The Importance of Pradhan Mantri Jan Dhan Yojana (PMJDY)

What is PMJDY?

Pradhan Mantri Jan Dhan Yojana (PMJDY) is a flagship financial inclusion programme launched by the Government of India on 15 August 2014. It aims to ensure that every household has access to affordable banking facilities, including savings accounts, remittances, credit, insurance, and pension services.

Why was it launched?

Before PMJDY, a large section of India’s population lacked access to formal banking services. Most banks were concentrated in urban areas and catered mainly to large businesses. The scheme was launched to:

• Bring economically weaker sections into the formal banking system.
• Enable direct benefit transfers (DBTs) for subsidies and welfare schemes.
• Promote digital payments through RuPay cards and Aadhaar linkage.
• Reduce dependence on informal moneylenders.

Progress So Far

Since its launch, PMJDY has achieved remarkable growth and become a cornerstone of India’s financial inclusion drive:

• Accounts Opened: From 18 million in the first week of launch to over 561 million by August 2025.
• Deposits Mobilised: Over ₹2.64 trillion, with an average balance of ₹4,726 per account.
• RuPay Cards: 386.8 million cards issued, linked with mobile and digital payment systems.
• Women Beneficiaries: Women account holders constitute 55.7% of total accounts.
• Rural Coverage: Around 66.75% of accounts are in rural and semi-urban areas.
• Insurance Coverage: As of April 2025, 236.9 million PMJDY accounts are insured under Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Suraksha Bima Yojana.
• DBT Impact: Direct transfer of subsidies has grown nearly tenfold in a decade, significantly reducing leakages and improving transparency.

Challenges

Despite its success, PMJDY faces several implementation and sustainability challenges:

1. Dormant Accounts: Around 21% of PMJDY accounts remain inactive, limiting the scheme’s effectiveness.
2. Multiple Accounts: Some individuals maintain multiple accounts, complicating monitoring and increasing misuse risks.
3. Fraud Risk: Simplified KYC norms make some accounts vulnerable to fraudulent activities.
4. Operational Costs: Banks face high maintenance costs related to technology, manpower, and service delivery.
5. Insurance Awareness: Many beneficiaries are unaware of the insurance and overdraft benefits available under the scheme.
6. Rural Economy Link: Without parallel growth in rural income and employment, account activity remains limited.

FAQs on PMJDY

1. What is the main feature of PMJDY?

It offers zero-balance savings accounts with access to banking services, RuPay cards, direct benefit transfers (DBTs), overdraft facilities, and insurance coverage.

2. How does PMJDY support digital transactions?

By linking accounts with RuPay cards, Aadhaar, and mobile numbers—known as the JAM Trinity—PMJDY has strengthened India’s digital payments ecosystem.

3. How has PMJDY helped rural households?

It has connected rural families to the formal banking network, facilitated DBTs, and reduced dependence on informal credit sources.

4. What role do women play in PMJDY?

Women are at the heart of PMJDY’s success—over half of all account holders are women, enhancing financial inclusion and empowerment.

5. Why do many accounts remain dormant?

Low income levels, limited financial literacy, and the opening of multiple accounts contribute to inactivity.

6. What is the global impact of PMJDY?

PMJDY is one of the world’s largest financial inclusion programmes and has been studied by countries such as Turkey, France, the UK, and Spain as a model for inclusive banking.

7. What is the way forward?

To ensure long-term success, PMJDY must focus on financial literacy, generating rural employment, encouraging active account usage, and strengthening fraud prevention mechanisms.