Fact Checking Government claims about Financial Inclusion & Jan Dhan Yojana
Sai Krishna Muthyanolla
March 4, 2019
The BJP government published an infographic on the 48-months portal that makes three claims about the Jan Dhan Yojana. This article is a fact check of these claims.
The BJP government published an infographic on the 48-months portal that makes three claims about the Jan Dhan Yojana. This article is a fact check of these claims.
What is the Jan Dhan Yojana?
According to the official website, ‘the Pradhan Mantri Jan Dhan Yojana (PMJDY) is a National Mission on Financial Inclusion encompassing an integrated approach to bring about comprehensive financial inclusion of all the households in the country. The plan envisages universal access to banking facilities with at least one basic banking account for every household, financial literacy, access to credit, insurance and pension facility. In addition, the beneficiaries would get RuPay Debit card having inbuilt accident insurance cover of Rs. 1 lakh. The plan also envisages channelling all Government benefits to the beneficiaries’ accounts and pushing the Direct Benefits Transfer (DBT) scheme of the Union Government’.
A response in Lok Sabha in November 2014 stated that ‘PMJDY was formally launched in August, 2014. The Yojana envisages universal access to banking facilities with at least one basic banking account for every household, financial literacy, access to credit, insurance and pension. The beneficiaries would get a RuPay Debit Card having inbuilt accident insurance cover of Rs.1.00 Iakh. In addition, there is a life insurance cover of Rs. 30000 to those people who open their bank accounts for the first time between August 2014 & January 2015 and meet other eligibility conditions of the Yojana’.
Further, the government stated in the Lok Sabha that, ‘PMJDY is different from the earlier financial inclusion programme (Swabhimaan) as it seeks to provide universal access to banking services across the country and focuses on coverage of all households (both rural and urban) while the earlier Financial Inclusion programme was limited to providing access point to villages with population greater than 2000. Further, PMJDY focuses on interoperability of accounts which was not there earlier; has simplified KYC guidelines and involves the Districts and States for monitoring and follow-up’.
To add to this, ‘there is no requirement of maintaining any minimum balance in case of accounts opened under Pradhan Mantri Jan Dhan Yojana (PMJDY)’.  However, it has to be noted that the concept of zero balance accounts (or no minimum balance account) is not new. The Reserve Bank of India (RBI) had directed all banks in the year 2005 to make available a basic banking ‘no-frills’ account either with ‘nil’ or very low minimum balances. Such an account was called ‘Basic Savings Bank Deposit Account (BSBDA)’. In fact, the RBI has now issued notifications with instructions that a BSBD account-holder of a particular Bank cannot open any other savings bank deposit account in the same bank, including the PMJDY account. In other words, a BSBD account is treated on par with a PMJDY account.
How many accounts have been opened under the scheme?
The first claim is that ‘31.52 crore Jan Dhan accounts opened’.
Responses in the Lok Sabha show that, ‘as of December 2017, a total of 30.71 crore accounts have been opened under PMJDY  and more recently, ‘as per the data sourced from banks, as of January 2019, out of the total 34.03 crore PMJDY accounts, 5.06 crore accounts were having zero balance’.
Claim: 31.52 crore Jan Dhan accounts opened.
Fact: As per data sourced from the bank, as on 23 January of 2019, there are a total of 34.03 crore PMJDY accounts. The number is higher due to the dynamic nature of the data, hence, the claim is TRUE. However, it has to be noted that financial inclusion as a concept is not new and about 15% of the PMJDY accounts have zero balance.
Does India account for more than half of the new bank accounts in the world between 2014-17?
The second claim is that ‘according to the World Bank Findex Report, India accounts for 55% of new bank accounts opened globally between 2014-17’.
The first Global Findex survey was completed in 2011, followed by a second round in 2014 and the latest one in 2017. Globally over those intervals, the share of adults with an account rose from 51% to 62% and then to 69%.
The report notes, ‘in India the share of adults with an account has more than doubled since 2011, to 80 percent. An important factor driving this increase was a government policy launched in 2014 to boost account ownership among unbanked adults through biometric identification cards. This policy benefited traditionally excluded groups and helped ensure inclusive growth in account ownership. Between 2014 and 2017 account ownership in India rose by more than 30 percentage points among women as well as among adults in the poorest 40% of households. Among men and among adults in the wealthiest 60% of households it increased by about 20 percentage points’.
The same report also states that ‘the share of account owners with an inactive account varies across economies, but it is especially high in many South Asian economies. In India, the share is 48%, the highest in the world and about twice the average of 25%  for developing economies. Part of the explanation might be India’s Jan Dhan Yojana scheme, developed by the government to increase account ownership. Launched in August 2014, the program had brought an additional 310 million Indians into the formal banking system by March 2018, many of whom might not yet have had an opportunity to use their new account’.
Though it is mentioned that 310 million Indians were brought into the banking system because of PMJDY, that is about a different time period.  However,  the report notes that, ‘515 million adults worldwide opened an account at a financial institution or through a mobile money provider between 2014 and 2017’. The 55% claim of the government seems to have been calculated based on the number of PMJDY accounts opened (310 million).  However, the number of savings bank deposit accounts including new accounts in scheduled commercial banks increased from 97.77 crore as of 31 March 2014 to 150.2 crore as of 31 March 2017.
Claim: According to the World Bank Findex Report, India accounts for 55% of new bank accounts opened globally between 2014-17.
Fact :Though it is mentioned that 310 million Indians were brought into the banking system because of PMJDY, that is about a different time period.  However,  the report notes that, ‘515 million adults worldwide opened an account at a financial institution or through a mobile money provider between 2014 and 2017’. The 55% claim of the government seems to have been calculated based on the number of PMJDY accounts opened (310 million).  However, the number of savings bank deposit accounts including new accounts in scheduled commercial banks increased from 97.77 crore as of 31 March 2014 to 150.2 crore as of 31 March 2017.. Hence, the claim remains UNVERIFIED.
What is the Indian postal payment bank?
The last claim is that ‘India Post Payment Bank to take the banking system to the doorstep of the poor and the unbanked’.
The Cabinet in June 2016 had approved the proposal of Department of Posts for setting up of India Post Payments Bank with a direction to roll out 650 India Post Payments Bank (IPPB) branches co-located in district headquarter Post Offices and their linkage with all (approximately 1.55 lakh) Post offices across the country by September, 2017.
According to the official information, ‘IPPB aims to drive financial inclusion at the last mile, by bringing customers under formal banking channels and providing access to banking services at affordable rates. There are multiple socio-economic benefits that would be realized by the economy at large, and are mentioned below:
According to another response in Lok Sabha, ‘IPPB would be offering the payment bank services to the rural population using Door Step (Assisted) Banking along with the regular counter services through the Postmen/Gramin Dak Sewaks (GDS) and Postal Assistants’.
The latest response about the IPPB in Lok Sabha in January 2019 states that ‘India Post Payments Bank (IPPB) has rolled out 650 branches co-located in the District Headquarter Post Offices on 01st September, 2018 using its own IT platform. All the Post Offices in the District will be linked to the respective branches which will function also as Access Points of IPPB to offer IPPB services to customers. The IPPB branches will function as Controlling Office for managing the operations of Access Point of IPPB’.
Claim: Indian Postal Payment Bank to take the banking system to the doorstep of the poor and the unbanked.
Fact: The India post payments bank has been launched with the aim of providing doorstep banking to the poor and the unbanked. Since the system has become fully functional only recently and no assessments have been conducted on the same, the claim remains UNVERIFIED.
This story is part of a larger series on the 4-years of the Modi government. This series has been made possible with the flash grant of the International Fact Checking Network (IFCN). Read the rest of the stories in this series here