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PRADHAN MANTRI JAN DHAN YOJANA

Syllabus:

• GS-3– PMJDY, Economic empowerment of population , financial literacy ,Banking sector

Focus :

The article also throws light on the role of Pradhan Mantri Jan Dhan Yojana in the process of fast streaming of financial inclusion of population in the country. However, it also emphasises the effectiveness of the scheme for the eradication of economic disparities, the development of saving expenses and the improvement of the facilities related to banking services.

Source-TH

Introduction

• Micro- and mobile-branching are crucial in battle against poverty; demographic, financial, and social inclusion; and inclusive development.
• The PMJDY, which was launched on the 28th of August, 2014, is perhaps the flagship financial inclusion program of the Government of India aiming at inclusion of all the households not covered under formal banking system.
• In this article, the author analyzes how PMJDY has changed the position on the issue of financial inclusion and its successes and difficulties as a program of development, tracing future opportunities to enhance its effectiveness.

Starting the Scheme for financial inclusion – Pradhan Mantri Jan Dhan Yojana

Need for Financial Inclusion:

• Financial access leads to the mitigation of the exposure of the generally marginalized groups to a better standard of living and income generating opportunities for general economic development.
• Consequently, the idea of PMJDY has been initiated by the Indian government to offer every individual a banking facility particularly unbanked household.
• The financial exclusion of a major part of India’s population was a status quo before the introduction of PMJDY.

Objectives of PMJDY:

• PMJDY’s prime objective is to create vibrant bank accounts for every expanded family and for un-banked rural households to have at least one bank account, and to make them avail of banking services like loans, credit cards, insurance, and pensions.
• To enhance the feasibility of the scheme was divided into two phases to achieve initially, 5 crore unbanked households who can be served using the schemes of JAM viz., Jan Dhan, Aadhaar and Mobile.

An Overview on Progress and Achievements of PMJDY

Rapid Expansion of Banking Access:

• PMJDY has been remarkably successful since its beginning more than 53 crore accounts had been opened by August 2024
• Increment in the number of account that has been identified.
• Most of the participation is contributed by the public sector banks, which are about 78% of the total accounts.
  

Behavioral Changes and Social Impact:

• The States having high PMJDY account holders have witnessed lowering of incidence of major social evils like spirts consumption and smoking, tobacco
• Education and financial literacy has created an empowered society where individuals have been empowered to make better decisions financially.

Challenges in financial inclusion and solutions

Supply-Side and Demand-Side Barriers:

• Despite the achievements PMJDY has provided to Indian citizens, the project has some problems existing on the supply and demand sides, such as the poor availability of financial products and services in the hard-to-reach regions, and inadequate awareness of the advantages of formal financial systems.
• These challenges can only be addressed by upgrading the ecosystem of financial inclusion by establishing a conducive environment for the private sector, building financial awareness, and providing gender-sensitive services.

Ensuring Sustainable Credit Access:

• The penetration of micro-insurance and credit products has to be promoted and expanded as cost-effectively as possible.
• But there is a concern on over borrowing especially for the new entrant to the market on the formal financial sector.
• The latest addition to the Fintech scene is the Unified Lending Interface which has the potential of completely revolutionizing lending, through improving efficiency, cutting costs and hastening the disbursement of credit.

Consumer Protection and Regulatory Challenges:

• The need to further enhance consumer protection frameworks arise due to the introduction of new financial products that are in form of digitally delivered goods.
• The idea is to ensure that, they promote innovativeness in the market while at the same time safeguarding consumers through legislation.

Future Directions for PMJDY

Leveraging Technology for Enhanced Inclusion:

• The use of IT can enhance and optimize the provision of the financial services, enhance customer relations and extend the scheme’s coverage right to the corners of the country.
• Allowing non-personal use of mobile money, payment wallets and other such developments in financial technology would go a long way in narrowing the divide between the urban and rural populations with respect to access to formal financial services.
• Linking up PMJDY accounts with other social welfare programs enable the boosting of the government interventional techniques, and improving the economy in all aspects.
• The proposed strategy of guaranteeing that all forms of financial gains are smoothly and immediately passed through to beneficiaries will enhance the usage of the PMJDY accounts as well as the overlying propositions.
• Focus on Financial Literacy and Empowerment:Such kinds of programs can be very helpful for the account holders of PMJDY, and can help open their eyes and enable them to better manage their finances, understand the importance of banking, and know how to efficiently make use of different services.
• It is therefore important that government and other stakeholders involve NGOs, educational institutions and other private players in the monitoring and expansion of financial literacy campaigns so that taking on financial inclusion does not randomly lead to economic instrumentality.
• Encouraging Private Sector Participation:Publicizing private sector participation through partnership is another way of addressing other issues that may hinder the furtherance of financial inclusion.
• Since the idea is to engage all the players in the development of appropriate tools and services, improving PMJDY can be achieved through continuous cooperation with financial technology solution providers, traditional banks, as well as other financial services providers.

Conclusion

• The Pradhan Mantri Jan Dhan Yojana has greatly helped in achieving the objectives aimed at reaching out the unserved poplar in formal financial system and bridging the existing income divide and promoting sustainable development.
• But to maintain this pace, new endeavors are needed to overcome existing, and improve financial literacy and new age targeting, suited for PMJDY. If catalyzed by timely interventions PMJDY can remain at the heart of India’s financial inclusion plan that would shape economic growth and social change.

Mains UPSC Question

GS 3

Evaluate the impact of the Pradhan Mantri Jan Dhan Yojana (PMJDY) on financial inclusion in India. Discuss the challenges and suggest measures to enhance the effectiveness of this scheme in promoting inclusive growth and economic empowerment.Top of FormBottom of Form(250 words)