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Question:  Pradhan Mantri Jan Dhan Yojana (PMJDY) is necessary for bringing unbanked to the institutional finance fold. Give arguments to justify your opinion.


Answer: Pradhan Mantri Jan Dhan Yojana is a banking inclusion scheme under which individuals previously out of formal banking will be included within the system by opening a minimum balance account. The scheme aims at widening banking reach to all sections of the society.

Need for extending banking

  • Optimising subsidy delivery
    The use of bank accounts can be made for directly transferring subsidies to the beneficiary without any middle men. This ensures that intended beneficiaries are reached without any chances of leakage.
    Ex: Subsidies from cooking gas is directly transferred to the account of beneficiary without any hassle or mismanagement.
  • Extending financial services
    For growth to take place, people from lower section must be able to register financial growth. This can be possible if financial services like loans and credits are easily available from formal sectors such as banks. By having bank accounts, these sections can avail benefits of financial sector to grow.
    Ex: Women can avail loans through Jan Dhan accounts for setting up small business with lower interest.
  • Consolidate funds
    For boosting growth domestically banks have to take the initiative for providing loans to business, which can only be possible if they mobilize funds. By extending customer base, banks aim to attract new money into the banking system.
    Ex: Jan Dhan accounts can be used to create a fixed deposit under Sukanya Samriddhi Yojana, which is a source of funds for banks.

Thus, Jan Dhan Yojana can be termed the breakthrough moment when banking sector broke the social barrier to extend the services to all sections of society.

Updated on 26 Mar 2020 |   Added on .26 Mar 2020  |  by admin