Financial Inclusion in India and Its Challenges

Only half PMJDY insurance claims settled in 2 years


Central idea: In an RTI reply, it is revealed that only 329 claims out of 647 filed were settled in the last two financial years under the Pradhan Mantri Jan Dhan Yojana (PMJDY).

What is PM Jan Dhan Yojana (PMJDY)?

  • The PMJDY is a financial inclusion program launched by the Indian government in 2014.
  • It is National Mission for Financial Inclusion to ensure access to financial services, namely, a basic savings & deposit accounts, remittance, credit, insurance, pension in an affordable manner.
  • Under the scheme, a basic savings bank deposit (BSBD) account can be opened in any bank branch or Business Correspondent (Bank Mitra) outlet, by persons not having any other account.

Benefits under PMJDY

  • One basic savings bank account is opened for unbanked person.
  • There is no requirement to maintain any minimum balance in PMJDY accounts.
  • Interest is earned on the deposit in PMJDY accounts.
  • Rupay Debit card is provided to the account holder.
  • Accident Insurance Cover of Rs.1 lakh (enhanced to Rs. 2 lakh to new PMJDY accounts opened after 28.8.2018) is available with RuPay card issued to the PMJDY account holders.
  • An overdraft (OD) facility up to Rs. 10,000 to eligible account holders is available.

Why in news?

  • In the financial year 2021-22, 341 claims were received for accident insurance cover under the PMJDY scheme.
  • Out of these, 182 claims were settled and 48 were rejected.
  • No information was provided on the status of the remaining 111 claims.

Is PMJDY a success?

  • Dormancy of accounts: The PMJDY scheme has led to an increase in the number of bank accounts in rural areas, but this has not necessarily led to a corresponding increase in transactions due to limited transaction history of many account holders.
  • Low or no transactions: Insurance coverage for the account holder is linked to their transaction history, and many accounts remain frozen due to lack of transactions, taking several weeks or months to reactivate.
  • False promise of overdraft: The promised overdraft facility of Rs 5000 for new account holders has not been provided as promised, leading to scepticism about the scheme’s success.
  • Payments bottleneck: The lack of proper connectivity, electricity, internet, and ATM facilities in rural areas has hindered the activation of RuPay cards and PIN numbers, which should have been considered before implementing such a large-scale program.


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