250801 11016125.9 297969669
2020 273599704 142388026 415987730 13573952 306049485
2021 296048169 147223083 443271252 15491646.7 313009705
2022 299506098 149312126 448818224 16271842.1 315225671
CAGR 8.45% 1.64% 5.88% 13.33% 3.24%
Source: https://pmjdy.gov.in/
Online Multidisciplinary E- National Conference on PROMOTING FINANCIAL AND INCLUSIVE GROWTH
77 Supported by NABARD
International Journal of Multidisciplinary Research and Technology
ISSN 2582-7359
Peer Reviewed Journal (Impact Factor 6.328)
All these figures show the role played by PMJDY as catalyst in financial inclusion initiative of the Government of
India.
The way ahead
PMJDY is a significant step in bringing the rejected vulnerable peoples under the umbrella of the official financial
system, but some of the challenges may jeopardise its survival if not closely monitored and regulated. To deal
with a flood of no-frills bank accounts, both current and new, the programme must ensure that monies are sent
from the government to individuals on a regular basis.When the large amount of 22.81 crore Rupay debit cards to
be distributed under Jan Dhan Yojana and the present volume of 120 million Rupay Kisan Cards are merged, a
problem is inevitable. To achieve the intended outcome, important participants such as cooperative societies,
banking or responders, mobile service providers, postal service, and new payment banks may be enlisted and roles
synchronised. The actual problem is in the delivery of services. The mere opening of the account will not bring
good fortune. Only when financial services are really available to the public will the account become heavenly.
Conclusion
Financial inclusion will benefit the poor by bringing them into the mainstream of growth, while simultaneously
providing financial institutions with a chance to collaborate on inclusive growth. We encounter a number of
hurdles in implementing financial inclusion initiatives. The proposal of creating a PMJDY account received a
positive reaction all around India, bringing banking to the masses of the Indian community. Constant evaluation
and frequent checks are critical for the success of any strategy. If implemented successfully, it would not only
eliminate poverty but will also put a stop to corruption.
Reference:
1. Bijoy, K. (2018). Financial Inclusion in India and PMJDY: A Critical Review. Proceedings of the First International
Conference on Information Technology and Knowledge Management, 14, 39–46. https://doi.org/10.15439/2017km32
2. Joshi, M. C., & Rajpurohit, V. P. (2016). Awareness of Financial Inclusion: An Empirical Study. Research Review
International Journal of Multidisciplinary, 1(6), 1–6.
3. Kumar, D., & Venkatesha, H. . (2014). Financial Inclusion Using Pradhan Mantri Jan-Dhan Yojana-a Conceptual Study.
Asia Pacific Journal of Research, 1(XX), 37–42.
4. Maity, S., & Sahu, T. N. (2020). Role of public sector banks towards financial inclusion during pre and post
introduction of PMJDY: a study on efficiency review. Rajagiri Management Journal, 14(2), 95–105.
https://doi.org/10.1108/ramj-03-2020-0009
Online Multidisciplinary E- National Conference on PROMOTING FINANCIAL AND INCLUSIVE GROWTH
78 Supported by NABARD
International Journal of Multidisciplinary Research and Technology
ISSN 2582-7359
Peer Reviewed Journal (Impact Factor 6.328)
5. Raichoudhury, A. (2019). Impact of education on PMJDY awareness and financial inclusion: A study of Puri district.
International Journal of Civil Engineering and Technology, 10(1), 220–226.
6. Ramakrishna, D. (2018). NABARD: A Financial Inclusion through Regional Rural Banks RRB’s in India. International
Journal of Trend in Scientific Research and Development, Volume-2(Issue-2), 257–261.
https://doi.org/10.31142/ijtsrd8341
7. Raval, H. . (2015). Shaping New India through Financial Inclusion in form of PMJDY. International Journal of
Research in Humanities & Social Sciences, 3(5), 34–38. http://raijmr.com/wp-content/uploads/2015/08/9_34-38-Dr.-
Hiren-R.-Raval.pdf
8. Singh, B. P., Kumari, A., & Sharma, T. (2020). Does PMJDY Scheme Augment Financial Inclusion in India ? Evidence
from Indian States. Munich Personal RePEc Archive, November, 1–21. https://mpra.ub.uni-muenchen.de/104442/
9. Tewari, D. M. (2015). Towards Financial Inclusion in India. Journal of Economic Policy and Research, 10(2), SAGE
Publications India.
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