Within a fortnight to announcing the launch of Jan Dhan Yojna, the current administration was able to pull off a howler; opening 15 million new accounts on day one. This scheme is purported as the financial inclusion programme intended to connect a billion people with the banking system.
Thereby, aiming at mass poverty alleviation through direct cash transfers and subsidies; and at the same time prevent massive leakages which were the hallmark of all such previous attempts.
KYC norms were liberalised in order to facilitate the scheme, as the targeted population lacked even the basic of documents required to open a bank account. Moreover the scheme also provides for an accident insurance worth rupees 1lakh. The rural Indian social landscape has always been mired by
indebtness of the masses through the local money lender/usurer. Perpetual indebtness has caused immense suffering amongst the rural population and has hampered social mobility. By providing an overdraft facility up to Rs 5000, the scheme aims to relieve the marginal Indian, to break free from
his dependence on the local money lender. Most Indians do not have any avenues for their saving needs as half of the population has little or no access to the banking services.
This brings us to the fundamental question- why is it that the even after more than 50years of nationalisation of banks do we have so many people left out of the loop?
Minimal savings, lack of awareness, financial illiteracy, orthodoxy or just plain unavailability. The answer unequivocally is neither but, a combination of all. Ranking high is financial imprudence, which is cited as the major reason for not expanding banking services in the hinterlands of the country where most of the people reside. Successive governments since independence have propped up this set-up through subsidies (read welfare) which are deemed harmful as per the post-liberalisation economists. Congress-led governments have received a lot of flak in their days over the issue, as their modus operandi leads to massive loan waivers. The present PM Narendra Modi led government had promised change as their motto of governance, Jan Dhan Yojna originating from them has befuddled many followers and sceptics alike.
Many are asking the same questions – is it for populism? Is it for financial inclusion? Or is it more of the same?
Keep reading for more on Jan Dhan Yojna.