Role of Pradhan Mantri Jan Dhan Yojana (PMJDY) in

Promoting Financial Inclusion in India: An Assessment

Satish Modi*, Sukanta Kumar Baral

Department of Commerce, Indira Gandhi National Tribal University, Amarkantak, M. P.

*Corresponding Author
E-Mail: smodiy2k@yahoo.com

Abstract: A sizable portion of our population is still excluded from access to banking and
financial services even after more than 70 years of independence and financial and economic
reforms. As a result, the poor have no access to opportunities to save savings, make
investments, or obtain credit. To cover the financially excluded segments of society under
financial inclusion; the Government of India and the Reserve Bank of India have made several
attempts. Our government is also making an effort in this area with a new scheme called
PRADHAN MANTRI JAN-DHAN YOJANA (PMJDY). PMJDY is India's national financial
inclusion campaign. PMJDY ensures that banking and financial services are available to the
weaker and poorer sections of society at a reasonable cost. PMJDY launched by Government
of India on 28th August, 2014. It has been more than Six years since this scheme started. There
is a need to evaluate PMJDY. Thus, in this research paper an effort has been made to
analyse the status of financial inclusion before and after launching of PMJDY in India
and contribution of PMJDY in increasing financial inclusion. It also covers the
implication, and effectiveness of PMJDY.
Keywords: Financial Inclusion, PMJDY, Economic Growth
Introduction: there is an urgent need to link the poor and
“My dream is to build such a digital India backward classes of the society with
in which Financial Inclusion shall be financial inclusion. The goal of financial
ensured through Mobile and E Banking.” - inclusion, sometimes referred to as
Shri Narendra Modi, Hon’ble Prime inclusive finance, is to make financial
Minister of India services accessible to those in society who
Finance is very essential for every are underprivileged and have low incomes.
economic activity. Finance is also required It is a concerted attempt to attract unbanked
for all classes of the society. From the individuals into the financial system.
beginning only the high class and middle- “Financial inclusion empowers
class members of society’s financial needs disadvantaged groups while also fostering
have been taken care off. It is highly equality among the population.” Financial
challenging for the poor and vulnerable inclusion gives the opportunity for poor to
people in society to obtain financing. accumulate savings, make investments, and
Whereas the accessibility of financing for access loans. The poor who have access to
these groups is a crucial requirement for financial services are also better able to
employment, the eradication of poverty and protect themselves against unexpected
social and economic empowerment. Thus, income drops and prepare for situations like

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Modi S. et. al. 105

illness, death of a family member, and job well as across the nation. Only 58.7% of
loss. Additionally, Financial inclusion Indian families overall and 54.4% of rural
enables the government to deposit households had access to formal banking
payments into beneficiaries’ bank accounts, services, according to the Census of 2011.
such as social security transfers, subsidies, In addition, the data showed that just 24.4
and MNREGA (Mahatma Gandhi National million farmer households, or 27.3% of the
Rural Employment Guarantee Program) total 89.3 million households, had access to
wages. Considering the importance of institutional credit while 73% of farm
financial inclusion special emphasis given households do not have formal credit
by the Government of India on inclusive facility. It is important to ensure that, as
growth in all welfare schemes and 12th Plan the Indian economy expands rapidly, all
(2012-17) was focused mainly to achieve facets of society participate in this
sustainable inclusive growth. progress, preventing regional
inequalities from stymieing this
In India, there have long been efforts made expansion. Therefore, there is a great
to include those who are financially need to offer financial services to all
excluded in society. In 2004, the households that are not covered under
Government started taking action for formal financial services. To fulfill this
financial inclusion by establishing a need, on August 28, 2014, the Indian
commission with Shri H.R. Khan as its Government introduced a new scheme
chairman. Following the 2008 release of the called PRADHAN MANTRI JAN-
Rangarajan Committee Report, significant DHAN YOJANA (PMJDY) to give
measures were planned. The main financial services to the excluded rural
initiatives taken by the Government of and marginalized population. It has been
India and RBI were Nationalization of more than 6 years since this scheme was
banks, the Lead Bank Scheme, branch launched. Thus, there is a need to
licensing regulations with a focus on rural evaluate PMJDY scheme.
and semi-urban branches, No-frills
Accounts, relaxation of KYC norms, the Review of Literature:
Business Correspondents and Facilitators There are several research papers on
Model, SHG bank linkage programme, financial inclusion. These comprised both
introduction of general credit cards, kisan international and Indian studies. There is
credit cards, direct benefit transfer, scanty research available on the
consolidation of regional rural banks, “PRADHAN MANTRI JAN-DHAN
performance appraisal of bank staff, YOJANA (PMJDY)” national mission of
Roadmap for banking services in unbanked financial inclusion. A short recap of various
villages. 2011 saw the launch of the research that are currently available on the
“Swabhimaan” campaign by the Indian PMJDY Scheme is given below.
government. The target of this campaign Dutta Tulika and Ashish Das (2017) have
was to provide banking services to over analysed the data of PMJDY. In this report
74,000 villages with a population of at least it has been attempted to summarize and
2000. Despite these efforts, the nation interpret the PMJDY data that the
continues to see significant regional Government of India disseminates. This
differences across urban and rural areas as study's primary goals were to determine the

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106 Modi S. et. al.

strategies used by various banks and learn is associated with greater motivation to
what the public thought of those strategies open a bank account. The study came to the
as part of a financial inclusion initiative. conclusion that the respondents preferred
The survey revealed that even while banks public sector banks over private sector
are adhering to RBI guidelines, there is still banks and that a number of factors pushed
more work to be done to advance financial them to create bank accounts via PMJDY.
inclusion. According to the report, three Suryavanshi Pushpa and Babita Yadav
parties—the RBI, all banks, and the general (2016) have done studies on PMJDY: A
public—must exert effort for financial National scheme for financial inclusion in
inclusion to progress. India. In this study an attempt has been
Chaudhary Alka (2017) has examined the made to give an insight of PMJDY scheme
role and implications of PMJDY in and to analyse the issues and challenges
financial inclusion and growth of India. The involved in implementation of PMJDY.
study came to the conclusion that the The study concluded that there are many
PMJDY plan has attracted a significant issues and challenges involved in effective
portion of India's population by offering implementation of schemes like limited life
banking services and financial products at insurance cover, poor telecom connectivity,
competitive prices. duplication and dormant accounts, poor
Sharma Neha and Goyal Ruchi (2017) had performance and less involvement of
conducted conceptual research on PMJDY private banks, increased operational costs
and sought to determine the success rate of associated with the scheme and giving
the inclusion process in rural areas of Jaipur credit facility without the assessment of
district. The study came to the conclusion credit value. The study recommended
that factors influencing inclusion include implementing a number of initiatives for
income, access to financial information financial inclusion, including the use of
through a variety of outlets, and knowledge cutting-edge technologies, putting up bank
of PMJDY. According to research, the branches in remote regions, providing
possibility of inclusion is increased by credit to everyone, entire life insurance
proximity to banks. coverage, etc.
Deb Rajat and Das Prasenjit (2016) Verma Yogesh and Garg Priyanka (2016)
assessed the bank account customers' analysed the effectiveness of PMJDY on
opinions of PMJDY. South Tripura's workers at Central University of Rajasthan
Baikhora area is where this study was and residents of Bandrasindri hamlet in
conducted. In the study, it was found that Rajasthan's Ajmer district. The majority of
men and women had quite different respondents, according to the survey, have
opinions on opening bank accounts under a basic understanding of PMJDY, and the
PMJDY. The study also revealed a positive primary causes of financial exclusion are a
relationship between monthly income and lack of resources and a lack of financial
the outcome, i.e., a higher monthly income literacy. According to a study, the
is associated with greater motivation to government must make sure that financial
open a bank account, while a negative literacy programmes are properly delivered
relationship was found between in rural parts of the nation so that the rural
respondents' age and educational people can be use banking services in true
attainment, i.e., a lower level of education sense.

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Modi S. et. al. 107

Sadhik Mahammad & Others (2015) has Research Methodology:

done a secondary data-based study on This study is based on certain facts and
financial inclusion with special reference to secondary data. Data required for study
PMJDY scheme. In order to boost the are mainly collected through various
Indian economy, this research focuses on Government web sources, Govt.
the role of financial inclusion. It also publications and annual report of RBI,
discusses the PMJDY scheme's different books, Journals, Newspapers
effectiveness, advantages, challenges, and and relevant websites.
possibilities for the future. The analysis
comes to the conclusion that the PMJDY PMJDY Scheme:
scheme lessens the risk of money lenders The objective of PMJDY, India's
taking advantage of disadvantaged groups. National Mission for Financial
According to the study, awareness must be Inclusion, is to make financial services
created among the people about the usage including banking, savings and deposit
and benefits of PMJDY scheme and accounts, remittance, credit, insurance,
disadvantaged individuals should be and pensions easily accessible to the less
encouraged to open bank accounts under powerful and lower-income sectors of
this scheme. society. The PMJDY is the cornerstone
The overview of the literature brings out the of the "Sab ka sath Sab ka Vikas"
fact that few studies had done on PMJDY development idea. PMJDY's slogan is
Scheme. These studies centred on the issues "Mera khatta Bhagya vidhata." Every
and challenges involved in implementation household would have access to banking
of PMJDY, benefits, difficulties and future and credit options with a bank account.
prospects of PMJDY scheme. Thus, an On August 28, 2014, the Indian government
overview of the literature shows that role of unveiled the PMJDY scheme. For creating
PMJDY Scheme in promotion of financial the most bank accounts in the
inclusion in the country has not extensively shortestamount of time, the PMJDY
been covered by the literature. Therefore, initiative broke the Guinness World Record
this research paper is an attempt to fill up on June 20, 2015. Up till the end of March
research gap taken above. 2020, more than 38 crore accounts had been
opened nationwide through PMJDY. This
Objectives: scheme was officially introduced in
The primary goal of this study is to August, 2014 for the four-year period that
assess the contribution of PMJDY in concluded on August 14, 2018. In
promotion of Financial Inclusion in September 2018, the government re-
India. Apart from this, the study has the launched PMJDY as an open-ended scheme
following objectives. and introduced extra advantages to entice
(I) To analyze the status of individuals to register bank accounts,
financial inclusion before and buoyed by the scheme’s success. The
after launching of PMJDY in government wants to expand access to
India. formal banking from "every family to every
(II) To analyze the financial adult" by increasing insurance coverage
growth and performance of and double the overdraft (OD) limit under
the PMJDY Scheme. the new PMJDY.

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108 Modi S. et. al.

8. Availability of insurance and pension

Special Benefits under PMJDY Scheme: products.
1. Interest on the deposited amount. 9. Any successful financial or non-
2. 2 lakhs of accidental insurance financial customer-induced transaction
coverage at any bank branch, Bank Mitra, ATM,
3. No minimal balance is necessary. POS, or other channel, both intra-bank
4. The policy offers a Rs. 30,000/- life and inter-bank, that occurs within 90
insurance pay-out upon the days of the accident date, including the
beneficiary's demise, provided that the accident date, will be considered
eligibility requirements are met. eligible under the PMJDY Scheme for
5. Simple Money Transfers Across India the benefit of Personal Accidental
6. Direct Benefit Transfer will be made by Insurance claims. Only one account per
the government to recipients of home, preferably the lady of the house,
government schemes in PMJDY is eligible for an overdraft of up to Rs.
accounts. 10,000.
7. An overdraft facility will be allowed
once the account has been operating
satisfactorily for six months.

Progress of PMJDY:

Table-1 :No. of Accounts opened (In Crore) under PMJDY as on 31/01/2015

Rural Urban No. of No. of
Bank (In Crore) (In Crore) Accounts (In Rupay Debit
Deposits in
Crore) Card issued
Accounts (In
(In Crore)
Crore)

Public Sector 5.3300249 4.5147276 9.8447525 8174.6304 9.1232024

Banks

Rural Regional 1.8489448 0.3297833 2.1787281 1599.4808 1.4967614

Banks

Private Banks 0.3226397 0.2012086 0.5238483 0725.5150 0.4593161

Grand Total 7.5016094 5.0457195 12.5473289 10,499.6262 11.0792799

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Modi S. et. al. 109

Source: Website of PMJDY: www.pmjdy.g

Table-1 shows that within six months of the Table-2 shows that as on 01/04/2020 the
launch of PMZDY i.e., from 28/08/2014 to total number of PMJDY accounts were
31/01/2015 more than 12.5 crore accounts 38.07 crore with deposit balance of
were open with deposit balance of Rs.1,19,680 crore. Out of this more than
Rs.10,499.62 crore under the scheme. Out 22.51 crore (59.12%) accounts were open at
of this more than 7.5 crore (59.78%) rural /semiurban bank branches whereas
accounts were open under rural areas more than 15.55 crore (40.84%) accounts
whereas more than 5 crore (40.21%) were open at urban metro bank branches.
accounts were under urban areas. Table also Table also shows that more than 30.31 crore
shows that more than 9.8 crore (78%) (79.6%) accounts were opened by Public
accounts were opened by Public Sector Sector banks while more than 6.49 crore
banks while more than 2.17 crore (17%) (17%) accounts were opened by Rural
accounts were opened by Rural Regional Regional Banks (RRB’s) whereas only
Banks (RRB’s) whereas only 4% accounts 3.3% accounts were opened by Private
were opened by Private banks. This banks. More than 29 crore Rupay debit card
number is more than 32% of the total issued to the beneficiaries.
accounts opened (38 Crore) till March
2020.
Table-2: No. of Accounts opened under PMJDY as on 01/04/2020
Type of No. of Accounts No. of Number of Deposits in No. of
Bank at Accounts at Total Accounts (In Rupay
rural/semiurban urban Accounts Crore) Debit
centre bank metro (In Crore) Cards
branches centre bank issued (In
(In Crore) branches Crore)
(In Crore)

Public 16.3312327 13.9863953 30.3176280 94,838.7088 24.4217755

Sector
Banks

Regional 5.4884993 1.0101469 6.4986462 21,554.1442 3.4452025

Rural
Banks
Private 0.6990936 0.5590417 1.2581353 03,288.0082 1.1527643
Sector
Banks

Grand 22.5188256 15.5555839 38.0744095 1,19,680.8612 29.0197423

Total
Source: Website of PMJDY: www.pmjdy.gov.in

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110 Modi S. et. al.

Table-2-A: Public Sector Banks Report as on 01/04/2020 (Figures in Crore)

Bank Name No. of No. of Number of Deposits in No. of Rupay

Beneficiaries Beneficiarie Total Accounts Debit Cards
at s at urban Beneficiari (In Crore) issued to
rural/semiur metro es beneficiaries
ban centre centre bank (In Crore) (In Crore)
bank branches
branches (In Crore)
(In Crore)
Bank of 1.7425944 2.3620377 4.1046321 13,856.1325 3.5964689
Baroda
Bank of India 1.1364698 1.19,58824 2.3323522 7,606.9958 1.9970159
Bank of 0.4746743 0.1427496 0.6174239 2,057.3721 0.1917399
Maharashtra
Canara Bank 0.8991537 0.3873745 1.2865282 5,170.4613 0.6861695
Central Bank 1.0471748 0.1802032 1.2273780 3,398.4917 0.7343036
of India
Indian Bank 1.3204759 0.3152023 1.6356782 5,458.8209 0.9901080
Indian 0.1143521 0.3938354 0.5081875 1,388.4843 0.4683748
Overseas Bank
Punjab & Sind 0.0882931 0.0436055 0.1318986 0639.1469 0.1186882
Bank
Punjab 2.7911851 1.0380718 3.8292569 17,803.1549 2.7690321
National Bank
State Bank of 4.9872744 7.0598221 12.0470965 29,603.6089 11.2756531
India
UCO Bank 0.4838968 0.3736928 0.8575896 2,833.9819 0.4160225
Union Bank of 1.2456883 0.4939180 1.7396063 5,022.0577 1.1781990
India
Public Sector 16.3312327 13.9863953 30.3176280 94,838.7088 24.4217755
Banks Sub
Total
Source: Website of PMJDY: www.pmjdy.gov.in
Table -2-A shows the report of Public by State Bank of India with deposit of
Sector Banks on PMJDY. Table shows that Rs.29,603 crore. Whereas 4.10 crore
total number of accounts in Public Sector (13.52%) with deposit of Rs. 13,856 crore
Banks as on 01/04/2020 was 30.31 crore and 3.82 crore (12.60%) with deposit of Rs.
with deposit of Rs. 94,838 crores. Out of the 17,803 crores were opened by Bank of
total accounts opened under PMJDY by Baroda and Punjab National Bank
Public Sector Banks highest number of respectively. In terms of average deposits
account 12.04 crore (39.72%) were opened in accounts opened Punjab National Bank

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Modi S. et. al. 111

ranks first with average deposit of Rs. 4660 total accounts opened under PMJDY by
whereas Bank of Borada and State Bank of RRB’s highest number of account 1.6989
India ranks second and third respectively crore (26.14%) were opened by Punjab
with average deposit of Rs. 3375 and Rs. National Bank with deposit of Rs.6420.24
2458. Table -2-B shows the report of crore. Whereas 1.3999 crore (21.53%) with
Regional Rural Banks (RRB’s) on PMJDY. deposit of Rs. 3755.65 crore and 1.2065
Table shows that total number of accounts crore (18.56%) with deposit of Rs. 4443.2
in RRB’s as on 01/04/2020 was 6.49 crore crores were opened by State Bank of India
with deposit of Rs. 21,554 crores. Out of the and Bank of Baroda respectively.

Table-2-B: Regional Rural Banks Report as on 01/04/2020 (Figures in Crore)

Bank No. of No. of No. of Total Deposits in No. of
Name Beneficiaries (In Beneficiarie Beneficiarie Accounts Rupay
Crore) at s (In Crore) s (In Crore) (In Crore)) Debit
rural/semiurba at urban Cards
n centre bank metro centre issued (in
branches bank Crore)
branches
Bank of 0.9510647 0.2555051 1.2065698 4443.2084 0.804495
Baroda 9
Bank of 0.5216539 0.1916356 0.7132895 1836.4760 0.493251
India 4
Bank of 0.1742979 0.0145307 0.1888286 653.8335 0.093550
Maharashtr 4
a
Canara 0.4926750 0.1048077 0.5974827 2361.9911 0.281084
Bank 5
Central 0.3226050 0.0460763 0.3686813 1103.1399 0.300032
Bank of 3
India
Indian Bank 0.0662577 0.0201160 0.0863737 125.8692 0.059673
2
Indian 0.1130746 0.0090065 0.1220811 499.4420 0.059390
Overseas 1
Bank
Jammu & 0.0130306 0.0021464 0.0151770 81.9952 0.004046
Kashmir 4
Bank Ltd
Punjab 1.5900074 0.1089374 1.6989448 6420.2414 0.754322
National 8
Bank
State Bank 1.1551716 0.2439911 1.3991627 3755.6595 0.565392
of India 9

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112 Modi S. et. al.

UCO Bank 0.0719190 0.0116502 0.0835692 227.1444 0.019728

1
Union Bank 0.0167419 0.0017439 0.0184858 45.1436 0.010234
of India 5
Regional 5.4884993 1.0101469 6.4986462 21,554.144 3.445202
Rural 2 5
Bank Sub-
Total
Source: Website of PMJDY: www.pmjdy.gov.in
In terms of average deposits in accounts Bank of Baroda and State Bank of India
opened Punjab National Bank ranks first ranks second and third respectively with
with average deposit of Rs. 3779 whereas average deposit of Rs. 3682 and Rs. 2682.

Table-2-C : Major Private Banks Report as on 01/04/2020 (Figures in Crore)

Bank Name No. of No. of No. of Deposits in No. of
Beneficiaries Beneficiaries Total Accounts Rupay
(In Crore) at (In Crore) at Beneficiari (In Crore) Debit Cards
rural/semiur urban metro es (In issued (In
ban centre centre bank Crore) Crore)
bank branches
branches
Axis Bank Ltd 0.0147274 0.0748540 0.0895814 251.5270 0.0763070
City Union 0.0009731 0.0075991 0.0085722 14.6767 0.0084543
Bank Ltd
Federal Bank 0.0462448 0.0106607 0.0569055 252.0281 0.0321895
Ltd
HDFC Bank 0.0397078 0.2090793 0.2487871 1167.6102 0.2487193
Ltd
ICICI Bank 0.3697815 0.1041211 0.4739026 304.7994 0.4739026
Ltd
IDBI Bank 0.0474829 0.0368021 0.0842850 282.0774 0.0707170
Ltd.
IndusInd Bank 0.0034960 0.0396315 0.0431275 31.9352 0.0398970
Ltd
Jammu & 0.1466400 0.0190593 0.1656993 860.3421 0.1438439
Kashmir Bank
Ltd
Karur Vysya 0.0028656 0.0177945 0.0206601 18.7280 0.0203119
Bank
Kotak 0.0124860 0.0042052 0.0166912 22.2621 0.0015789
Mahindra
Bank Ltd

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Modi S. et. al. 113

Lakshmi Vilas 0.0048041 0.0132372 0.0180413 20.9237 0.0150718

Bank Ltd
RBL Bank Ltd 0.0064758 0.0043206 0.0107964 3.2022 0.0105140
South Indian 0.0027614 0.0171379 0.0198993 56.1780 0.0101048
Bank Ltd
Yes Bank Ltd 0.0006472 0.0005392 0.0011864 1.7180 0.0011523
Major Private 0.6990936 0.5590417 1.2581353 3288.0082 1.1527643
Banks: Total

Source: Website of PMJDY: www.pmjdy.gov.in

Table -2-C shows the report of Major accounts opened Jammu & Kashmir Bank
Private Banks on PMJDY. Table shows that Ltd ranks first with average deposit of Rs.
total number of accounts under PMJDY in 5192 whereas HDFC Bank Ltd and ICICI
Private banks as on 01/04/2020 was 1.2581 Bank Ltd ranks second and third
crore with deposit of Rs. 3288 crores. Out respectively with average deposit of Rs.
of the total accounts opened under PMJDY 4694 and Rs.643. Table-3 shows that
by Private banks highest number of during the six years (2011-2016) maximum
accounts 47,39,026 (37.66%) were opened number of bank branches 11686 were
by ICICI Bank Ltd with deposit of opened in the year 2014 and the least
Rs.304.799 crore. Whereas 24,87,871 branches 4382 were opened in the year
(19.77%) with deposit of Rs.1167.61 crore 2016. With the widespread use of mobile
and 16,56,993 (13.17%) with deposit of Rs. devices comes a rise in branchless banking,
860.34 crores were opened by HDFC Bank which is leading to a modest expansion of
Ltd and Jammu & Kashmir Bank Ltd bank branches.
respectively. In terms of average deposits in

Table-3 :Details of New Bank Branches and Accounts Opened

Year No. of Bank No. of New Deposit No. of New No. of New MFI
Branches Accounts (in crore) Credit Accounts Loan Accounts
Opened (in crore) (in crore)

2011 5158 7.5 - -

2012 8688 9.3 1.22 -

2013 8473 13.9 - -

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114 Modi S. et. al.

2014 11686 18.5 1.00 0.37

2015 9517 21.4 - 0.17

2016 4382 20.6 2.12 0.88

Source: Compile from CRISIL Inclusix 2018 Vol. 04 Page (23-25)

Table-3 also shows that deposit accounts outlets for providing financial services are
have grown steadily over all the years the main challenges.
except slight decrease in the year 2016. To overcome these challenges PMJDY
60.50 crore new deposit accounts were scheme was launched on 28 th August,
opened during the fiscal 2013 and fiscal 2014. PMJDY scheme is based on six
2016, which is double the 30.7 crore pillars. These includes providing bank
accounts opened during fiscal 2010 and accounts, credit, insurance, pension,
fiscal 2013. The main reason for the financial literacy, and increasing the
significant expansion in deposit accounts number of Business Correspondents
was PMJDY. Between fiscal 2015 and (BC). The CRISIL has released CRISIL
2016, 42 crore new deposit accounts were Inclusix index to know the quantum of FI
opened, and half of those fell under in India. CRISIL has so far released four
PMJDY. Table shows that credit accounts volumes. The first volume was released in
also experienced a significant growth June 2013 and second, third and fourth
over the two years ended fiscal 2016. The volume were released in January 2014,
table also shows that between fiscal 2013 June 2015 and February 2018
and fiscal 2016, there was a substantial respectively. Researcher has used CRISIL
increase in the number of microfinance Inclusix index to track the progress of
credit accounts. Due to their extensive financial inclusion in India before
presence in underbanked and unbanked PMJDY and after PMJDY. For easy
areas, particularly in semi-urban and rural understanding to readers CRISIL Inclusix
India, MFIs play a critical role in Scores (CIS) has been divided in the
promoting financial inclusion. following four categories. These
categories indicate different levels of FI.
Status of Financial Inclusion in India
before and after PMJDY: Table-4: CIS Classification on the basis
Before launch of PMJDY there were of Financial Inclusion
many challenges related to Financial CIS Level of FI
Inclusion (FI) in India. Lack of
coordination among stakeholders, Lack of
proper planning, operational issues such > 55 High
as few Business Correspondent (BC)

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Modi S. et. al. 115

40.1 to 55.00 Above Average

In CIS quantum of financial inclusion has
been measured based on the following
25 to 40.00 Below three tangible and critical dimension as:
Branch Penetration (BP), Credit
Penetration (CP), and Deposit Penetration
< 25 Low (DP).

Source: CRISIL report (I) June, 2013

Table-5: Dimension wise CIS for India

Year BP CP DP All India Average Score
2010 38.9 34.8 43.4 -
2011 41.0 36.80 48.30 40.10
2012 42.7 38.70 53.20 42.80
2013 52.4 45.70 60.30 50.10
2014 53.5 49.9 62.1 -
2015 55.4 50.4 70.5 -
2016 57.2 56.00 78.30 58.00
Source: Compile from CRISIL report (I) June 2013 to report (IV), February 2018

Note: 52.4 in the year 2013 which increased at

In 2013 Index CRISIL included the the rate of 9.16% to 57.2 in the year
contribution of Microfinance Institutions 2016. In the year 2013 Credit Penetration
(MFIs) first time for index computation. (CP) score was 45.70 it increased to 56.0
Therefore, index values for the fiscal in the year 2016. CP score has grown at
year 2013 are not directly comparable for a rate of 22,53%. The Deposit
BP and CP scores with those of previous Penetration (DP) score was 60.30 in the
years but DP scores are directly year 2013 which increased by 29.85% to
comparable because regulations restrict 78.30 in the year 2016. There has been a
MFIs from collecting deposits. rapid growth in Deposit Penetration due
Table-5 shows the dimension wise CIS to the large number of accounts opened
for India. As per Table in 2013; before under PMJDY. Table-6 shows Financial
launch of PMJDY all India score of Inclusion score of India with different
Financial Inclusion was 50.10 while in regions. According to the Table,
2016; after launch of PMJDY this score Financial Inclusion index of Southern
increased to 58.0. The Financial Region is the highest in all the years and
Inclusion score has grown at a rate of it is also higher than the average index of
16%. Branch Penetration (BP) score was India. For the year 2011 and 2012, CIS of

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116 Modi S. et. al.

Southern Region is more than twice as PMJDY in August 2014 Financial

compare to CIS of Eastern Region and Inclusion Index of Western Region for
North East Region. This difference of the year 2016 is 62.8 which is higher than
Financial Inclusion index clearly shows the India’s average index 58. The CIS for
that there is a huge difference in financial other regions of the country i.e.,
inclusion in different regions of the Northern, Eastern and North East region
country. Table also shows that till 2013; is also increase in the year 2016 as
before launch of PMJDY except compared to pre PMJDY period.
Southern Region, the Financial Inclusion However, the index of these regions is
index of all regions of the country were still lower than the average index 58 of
less than the average index of the the country.
country. Table shows that after launch of

Table-6: Financial Inclusion at Regional Level

Region CIS 2011 CIS 2012 CIS 2013 CIS 2016

India 40.1 42.8 50.1 58

Southern Region 62.3 66.1 76.0 79.8

Western Region 38.2 40.9 48.2 62.8

Northern Region 37.1 39.5 44.0 51.7

Eastern Region 28.6 30.8 40.2 48.2

North East Region 28.5 30.9 39.7 46.5

Source: Compile from CRISIL report (I) June 2013 to report (IV), February 2018

Table-7: Distribution of States and Union Territories based on CIS

Level of FI CIS No. of States / No. of No. of No. of
UT 2011 States / UT States / UT States / UT
2012 2013 2016
High > 55 11 11 14 21
Above 40.1 to 55.00 04 10 11 10
Avg.
Below 25 to 40.00 17 13 09 05
Low < 25 03 01 01 -
Total 35 35 35 36*
Source: Compile from CRISIL report (I) June 2013 to report (IV), February 2018
* Telangana state formed after 2013

Table-7 shows the number of States and the level of financial inclusion. Table
Union Territories (UT) of India based on shows that till 2013; before launch of

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Modi S. et. al. 117

PMJDY out of the total 35 states and UT of created without using a base year and
India 11 were in the category of high represents all stakeholders' cumulative
financial inclusion score above 55 for the efforts over time to promote financial
year 2011 and 2012 and in the year 2013 inclusion. For the FY that ended in March
this number increased to 14. In the year 2021, the FI index was first published in
2011 three States and UT were in the August 2021. For the fiscal year 2020–
category of low financial inclusion and in 2021, the FI Index number was 53.9. While
the year 2012 & 2013 this number was the FI Index number for March 2022 is
reduced to one. Table also shows that after 56.4, increase was seen across all of the
launch of PMJDY in August 2014 out of sub-indices (Access, Usage and Equality).
36 districts and UT, 21 were in the category
of High financial inclusion, 05 were in the Major Findings of the Research:
category of below financial inclusion and The Pradhan Mantri Jan-Dhan Yojana
there was no State /UT in the low category (PMJDY) of the National Mission for
in the year 2016. It is clear from the table Financial Inclusion was initially introduced
that after the launch of PMJDY, the on August 28th, 2014, for a period of four
number of States/ UT in the category of years (in two parts). It asks for universal use
high financial inclusion score above 55 of banking services with every family
increased from 14 to 21 with a 50% having at least one basic banking account,
increase. The level of financial inclusion as well as financial literacy, access to credit,
has improved due to the large number of insurance, and pensions. For creating the
accounts opened under PMJDY. most bank accounts in the shortest amount
of time, the PMJDY initiative broke the
Financial Inclusion (FI) Index of Reserve Guinness World Record on June 20, 2015.
Bank of India (RBI): In September 2018, the government re-
The Reserve Bank of India constructed the launched PMJDY as an open-ended scheme
Financial Inclusion Index (FI-Index) in and introduced extra advantages to entice
2021 after consulting with the relevant individuals to register bank accounts,
parties, including the Government, to buoyed by the scheme’s success. The
measure the amount of financial inclusion government wants to expand access to the
throughout the nation. The FI index was official banking system from "every
designed as a thorough index that included household to every adult" by increasing
information on the banking, investments, insurance coverage and providing double
insurance, postal, and pension sectors. The the overdraft (OD) limit under the new
FI-Index is made up of three main factors: PMJDY. The following are the study's main
access, which is weighted at 35%; usage, findings:
which is weighted at 45%; and quality, • Within six months of the launch of
which is weighted at 20%. Each of these PMZDY i.e., from 28/08/2014 to
parameters is made up of different 31/01/2015 more than 12.5 crore
dimensions, which are calculated using a accounts were open with deposit
variety of indicators. The quality criterion balance of Rs.10,499.62 crore under the
takes into account things like consumer scheme. Out of this more than 7.5 crore
protection, financial literacy, and service (59.78%) accounts were open under
inequalities and flaws. The index was rural areas whereas more than 5 crore
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118 Modi S. et. al.

(40.21%) accounts were under urban crores were opened by Bank of

areas. More than 9.8 crore (78%) Baroda and Punjab National Bank
accounts were opened by Public Sector respectively. In terms of average
banks while more than 2.17 crore (17%) deposits in accounts opened Punjab
accounts were opened by Rural National Bank ranks first with
Regional Banks (RRB’s) whereas only average deposit of Rs. 4660
4% accounts were opened by Private whereas Bank of Borada and State
banks. This number (12.5 Crore) is Bank of India ranks second and
more than 32% of the total accounts third respectively with average
opened (38 Crore) till March 2020. deposit of Rs. 3375 and Rs. 2458.
(Table-1) (Table-2-A)
• As on 01/04/2020 the total number • Analyzing of performance of
of PMJDY accounts were 38.07 Regional Rural Banks (RRB’s) on
crore with deposit balance of PMJDY shows that total number of
Rs.1,19,680 crore. More than half accounts in RRB’s as on 01/04/2020
the account holders are women. Out was 6.49 crore with deposit of Rs.
of total accounts more than 22.51 21,554 crores. Out of the total
crore (59.12%) accounts were open accounts opened under PMJDY by
at rural /semiurban bank branches RRB’s highest number of account
whereas more than 15.55 crore 1.6989 crore (26.14%) were opened
(40.84%) accounts were open at by Punjab National Bank with
urban metro bank branches. More deposit of Rs.6420.24 crore.
than 30.31 crore (79.6%) accounts Whereas 1.3999 crore (21.53%)
were opened by Public Sector banks with deposit of Rs. 3755.65 crore
while more than 6.49 crore (17%) and 1.2065 crore (18.56%) with
accounts were opened by Rural deposit of Rs. 4443.2 crores were
Regional Banks (RRB’s) whereas opened by State Bank of India and
only 3.3% accounts were opened by Bank of Baroda respectively. In
Private banks. (Table-2) terms of average deposits in
• Analyzing of performance of Public accounts opened Punjab National
Sector Banks on PMJDY shows that Bank ranks first with average
total number of accounts in Public deposit of Rs. 3779 whereas Bank
Sector Banks as on 01/04/2020 was of Baroda and State Bank of India
30.31 crore with deposit of Rs. ranks second and third respectively
94,838 crores. Out of all the with average deposit of Rs. 3682
accounts opened by the Public and Rs. 2682. (Table-2-B)
Sector Banks under PMJDY; • Analyzing of performance of Major
highest number of account 12.04 Private Banks on PMJDY shows
crore (39.72%) were opened by that total number of accounts under
State Bank of India with deposit of PMJDY in Private banks as on
Rs.29,603 crore. Whereas 4.10 01/04/2020 was 1.2581 crore with
crore (13.52%) with deposit of Rs. deposit of Rs. 3288 crores. Out of
13,856 crore and 3.82 crore the total accounts opened under
(12.60%) with deposit of Rs. 17,803 PMJDY by Private banks highest
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Modi S. et. al. 119

number of accounts 47,39,026 three tangible and critical

(37.66%) were opened by ICICI dimension as: Branch Penetration
Bank Ltd with deposit of (BP), Credit Penetration (CP), and
Rs.304.799 crore. Whereas Deposit Penetration (DP). By
24,87,871 (19.77%) with deposit of analysing the CIS for India, it is
Rs.1167.61 crore and 16,56,993 known that before launch of
(13.17%) with deposit of Rs. 860.34 PMJDY all India score of Financial
crores were opened by HDFC Bank Inclusion was 50.10 while in 2016;
Ltd and Jammu & Kashmir Bank after launch of PMJDY this score
Ltd respectively. In terms of increased to 58.0. The Financial
average deposits in accounts opened Inclusion score has grown at a rate
Jammu & Kashmir Bank Ltd ranks of 16%. Branch Penetration (BP)
first with average deposit of Rs. score was 52.4 in the year 2013
5192 whereas HDFC Bank Ltd and which increased at the rate of 9.16%
ICICI Bank Ltd ranks second and to 57.2 in the year 2016. In the year
third respectively with average 2013 Credit Penetration (CP) score
deposit of Rs. 4694 and Rs.643. was 45.70 it increased to 56.0 in the
(Table-2-C) year 2016. CP score has grown at a
• During the fiscal 2013 and fiscal rate of 22,53%. The Deposit
2016 60.50 crore new deposit Penetration (DP) score was 60.30 in
accounts were opened, which is the year 2013 which increased by
double the 30.7 crore accounts 29.85% to 78.30 in the year 2016.
opened during fiscal 2010 and fiscal There has been a rapid growth in
2013. The main reason for the Deposit Penetration due to the large
significant expansion in deposit number of accounts opened under
accounts was PMJDY. Between PMJDY. (Table-5)
fiscal 2015 and 2016, 42 crore new • To measure the amount of financial
deposit accounts were opened, and inclusion throughout the nation the
half of those fell under PMJDY. Reserve Bank of India constructed
credit accounts also experienced a the Financial Inclusion Index (FI-
significant growth Over the two Index) first time in 2021. The FI-
years ended fiscal 2016, credit Index is made up of three main
accounts also grew significantly. factors: access, which is weighted at
Between fiscal years 2013 and 35%; usage, which is weighted at
2016, there was a significant rise in 45%; and quality, which is weighted
the number of microfinance credit at 20%. For the fiscal year 2020–
accounts. (Table-3) 2021, the FI Index number was 53.9
• To track the progress of financial whereas, the FI Index number for
inclusion in India before PMJDY March 2022 is 56.4, increase was
and after PMJDY CRISIL Inclusix seen across all of the sub-indices
index / score (CIS) has been used in (Access, Usage and Equality).
this study. In CIS quantum of • By comparing Financial Inclusion
financial inclusion has been score of India with different
measured based on the following regions, it clearly shows that there
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120 Modi S. et. al.

are significant regional variations in revealed on analysis of data that

financial inclusion. Financial after launch of PMJDY in August
Inclusion index of Southern Region 2014 out of 36 districts and UT, 21
is the highest in all the years and it were in the category of High
is also higher than the average index financial inclusion (Above 55), 05
of India. For the year 2011 and 2012 were in the category of below
CIS of Southern Region was 62.3 & financial inclusion (25 to 40) and
66.1 which is more than twice as there was no State /UT in the low
compare to CIS of Eastern Region category in the year 2016. It is clear
(28.6 & 30.8) and North East from the analysis that after the
Region (28.5 & 30.9). Till 2013; launch of PMJDY, the number of
before launch of PMJDY except States/ UT in the category of high
Southern Region, the Financial financial inclusion score above 55
Inclusion index of all regions of the increased from 14 to 21 with a 50%
country were less than the average increase. The level of financial
index of the country. Whereas, after inclusion has improved due to the
launch of PMJDY in August 2014 large number of accounts opened
Financial Inclusion Index of under PMJDY. ((Table-7)
Western Region for the year 2016 is
62.8 which is higher than the India’s Conclusion:
average index 58. The CIS for other The six-year path of interventions guided
regions of the country i.e., Northern, by PMJDY has, in fact, resulted in
Eastern and North East region is transformative and directional change,
also increase in the year 2016 as allowing the burgeoning Financial
compared to pre PMJDY period. Inclusion ecosystem to provide banking and
However, the index of these regions financial services to the very lowest of the
is still lower than the average index poor. People-centred economic projects
58 of the country. (Table-6) have their roots in PMJDY. It was essential
to open their bank account, which has
• By analyzing the level of financial practically been accomplished under the
inclusion in States and Union PMJDY scheme, in order to extend the
Territories (UT) of India this is benefits of the government's numerous
known that that till 2013; before public welfare schemes to the very last
launch of PMJDY out of the total 35 member of the community. Currently, over
states and UT of India 11 were in the 38 crore PMJDY account holders are
category of high financial inclusion receiving financial aid through a number of
score above 55 for the year 2011 government schemes, including COVID-19
and 2012 and in the year 2013 this financial aid, direct benefit payments, PM-
number increased to 14. In the year KISAN, increased wages under
2011 three States and UT were in MGNREGA, and life and health insurance
the category of low financial coverage that is directly deposited into their
inclusion (less than 25) and in the bank accounts. Every second new account
year 2012 & 2013 this number was opened between March 2014 and March
reduced to one. This was also 2016 was a PMJDY account. Within 10

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Modi S. et. al. 121

days after the lockdown in the year 2020 Inclusive Growth in India’ International
during Covid-19, ex-gratia payments were Journal for Research in Management and
made to more than 20 crore women's Pharmacy, Vol.6, Issue 5, May 2017, p-14-
PMJDY accounts. The Jan Dhan account 17
frees the poor from the control of predatory
money lenders in addition to providing a Cnaan, R.A., Moodithaya, M.S. & Handy,
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mechanism for them to transfer money to
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their family in the villages and enter their
Policy, 41 (1), 183-205, Cambridge
savings into the formal financial system.
University Press
Thanks to PMJDY, which has also
enhanced India's financial infrastructure, Crisil Inclusix, an index to measure India’s
the majority of adults in that country now progress on financial inclusion (2013), Vol
have access to financial services. Direct 1, available at
Benefit Transfers (DBTs) have helped the https://www.crisil.com/en/home/our-
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the Covid epidemic by empowering them
and providing them with financial security. Deb, Rajat and Das, Prasenjit (2016),
One important element is that DBTs ‘Perceptions of Bank Account Holders
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Finance, Amity University, 1(1), p- 67-91
rupee reaches its assigned beneficiary.
Rajiv Gandhi, a former prime minister, Dutta, Tulika and Das Ashish (2017),
famously observed, “A rupee provided by ‘Analyzing Data of PMJDY’ Technical
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it reaches the beneficiary.” As opposed to www.math.iitb.ac.in>PMJDY_2017
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receiving 100% of government aid through https://indianexpress.com/article/business/
direct benefit transfers into the 37 crore economy/financial-inclusion-index-inches-
accounts opened under PMJDY. The up-all-sub-indices-rise-rbi-8067235/
PMJDY's slogan, "Mera Khata Bhagya
Vidhata," is therefore considered to be fully https://pmjdy.gov.in/
accomplished.
https://rbi.org.in/scripts/BS_ViewBulletin.
aspx?Id=20502
Acknowledgements:
In this study authors have used CRISIL https://timesofindia.indiatimes.com/busine
Inclusix index to track the progress of ss/india-business/women-hold-56-of-over-
financial inclusion in India prior PMJDY 46-crore-jan-dhan-
and post PMJDY. Authors express accounts/articleshow/93841793.cms
gratitude to the CRISIL.
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