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Ever thought of a life without access to basic banking services? For a certain section of people, it is difficult to imagine a life without these facilities. But, Census 2011 presented a different picture when the purview is expanded.

Out of 24.66 Crore households, only 14.48 Crore households were availing banking services.

In rural areas, only 54.4 percent of households had access to banking services.

Essentially, less than two-thirds of the households in the country had access to banking facilities even after 64 years of independence. While one segment of the population had access to an assortment of financial services, the other segment of underprivileged was totally deprived of even the basic facilities. This meant exclusion of large segments from all benefits that come from the financial system affecting the overall economic growth of the country.

The government wanted to focus on inclusive growth. The journey to inclusive growth starts with financial inclusion. Financial inclusion matters because it provides a route to the poor for bringing their savings into the formal financial system. Once the poor can be reached directly through banking facilities, a number of initiatives can be implemented for poverty alleviation.

In his Independence Day speech in 2014, PM Modi expressed a desire to connect the poorest citizens of the country with the facility of bank accounts, thereby giving birth to the Jan Dhan Yojana. The Yojana envisaged universal access to banking facilities with at least one basic banking account for every household. A bank account is the most basic financial instrument and the government realised the importance of getting the basics right in order to move further. This was the end of “financial untouchability” and the beginning of freedom from poverty.

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Jan Dhan does much more than creating bank accounts. Apart from the interest on deposits, beneficiaries are provided with a life cover of Rs. 30,000. An overdraft facility upto Rs.5000/- is also available after satisfactory operation of the account for 6 months. Additionally, RuPay Debit cards having inbuilt accident insurance cover of Rs. 1 lakh are also provided. Ensuring last mile connectivity by literally taking banks to account holders through the 1.26 lakh Bank Mitras is a significant achievement of the Jan Dhan Yojana.

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As Jan Dhan completes three years, 29.58 crore people have opened bank accounts under the Yojana with an impressive balance of Rs. 65,900 crores. 22.74 crore RuPay Debit cards have been issued. The rapid pace of progress has even been appreciated in international quarters and the financial inclusion model is a case study for the world to learn from.

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Prime Minister Narendra Modi’s vision goes beyond banking the unbanked. In fact, Jan Dhan was only a means to an end. The government moved from Jan Dhan to Jan Suraksha, thereby insuring the uninsured. The next step was to improve the quality of lives by providing access to capital – Pradhan Mantri MUDRA Yojana was introduced for funding the unfunded. The entire network created by the Pradhan Mantri Jan Dhan Yojana has also accelerated implementation of the Direct Benefits Transfer (DBT) scheme. Connecting individual bank accounts to the account-holder’s Aadhaar was a real game changer. It eliminated redundant regulations and provided unparalleled reach for the government to reach the poor directly. Jan Dhan and the other schemes unleashed the “JAM” revolution which brought together financial inclusion (Jan Dhan), biometric identification (Aadhaar) and mobile telecommunications.

“Just as GST created one tax, one market, one India, the PMJDY and the JAM revolution can link all Indians into one common financial, economic, and digital space. No Indian will be outside the mainstream. This is nothing short of a social revolution.” – Shri Arun Jaitley, Minister of Finance in a blog on the third anniversary of Jan Dhan Yojana.

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April 2024