The Other Side of Jan Dhan: Understanding Inoperative Accounts

The Indian government’s commitment to financial inclusion has been prominently showcased through the Pradhan Mantri Jan Dhan Yojana (PMJDY), an ambitious scheme aimed at ensuring universal banking access. However, recent data presented to the Rajya Sabha by Bhagwat K Karad, Minister of State for Finance, highlights a crucial aspect of this journey: the inoperativeness of a significant portion of these accounts.

Detailed Overview of the Current Scenario:

  1. Extent of Inoperativeness:
    • As of December 6, 2023, nearly 20% of the 511.1 million (51.11 crore) PMJDY accounts were reported as inoperative. This translates to about 103.4 million (10.34 crore) accounts.
    • Among these, 49.3 million (4.93 crore) accounts are held by women.
    • The cumulative balance in these inoperative accounts stands at approximately Rs 12,779 crore, which constitutes around 6.12% of the total deposited balance in PMJDY accounts​​​​.
  2. Comparison with the Broader Banking Sector:
    • The proportion of inoperative accounts under PMJDY is consistent with the general banking sector’s pattern, indicating a systemic issue rather than a scheme-specific one.
    • The inoperative accounts under PMJDY are not an anomaly but reflect widespread banking behaviors across India​​​​.
  3. Trends and Improvements:
    • There has been a notable decline in the percentage of inoperative accounts from 40% in March 2017 to 20% in November 2023.
    • This reduction is the result of various initiatives by banks and the government to foster active banking practices among account holders​​.
  4. Mechanisms for Account Reactivation:
    • Accounts become inoperative or dormant when there are no customer-induced transactions for over two years, following guidelines set by the Reserve Bank of India (RBI).
    • Account holders can reactivate their accounts at any time without incurring fees by completing the necessary KYC procedures.
    • The inoperative accounts continue to accrue interest at rates applicable to operative accounts, and the funds remain accessible to the depositors once the accounts are reactivated​​​​.
  5. PMJDY: A Pillar of Financial Inclusion:
    • The scheme has been instrumental in providing at least one basic banking account for every household, significantly improving financial access.
    • As of the latest data, PMJDY has led to the issuance of 347.1 million RuPay cards and a total deposit accumulation of Rs 2,08,637.46 crore in beneficiary accounts.
    • PMJDY’s success is not just in numbers but also in its role in fostering a more financially inclusive environment across the country​​.

Government and Banking Sector Initiatives:

The Indian government, along with the banking sector, is intensifying efforts to reduce the number of inoperative accounts. This involves:

  • Organizing awareness camps at local levels to educate people about good banking habits.
  • Regular monitoring of account activities by the government to ensure continued progress.
  • Banks are undertaking efforts to make banking more accessible and customer-friendly, encouraging regular transactions and account maintenance.

Future Outlook:

The reduction in the percentage of inoperative accounts indicates a shift towards more active financial engagement by the populace. The government’s continuous efforts to educate and encourage the use of banking facilities, combined with the convenience and security offered by PMJDY accounts, are expected to further decrease the number of inoperative accounts. The PMJDY, thus, remains a cornerstone in India’s journey towards comprehensive financial inclusion, creating a foundation for a more economically empowered society.



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