1.

1 CONTEXT
The prophecy of Millennium Development Goals of U.N i.e
growth with equity clearly envisages that the growth spree of the globe in the 21st century
has left some people behind the time. Handful of the global populace are still languishing in
the vicious circle of poverty and are cast aside by those who are economically stronger and
swifter in the sway of globalisation and liberalisation. For better growth of world, the
deprived sections should be dragged into the mainstream of growth. This is because of the
fact that poverty any where is a grave threat to prosperity everywhere. Financial services
actively contribute to the humane and economic development of the society. These lead to
social safety net and protect the people from economic shocks. Hence, each and every
individual should be provided with affordable institutional financial products or services
popularly called financial Inclusion.
Financial Inclusion is delivery of banking
services at an affordable cost to the vast sections of disadvantaged and low income groups.
The financial inclusion plan aims at providing easy access to financial services o those
sections of the society who are deprived of its so far at affordable cost hereby bringing them
into the mainstream financial sector. Implementation of financial inclusion is not a new
concept for bank. Financial inclusion activities are being implemented by your bank since
inceptions through various government-sponsored programmes, lending to the poorest of the
poor, lending to the minority communities, lending to SC/SC, lending to priority sectors, etc.
however, the RBI formalised concept of financial inclusion in 2005, when it permitted
rendering of banking services through Business Correspondent(BC) channel. It then advised
all commercial banks in the year 2010 to submit board approved plan for providing banking
services in rural unbanked areas under financial inclusion. In India, the banking industry has
grown both horizontally and vertically but the branch penetration in rural areas has been
slow. Even after decades of bank nationalization, with a shift in focus and urban slums
continuing to exploit the poor. The efforts to include the financially excluded segments of the
society into the formal financial system in India have been in vogue for quite something. The
Reserve Bank of India first mooted the concept in 2005 and branchless banking through Bank
Mitra was started in the year 2006. In the year 2011, the Government of India gave a serious

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push to the programme by undertaking the swabhimaan campaign to cover over 74000
villages with population of more than 2,000, with banking facilities.

1.2 PRADHAN MANTRI JAN-DHAN YOJANA:-AN OVERVIEW

Honble Prime Minister, Sh. Narendra Modi on 15th August, 2014 announced Pradhan
Mantri Jan-Dhan Yojana(PMJDY) which is a National Mission for Financial Inclusion.
The task is gigantic and is a National Priority.

The financial inclusion programme, named

Pradhan Mantri Jan Dhan Yojana (PMJDY), kicked off with 1.5 crore bank accounts opened
on the very first day. Each account holder is covered by life insurance worth Rs.30,000,
accident insurance worth Rs.1,00,000, provided a debit card and allowed to overdraw up to
Rs.5,000. All that without any due diligence or a single penny paid in as premium! The Prime
Minister proudly proclaimed, Never before had insurance companies issued 15 million
accident insurance policies in a single day. Never before in economic history were 15 million
bank accounts opened on a single day. Indeed. It does not take much to see that insurance
companies and banks do not possess the privilege of taxing productive citizens to splurge on
populist measures. Now despite the launch of such a big bang welfare programme, quite
ironically, the primary belief among the mute supporters of the financial inclusion
programme seems to be that direct benefits transfer would cut down welfare expenditure by
plugging leakages from the system. Nothing could be farther from the truth. Notwithstanding
the many delusions of the Indian Right, statesmen of all kinds pursue only those policies that
serve the purpose of aggrandizement of their own political power and stature. Democratic
politics as a system is tuned to pander to populist interests, which leads to competition among
politicians to increasingly splurge on populism. Thus, every five years the size of welfare
doled out to voters rises progressively. While this may not always hold true in the short term,
the trend since the early 20th century, when democracies began to spring up, points to
increasing plunder of productive citizen.
This has happened despite rising living standards that should have decreased welfare
spending. Some states have shown clear evidence of politicians actively competing to
increase spending each term to stand a step ahead of the promises of others. This has meant
not just an increase in the size of doles, but also new measures to make welfare delivery more
efficientsuch that benefits are actually received by the targeted groups rather than the
corrupt bureaucracy that is tasked with the job. Thus, it is the desire of political parties to
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fully reap the political benefits of their welfare programmes by reining in leakages that has
culminated in support for direct benefits transfer. Direct benefits transfer, in other words, is a
mechanism evolved to keep up with political competition in spending more on targeted
groups receiving benefits. So, banking on technological advancesthat were adopted not to
reduce spending but to pander more effectively to populist demandsto cut down welfare
expenditure would be no less than folly. The previous governments Aadhaar programme was
supposed to prevent leakages to help the Congress keep pace in the game of competitive
populism. The party was voted out of power before the scheme could be implemented on a
large scale. Today, PMJDY is nothing more than Modis own attempt at efficient delivery of
welfare to please voters. This trend of competitive populism can only mess up the state of
public finance, which is already nothing to write home about. Natural Order runs every
Monday, with a libertarian take on the world of economics and finance.

1.3 IMPORTANCE OF THE STUDY:

In India, about 42 per cent of the population lacks access to a formal financial institution
such as a bank and is not part of the countrys banking system. This population depends on
local money lenders for loans which are often given at exorbitant interest rates and unfair
terms. Without access to a basic bank account, facilities such as insurance cover and debit
cards remain a far cry to this section of the population. The PM Jan Dhan Yojana is set to
change this scenario. In the long term, this scheme will also provide the backdrop for a
cashless economy another focal point of the Prime Ministers I-Day address (Digital India).
This study also focuses on various unseen reasons for failure of different policy in relating to
financial inclusion. It also signifies the financial inclusion is the need of the hour for
sustainability and maintenance of the growth process. This study proves that victims of
financial exclusion and how they are the victims of this financial exclusion. It also guides the
future of financial inclusion process in India. It assesse the perception of people regarding
financial inclusion services and its benefits. Thus it is a topic which attracts many researchers
to identify the root of the problems and to find out suggestive measures for bringing
unbanked people to mainstream of growth.

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1.4 REVIEW OF LITERATURE:

In order to clearly understand the gravity of the topic of these research paper an extensive
review of various reports, white papers, dissertations, academic journal have been reviewed.
Few of them are listed below.

According to Indian Institute of Banking and Finance, financial inclusion is

delivery of banking services at an affordable cost to the vast sections of
disadvantaged and low income group. Unrestrained access to public goods and
services is the sine qua non of an open and efficient society. As banking services are
in the nature of public good, it is essential that availability of banking and payment
services to the entire population without discrimination is prime objective of the
public society.

According to K.C.CHAKRABARTY, Deputy Governor, Reserve Bank of India,

financial inclusions the process of ensuring access to appropriate financial products
and services needed by all sections of the society in general and vulnerable groups
such as weaker sections and low income groups in particular at an affordable cost in
affair and transparent manner by mainstream institutional players.

Kunthia R (2014) - The author in this research paper has attempted to study the
recent developments on Financial Inclusion in India with special reference to the
recently launched Pradhan Mantri Jan-Dhan Yojana (PMJDY).The author has
presented an analysis of its different important areas, the roadblocks in the process
and has suggested strategies to attain universal coverage of the PMJDY for the
underprivileged population and the large unbanked areas of thecountry.2

Sumanthy M Patnaik BCM, Satpathy I & Supkar A (2014) - This study is an

attempt to understand the hopes and expectation of the customers of the Odisha
Gramin Bank (OGB). The authors have taken note of the reforms initiated by the
Government of India but to what extent the aspirations of the customers are being
taken care is the present issue discussed in this paper. In this study the authors have
tried to include the views 281 respondents and have considered 12 hypotheses. Two
hypotheses were rejected by the respondents. The reasons seem to be the more and
more nationalised banks presence in the rural area. The authors believe that if the
intentions are good then the results will be definitely a positive one.
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Sumanthy M (2013) - By ignoring the underprivileged and the disadvantaged is

never going to develop India as a nation in a remarkable way. The banks have shown
a growth in both volume and complexity as well as improvements in financial
viability, competitiveness and profitability, but still they have not been able to bring
a vast segment of the population, particularly the underprivileged sections into the
bracket of basic banking services. An all-out and serious effort is required to be
made to eradicate financial exclusion as it can lift the standard of living and provide
opportunities to the poor and disadvantaged. Aggressive policies need to be
introduced with proper regulatory framework and consumer education so that it does
not lead to a situation of a financial crisis.

Bhuvaneshwari P & Pushpalatha P (2013) - The authors say that even after
attainment of independence India is yet to provide independence to its poor from
debt and cunning money lenders. The authors are of the view that the Indian banking
system has to increase its focus on the problems faced by rural India. The authors
advocate the concept of social banking which primarily constitutes financial services
that result in human development; it is a system in which the rich subsidises the
provision of the financial services to the poor. Social banking exists in India in the
form of cooperative banks, regional rural banks but their success has been limited
due to the combination of a large population, the vast geographical spread of the
country & unavailability of banking services.

Sinha A (2013) - The author has commented on the occasion of the launch of the
financial inclusion programme of Cosmos bank that without overall financial
inclusion , both financial stability and inclusive growth cannot be reached. Banks
need to look at financial inclusion as a business model that can generate profits and
not as an obligation which they need to fulfil. In order to make financial inclusion as
a successful business model, the banks have to focus on lowering the costs of
transactions by leveraging technology and offering more products of credit to the
already included population. The author finally concludes that the Urban Cooperative banks have the potential to complete the objectives of financial inclusion.

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1.5 RESEARCH GAP AND STATEMENT OF PROBLEM:

A lot of research has been made on Pradhan Mantri Jan Dhan Yojana so far.
But no research has been made on what extend financial inclusion can be achieved
through PMJDY, which is nationwide policy for achieving financial inclusion. This
is the scope for doing research on this topic.

1.6 OBJECTIVES OF THE STUDY:

To study the extent to which financial inclusion can be achieved through PMJDY.
To analyse the socio-economic conditions of people.
To assess the savings and capital mobilisation through PMJDY
To examine the Bank participation and service offered in PMJDY

1.7 RESEARCH METHODOLOGY:

1.7.1Sources of data:
The present study has been conducted on the basis of both primary data and secondary data.
Primary data are collected from typical rural area of Kendrapara district, Odisha. The data
also are collected from different Nationalisation bank and private bank also. It also collected
from Reserve Bank of India sources. Primary data was collected through opinion survey
techniques like direct interview, structured questionnaire, and observation.
Secondary data was extracted from various archives like- books, e-newspapers, magazines,
journals and internet search.
1.7.2 Scope of the study:
The study is limited to geographical area of Kendrapara district , Odisha, India. The scope
includes household servants, domestic helps, migrant & local construction labourers,
rickshaw, cart pullers, taxi drivers and other contractual low income staff, farmers, students
and youth mass etc.

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1.7.3 Period of the study:

This project has taken around three months to be completed and various magazines, articles;
journals are studied for this project. Suggestions from various professors and teachers are
taken and discussion among seniors and friends are made for conducting this study.
1.7.4 Tools and techniques:
Various statistical and mathematical tools and techniques like ratios, percentage, and
questionnaire are used in this research project.

1.8 RELEVANCE OF THE STUDY:

This research work will immensely help to the Government and Reserve Bank of India for
formulating plans and policies regarding the financial inclusion and financial literacy. This
will help to the other researchers, economist, professionals in their respective fields.

1.9 LIMITATION OF THE STUDY:

The major limitation in this project is time constraint. If not for less time
some more data could have been collected
The research is limited to only one geographical boundary i.e Bhubaneswar
The sample size is only 400 which is a small sample.
Since the target respondents chosen were mainly typical rural people.
Monetary support for collecting data is limited.

1.10 CHAPTER PLAN:

As mentioned in the content that this project is consists of five chapters. The details
about the chapter plan is mentioned belowChapter 1 covers introduction part of the project which includes context,
Importance of the topic, Literature review, Research gap & statement of the
problem, Objectives of the study, Research methodology, and relevance of the study
and limitation of the study.
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Chapter 2overviews on financial inclusion, its concept, needs, present scenario,

causes, role of technology, comparative analysis, policy development, mainstream of
services of financial inclusion, impact on household, role of major stakeholders
Chapter 3 gives some basic idea on Pradhan Mantri Jan Dhan Yojana and its origin,
objectives,

facilities

offered,

participatory

banks,

documents

required,

implementation, strategy, media and publicity, comparative analysis of PMJDY,

status of BOB in PMJDY
Chapter 4 contains a a case study on Kendrapara district profile and opinion about
PMJDY and also study on public sector bank participation in PMJDY
Chapter 5 covers major findings, suggestion, scope for future study and conclusion
of the research topic.

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2.1 INTRODUCTION:
The World is moving at an amazing pace. Thanks to the advances in technologies, distances
have become meaningless. Globalization has enabled the rise of global trade leading to
wealth generation in developed as well as developing countries. Wealth can be created in any
part of the world with a single click of the mouse. Developing nations, like India have
immensely benefited from the globalizing economy. Wealth has been pouring into the
country as investments (both direct and institutional). Indian companies are acquiring
companies all over the world, hence benefitting from expansion. This has directly affected
the lives of many citizens in our country. For many, there has been a dramatic increase in the
disposable income. The savings, consumption and investment patterns have changed in the
past few years. This has meant that there has been an increase in demand for many financial
services from different financial firms.
The market has responded to this soaring demand with making attractive offers and services
for the customers at affordable rates. The liberalization of the economy in the 1990s has
brought in new players into the field which has not only brought in some much needed fresh
air to the stagnant financial sector but also competition for the same market space which was
relatively unknown in the financial sector till then. Since then, there have been progressive
reforms in the financial sector allowing for better and easier facilities and options to the
consumer. An increasing financially aware middle class have realized the importance of
financial services. Banks have streamlined and rationalized themselves to meet with the
changing demands of the people. Banks have become partners in growth for many offering
them a safer and secure future.
However, not all the reforms in the financial services sector have still been able to bring in
the other half of Indias population who are un-banked. There are many reasons that are
obvious for this kind of financial exclusion. The new surge in the economy has not yet
percolated into the lower strata of the society. It is easy to blame the capitalist growth for this
sort of income disparities. Even after 60 years of Indian independence, 1/3 of our population
is still illiterate (let alone financially literate) and at least 26% of the population still lives
under the poverty line. There are many statistics, which goes on to prove that for even a
developing nation India has a long way to go.
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Most of the un-banked or financially excluded population of India live in rural areas;
nevertheless, there is also a significant amount of the urban population of India who face the
same situation even with easy access to banks. Many of the financially excluded in these
areas are illiterates earning a meagre income just enough to sustain their daily needs. For such
people, banking still remains an unknown phenomena or an elitist affair. It is easier for them
to keep their money at their house or with some moneylenders and easily make immediate
purchases (which make up most of their expenditure) rather than to follow the cumbersome
process at banks. A lot of the financially excluded populations are at the mercy of
moneylenders or pawn shop owners. They should be made a part of the formal banking
structure so that they could also have the benefits that the others enjoy. By making them
financially inclusive, we are making their financial position less volatile. At the same time,
we are treating them on an equal par with other members of the population so that they would
not be denied of access to a basic service such as banking.
India's development strategy, particularly since the reforms of the early nineties has
identified the existing positive correlation between economic growth, financial deepening and
financial inclusion. However, in recent years, an accelerated exercise has been done through
targeted mediations by the government and the Reserve Bank of India. The eleventh five year
plan (2007-12)has focused on inclusive growth and has further emphasized the initiatives
financial inclusion as the underprivileged and the poor have enormous potential to contribute
in achieving the objective of faster and higher inclusive growth. Accessing of financial
services by the poor and vulnerable groups is a precondition for employment, poverty
reduction, economic growth, and social cohesion. Through access to financial services, the
weaker groups of the society will get empowered by getting the opportunity to have a bank
account which will enable them to save and make investments thus breaking their pattern of
financial hardships resulting due to low and irregular earnings; to avail the benefit of securing
their families' future with insurance; to avail the facility of credit from forma sources of
finance and attaining freedom from unscrupulous money lenders. All the above mentioned
scenarios will in the long run enable them to break the shackles of poverty. The banking
sector in India has recognized the importance of inclusive growth and as a result has endured
a few essential changes over the period of the last twenty years. Banking reforms which
began in the early nineties has facilitated the entry of new private and foreign players in the
sector which has increased the competition benefiting the consumers and changing the
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operational mind set of the banks, the new generation private sector banks have introduced a
wide range of services and delivery channels using technological breakthroughs. With the
increase of use of technology the traditional brick-and-mortar infrastructure like staffed
branches have transformed into a system.
Financial inclusion is the new model of economic growth which plays a major role in
eradicating poverty. The concept of financial inclusion is primary to the process and efforts
for achieving inclusive growth and sustainable development of the country. It is a policy of
involving aider section of population deposit mobilization and credit intermediation. The
financial stability and development council under the ministry of finance, government of
India is committed to provide financial literacy and financial inclusion and it has directed all
the financial entities in the country including the financial sector regulators, reserve bank of
India, commercial banks and other financial service providers to stay focused on the same
cause. Empirical evidence has proved that countries which are having a large excluded
population from the services of the formal financial institutions show a hiver rate of
inequality and poverty. Thus, we can say that banking sector is a key player in achieving
inclusive growth as well as financial inclusion. However there are still many issues and
challenges in the road to achieving 100% financial inclusion. The first challenge is the
coverage of the remote areas which are completely unbanked, to some extent this has been
taken care of by the Business Correspondent / Business Facilitator model but it involves a
higher cost of transaction for the banks as well as the consumer making it commercially
unviable. The second challenge is to develop a user friendly and simple model of business
and service delivery which will enable the customers to access financial services at their
vicinity, there is also a need to develop a strong grievance handling system to address any
glitches and issues. The third challenge is the opening of new branches in the unbanked areas
with minimum infrastructure. The fourth challenge is to develop new customised products
according to the requirements of the poor customers apart from the basic banking services.
The fifth and the most important challenge is to develop an ecosystem of collaboration
between the regulators, financial institutions, industry players, technology providers, NGOs,
civil societies, state level and central level agencies which can stimulate financial inclusion.

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2.2 FINANCIAL INCLUSION: BACKGROUNDIndia has adopted inclusive growth as part of its economic planning. It was in fact the
11thfive year plan (2007-2012) which emphasizes on inclusive growth and enables the
vulnerable groups of the society to actively participate in the economic development of the
country. This can be made possible through successful implementation of financial inclusion
which involves the delivery of financial services at a sustainable cost to the vast segments of
low income and disadvantaged groups. The objective is to develop a model of an inclusive
financial system which will support full participation of the neglected and underdeveloped
segments of the society in the financial system. An inclusive financial system is one that
gives equal weight to both the development opportunities and the market potential for the
poor by bringing them into the banking and financial bracket which involves the following:

Financially and socially sound institutions having the capabilities of setting

standards, self-regulations and performance monitoring systems governed under a
sound and robust regulation system.

Assuring the sustainability of the financial institutions in providing continuous

access to poor customers of the various financial services.

Availability of multiple financial service providers including private, public and

non-profit organizations in the sector making sustainable efforts to reduce the costs
of the services.

A Wide variety of financial services which enable the underprivileged customers to

avail credit, procure savings, receive and send remittances and other financial
benefits which they are eligible for this scheme.
The efforts to include the financially excluded segments of the society into formal
financial system in India are not new. The concept was first mooted by the Reserve
Bank of India in 2005 and Branchless Banking through Banking Agents called Bank
Mitra (BusinessCorrespondent ) was started in the year2006. In the year 2011, the
Government of India gave a serious push to the programme by u n d e r t a k i n g t h
e " S w a b h i maan campaign to cover over 74,000 villages, with population more
than 2,000 (as per2001 census), with banking facilities. State wise number of

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villages covered under the campaign may be seen. Learnings from the campaign
suggest that

The efforts need to be converged so as to cover the various aspects of PMJDY, like
availing of Micro Credit, Insurance& Pension.

The campaign focussed only on the supply side by providing banking outlet sin
villages of population greater than2000, but the entire geography could not be
covered.

The target was for coverage of villages and not of the households.

The remuneration of the Bank Mitr(Business Correspondent) was very poor.

Dependability and trust factor with a mobile BC was not high. Most of the BCs
operated off-line which locked a customer with a particular BC there by constraining
the utility.

Some technology issues hampered further scalability of the campaign.

The deposit accounts so opened under the campaign had very limited number of, or
no transactions.

The task of credit counselling and Financial Literacy did not go hand in hand with the
campaign

Consequently the desired benefits were not visible. Learning from the past, the present
proposal is, therefore, an integrated approach to bring about comprehensive financial
inclusion. The learnings from the previous campaign and proposed approach under the
comprehensive FI plan in mission mode is appended with Executive Summary. At present
only 0.46 lakh villages out of the5.92 lakh villages in the country have bank branches. In
order to cover the remaining areas with the banking outlets, a composite approach is
proposed through branch and branchless banking. Strategy for branchless banking is through
online fixed points Bank Mitr (Business Correspondent) who act as representatives of Banks
to provide basic banking services. Mobile banking facility with USSD based technology is
also proposed to be provided to every accountholders with low end mobile phones. Mobile
wallets would also be effectively utilised to deepen Financial Inclusion.

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2.3 OBJECTIVES OF FINANCIAL INCLUSION:

The access to various mainstream financial services e.g. saving bank account, credit,
insurance, payments and remittance and financial and credit advisory services.

The main objective is to provide the benefit of vast formal financial market,&
protect them from exploitation of informal credit market, so that they can be brought
into the mainstream

2.4 ROLE OF STAKEHOLDERS IN FINANCIAL INCLUSION:

2.4.1 Department of Financial Services:

Overall ownership of the Mission Mode Project on Financial Inclusion

Overall Monitoring and Implementation of the Mission

2.4.2 Other Central Government Departments:

In order to achieve the complete financial inclusion and transfer of social

benefits in the accounts of the beneficiaries, the concerned Departments of
Central Government would coordinate with the stake holders.

Presently, 26 centrally Social benefits scheme under DBT are sponsored by

eight Departments of the Central Government as under:

I. M/o Social Justice & Empowerment

II. M/o Human Resources Development,
D/o Higher Education
III. M/o Human Resources Development,
D/o School Education & Literacy
IV. M/o Tribal Affairs
V. M/o Minority Affairs
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VI. M/o Women and Child Development

VII. M/o Health & Family Welfare
VIII.M/o Labour and Employment

MGNREGA is sponsored by Ministry of Rural Development (MoRD, GoI),

and is likely to be included in Direct Benefit Transfer.

Departments like Department of Posts for using the rural post offices /
Gramin Dak Sewak, Department of Telecommunications for telecom
connectivity, Ministry of Information & Broadcasting and DAVP to assist in
media campaign, DEITY in development of logistic support for monitoring
like creation of portal for data updating, development of electronic reporting
system, MoRD for convergence with NRLM, HUPA for convergence with
NULM etc.

2.4.3 Reserve Bank Of India (RBI):

To align their directions to the Banks on Financial inclusion with the

Mission mode

FIF fund allocation support

Depositor Education and Awareness Fund scheme 2014 support.

To guide and support Banks in Financial Literacy Campaign and revamping

and expansion of FLCCs up to the Block level.

2.4.4 Banks: As defined in the Mission

Mode document
2.4.5 Indian Bank Association( IBA):

Coordination in Financial Inclusion Effort with all Banks

Key monitoring role in Financial Literacy campaign

Coordination in publicity and campaign

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Coordination in centralised handling of customers grievances / issues

through Toll free numbers in coordination with Banks.

A dedicated Desk to be set up for monitoring of implementation of FI.

Coordinate with SLBC for Grievances redresses.

2.4.6 National Bank of Agriculture & Rural Development ( NABARD):

Coordination in publicity and campaign

Monitoring of Implementation of Financial Inclusion in respect of

organisations working under NABARD

Allocation of funds from Financial Inclusion Fund (FIF)

Financial Literacy by SHGs/JLGs beneficiaries.

2.4.7 State Governments:

Appointment of Mission Director at State level

Monitoring of financial inclusion campaign in coordination with SLBC &

all the stakeholders.

Direct Benefit Transfer of the State schemes in the bank accounts of the
beneficiaries

One officer of the State Government on deputation to oversee

implementation issue.

2.4.8 State Level Bankers Committee(SLBC):

SLBC Convenor GM to act as Secretary to state implementation committee

Coordination with all the Banks for Financial Inclusion Activity

Monitoring and follow up of different activities of Financial inclusion

2.4.9 District Administration:

Key role in implementation of FI in the districts

District Collector (DC) to act as chairman of District level implementation

committee

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2.4.10 Lead District Manager (LDM):

Lead District Manager (LDM) to act aSecretary to the District

Implementation Committee

LDM to coordinate with all the Banks in FI implementation in the District

2.4.11 Local Bodies:

Representatives of local bodies ( panchayat in rural areas municipalities in

urban areas) to assist in implementation of FI in various ways like in
organising camps in opening of accounts, identification of persons for
opening of account, in financial literacy campaign etc.

2.4.12 National Payment Corporation of India (NPCI):

Coordination and necessary guidance and supports to banks for in providing

and proper operations of RuPay cards

To facilitate inter-operability among Bank Mitr (Business Correspondent)

Necessary supports to Banks in making available USSD based mobile

banking with low end mobile phones so that customer can avail basic
banking services like deposit, withdrawal, fund transfer, balance enquiry etc
across the banks. This product may be enabled at Bank Mitr(Business
Correspondent) outlets also.

2.4.13 Unique Identification Authority of India (UIDAI):

Convergence of Aadhaar enrolment with Bank account opening.

Facilitating the subsidy scheme on procurement of Aadhaar Enabled

Payment System (AEPS) machines by Banks.

Fast conversion of EID to UID to ensure faster credit to Bank accounts.

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2.5 NEEDS OF FINANCIAL INCLUSION:

Financial inclusion broadens the resource base of the financial system by developing a
culture of savings among large segment of rural population and plays its own role in the
process of economic development. Further, by bringing low income groups within the
perimeter of formal banking sector; financial inclusion protects their financial wealth and
other resources in exigent circumstances. It helps to deliver the advantage of various schemes
of government to needed individuals. Financial inclusion also mitigates the exploitation of
vulnerable sections by the usurious money lenders by facilitating easy access to formal credit.
Current status of financial Inclusion To ensure financial inclusion, various initiatives were
taken up by RBI/ Government of India.

Creating a platform for inculcating the habit to save money The lower income
category has been living under the constant shadow of financial duress mainly
because of the absence of savings. The absence of savings makes them a vulnerable
lot. Presence of banking services and products aims to provide a critical tool to
inculcate the habit to save. Capital formation in the country is also expected to be
boosted once financial inclusion measures materialize, as people move away from
traditional modes of parking their savings in land, buildings, bullion, etc

Providing formal credit avenues -So far the unbanked population has been
vulnerably dependent of informal channels of credit like family, friends and
moneylenders. Availability of adequate and transparent credit from formal banking
channels shall allow the entrepreneurial spirit of the masses to increase outputs and
prosperity in the countryside. A classic example of what easy and affordable
availability of credit can do for the poor is the micro-finance sector.

Plug gaps and leaks in public subsidies and welfare programmes - A

considerable sum of money that is meant for the poorest of poor does not actually
reach them. While this money meanders through large system of government
bureaucracy much of it is widely believed to leak and is unable to reach the intended
parties. Government is therefore, pushing for direct cash transfers to beneficiaries
through their bank accounts rather than subsidizing products and making cash
payments. This laudable effort is expected to reduce governments subsidy bill (as it
shall save that part of the subsidy that is leaked) and provide relief only to the real
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beneficiaries. All these efforts require an efficient and affordable banking system
that can reach out to all. Therefore, there has been a push for financial inclusion.

Support from RBI for Financial Inclusion- RBI set up the Khan Commission in
2004 to look into financial inclusion and the recommendations of the commission
were incorporated into the mid-term review of the policy (200506) and urged banks
to review their existing practices to align them with the objective of financial
inclusion. RBI also exhorted the banks and stressed the need to make available a
basic banking 'no frills' account either with 'NIL' or very minimum balances as well
as charges that would make such accounts accessible to vast sections of the
population .Of the many schemes and programmes pushed forward by RBI the
following need special mention.

Initiation of no-frills account - These accounts provide basic facilities of deposit

and withdrawal to accountholders makes banking affordable by cutting down on
extra frills that are no use for the lower section of the society. These accounts are
expected to provide a low-cost mode to access bank accounts. RBI also eased KYC
(Know Your customer) norms for opening of such accounts.

Banking service reaches homes through business correspondents- The banking

systems have started to adopt the business correspondent mechanism to facilitate
banking services in those areas where banks are unable to open brick and mortar
branches for cost considerations. Business Correspondents provide affordability and
easy accessibility to this unbanked population. Armed with suitable technology, the
business correspondents help in taking the banks to the doorsteps of rural
households.

EBT Electronic Benefits Transfer- To plug the leakages that are present in
transfer of payments through the various levels of bureaucracy, government has
begun the procedure of transferring payment directly to accounts of the
beneficiaries. This human-less transfer of payment is expected to provide better
benefits and relief to the beneficiaries while reducing governments cost of transfer
and monitoring. Once the benefits starts to accrue to the masses, those who remain
unbanked shall start looking to enter the formal financial sector.

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2.6 MAINSTREAM OF FINANCIAL SERVICES FOR FINANCIAL

INCLUSION:

Basic saving bank account- an account with all basic feature of saving account.

Payment and remittances services

Immediate credit in case of contingencies like accidents, medical treatment etc,

they should be provided immediate credit.

Entrepreneurial credit this means, to run/expand small scale business/shop or any

economic activity, easy credit should be provided, so that financial dependence can
be created amongst households.

Housing finance- funding for purchasing new residential or reconstruction

Insurance life\healthcare- to plan future better

Financial education\credit counselling centres to guide them which product suits

them better, where to go credit needs, what are various services available to better
their personal financial planning.
Figure 2.1:Household access to Financial services

Source-Google

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2.7 POLICY DEVELOPMENTS:

2.7.1First phase developments (1969-1981)
In 1969, the banks were nationalised in order to spread banks branch network in order to
develop strong banking system which can mobilise resources/deposits and channel them into
productive/needy sections of society and also government wanted to use it as an important
agent of change. So, the planning strategy recognized the critical role of the availability of
credit and financial services to the public at large in the holistic development of the country
with the benefits of economic growth being distributed in a democratic manner. In
recognition of this role, the authorities modified the policy framework from time to time to
ensure that the financial services needs of various segments of the society were met
satisfactorily Before 1990, several initiatives were undertaken for enhancing the use of the
banking system for sustainable and equitable growth. These included

Nationalization of private sector banks,

Introduction of priority sector lending norms,

The Lead Bank Scheme,

Branch licensing norms with focus on rural/semi-urban branches,

Interest rate ceilings for credit to the weaker sections and

Creation of specialised financial institutions to cater to the requirement of the

agriculture and the rural sectors having bulk of the poor population

Social Networking Approach:

The announcement of the policy of social control over banks was made in December
1967 with a view to securing a better alignment of the banking system with the
needs of economic policy. The National Credit Council was set up in February 1968
mainly to assess periodically the demand for bank credit from various sectors of the
economy and to determine the priorities for grant of loans and advances. Social
control of banking policy was soon followed by the nationalisation of major Indian
banks in 1969. The immediate tasks set for the nationalised banks were mobilisation
of deposits on a massive scale and lending of funds for all productive activities. A
special emphasis was laid on providing credit facilities to the weaker sections of the
economy.
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 Priority sector Approach:

The administrative framework for rural lending in India was provided by the Lead
Bank Scheme introduced in 1969, which was an important step towards
implementation of the two-fold objectives of deposit mobilisation on an extensive
scale and stepping up of lending to weaker sections of the economy. Realising that
the flow of credit to employment oriented sectors was inadequate; the priority sector
guidelines were issued to the banks by the Reserve Bank in the late 1960s to step up
the flow of bank credit to agriculture, small-scale industry, self-employed, small
business and the weaker sections within these sectors.
Lead Bank Scheme Approach:
But all these measure were focused towards inclusion of a sector, regional areas etc.,
there was a very less or no emphasis was on financial inclusion of
Individual/household level. The promotional aspects of banking policy have come
into greater prominence. The major emphasis of the branch licensing policy during
the 1970s and the 1980s was on expansion of commercial bank branches in rural
areas, resulting in a significant expansion of bank
2.7.2SECOND PHASE POLICY(2005-2006)
As the central bank of the country, the Reserve bank of India has taken steps to ensure
financial inclusion in the country. It has tried to make banking more attractive to citizens by
allowing for easier transactions with banks. In 2004 RBI appointed an internal group to look
into ways to improve Financial Inclusion in the country.With a view to enhancing the
financial inclusion, as a proactive measure, the RBI in its Annual Policy Statement for the
year 2005-06, while recognizing the concerns in regard to the banking practices that tend to
exclude rather than attract vast sections of population, urged banks to review their existing
practices to align them with the objective of financial inclusion. In the Mid Term Review of
the Policy (2005-06), It is observed that there were legitimate concerns in regard to the
banking practices that tended to exclude rather than attract vast sections of population, in
particular pensioners, self-employed and those employed in the unorganised sector.

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 No-Frill Accounts:
It is a basic saving fund account having all the features of a normal saving fund
which it differs in the following aspects
1. The holder is not required to maintain any minimum balance requirement and also
nothing is charged for opening this type of account
2. KYC norms have been simplified so that everyone can have this account
3. Transaction are limited to 5-10 free transactions per month
4. ATM facility is provided free of cost
5. There is no account maintenance cost
b) Overdraft in Saving Bank Accounts:
Bank were advised to give credit in form of overdraft on saving bank account to its
customer so that in case of small credit need like medical bill, any accidental charges
etc. can be met in.
KYC norms:
The Know Your Customer (KYC) norms were revised in order to make it easy for
people to avail financial services on February 18, 2008. These guidelines include
1. In case of close relatives who find it difficult to furnish documents relating to
place of residence while opening accounts, banks can obtain an identity document
and a utility bill of the relative with whom the prospective customer is living, along
with a declaration from the relative that the said person (prospective customer)
wanting to open an account is a relative and is staying with him/her. Banks can also
use any supplementary evidence such as a letter received through post for further
verification of the address;
2. Banks have been advised to keep in mind the spirit of the instructions and avoid
undue hardships to individuals who are otherwise classified as low risk customers;
3. Banks should review the risk categorization of customers at a periodicity of not
less than once in six months.
4. Further, in order to ensure that persons belonging to low income group both in
urban and rural areas do not face difficulty in opening the bank accounts due to the
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procedural hassles, the KYC procedure for opening accounts has been simplified for
those persons who intend to keep balances not exceeding rupees fifty thousand (Rs.
50,000/-) in all their accounts taken together and the total credit in all the accounts
taken together is not expected to exceed rupees one lakh (Rs.1,00,000/-) in a year.
SHG Model:
A Self Help Group (SHG) is a group of about 15 to 20 people from a homogenous
class who join together to address common issues. They involve voluntary thrift
activities on a regular basis, and use of the pooled resource to make interest-bearing
loans to the members of the group. In the course of this process, they imbibe the
essentials of financial intermediation and also the basics of account keeping. The
members also learn to handle resources of size, much beyond their individual
capacities. They begin to appreciate the fact that the resources are limited and have a
cost.
Financial Literacy Program:
Recognizing that lack of awareness is a major factor for financial exclusion, the
Reserve Bank has taken a number of measures towards imparting financial literacy
and promotion of credit counseling services. The Reserve Bank has undertaken a
project titled Project Financial Literacy.
2.7.3 THIRD PHASE- RANGARAJAN COMMITTEE:
The Government of India (Chairman Dr. C. Rangarajan) constituted the Committee on
Financial Inclusion on June 26, 2006 to prepare a strategy of financial inclusion. The
Committee submitted its final Report on January 4, 2008. The Report viewed financial
inclusion as a comprehensive and holistic process of ensuring access to financial services and
timely and adequate credit, particularly by vulnerable groups such as weaker sections and
low-income groups at an affordable cost9. Financial inclusion, therefore, according to the
Committee, should include access to mainstream financial products such as bank accounts,
credit, remittances and payment services, financial advisory services and insurance facilities.
The Report observed that in India 51.4 per cent of farmer households are financially excluded
from both formal/informal sources and 73 per cent of farmer households do not access formal
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sources of credit. Exclusion is most acute in Central, Eastern and North-eastern regions with
64 per cent of all financially excluded farmer households. According to the Report, the
overall strategy for building an inclusive financial sector should be based on
Effecting improvements within the existing formal credit delivery mechanism;
Suggesting measures for improving credit absorption capacity especially amongst
marginal and sub-marginal farmers and poor non-cultivator households;
Evolving new models for effective outreach; and
Leveraging on technology-based solutions

Creation of Special Funds:

The Committee on Financial Inclusion set up by the Government of India (Chairman:

Dr.C.Rangarajan) in its Interim Report recommended the establishment of two Funds, namely
the Financial Inclusion Promotion and Development Fund for meeting the cost of
developmental and promotional interventions for ensuring financial inclusion, and the
Financial Inclusion Technology Fund (FITF) to meet the cost of technology adoption.

2.8 PRESENT STATUS OF FINANCIAL INCLUSION IN INDIA:Despite various measures for financial inclusion, poverty and exclusion continue To
dominate socio-economic and political discourse in India even after six decades of post
economic independence era. Though economy has shown impressive growth during post
liberalization era of1991, impact is yet to percolate to all sections of the society and therefore,
India is still home of 1/3 of world's poor.

Census, 2011 estimates that only 58.7%of the households have access to banking
services

The present banking network of the country (as on 31.03.2014) comprises ofa bank
branch network of 1,15,082 and an ATM network of 1,60,055. Of these, 43,962
branches (38.2%) and23,334 ATMs (14.58%) are in rural areas .

The statistics show that there is substantial progress towards opening of accounts,
providing basic banking services during the recent years as indicated above.
However, it is essential that all the sections be financially included in order to have
financial stability and sustainability of the economic and social order.
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. According to World Bank Findex Survey(2012) only 35% of Indian adults had
access to a

Formal bank account and 8% borrowed from a formal financial institution in last 12months.
The miniscule number suggests an urgent need to further push the financial inclusion agenda
to ensure that people at the bottom of the pyramid join the mainstream of the formal financial
system.
Recent Important Guidelines on Financial Inclusion:

2006: In January, banks were allowed to enlist non-profit Bank Mitr (Business
Correspondent) as agents for delivery of financial services, acting in the capacity of
'last-mile infrastructure'.

2008: In April, it was determined that BCs should be located not more than
15kilometres from the nearest bank branch so as to ensure their adequate supervision.
This was a very restrictive rule thats severely limited the expansion of this model.

2008: The RBI issued operative guidelines for mobile banking and amended the same
in December 2009 to ease the various transaction limits and security norms.

2009: Individual for profits were allowed to participate as BCs, and this category
included kirana store , gas stations, PCOs etc. Further, kilometres from the nearest
bank branches.

2009: Banks were allowed to apply 'reasonable' service charges from customers to
ensure viability of the BC model, and to pay a 'reasonable' commission/fee to the BC
to incentivize them.

2010: In June the RBI and TRAI were able to reach an initial agreement regarding
the rollout of mobile banking, whereby TRAI would deal with all interconnection
issues and RBI would handle the banking aspects such as KYC checks, transaction
limits etc.

2010: In September, all companies listed under the Companies Act (1956) were
allowed to act as BCs, with the exception of non-bank financial companies.

2010: The same directive determined that the distance rule was open to and optional
relaxation in certain cases, based on the decision of the State Level Bankers'
Committees.

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However, document verification falls under the domain of the banks, to ensure
adherence to KYC norms. This does slow down the account opening process.

2011: In January, TRAI announced its intent to fix mobile tariffs for financial
services as against their current market pricing, with a view to ensuring affordability.

2011: RBI issued guidelines for opening Aadhaar Enabled Bank Accounts to
facilitate routing of MGNREGA wages and other social benefits in to the accounts
using EBT.

2012: RBI permitted Aadhaar letter as a proof of both Identity & Address for the
purpose of opening of bank Accounts

2012: GoI introduced Sub Service Area (SSA) approach for opening of banking
outlet and for Direct Cash Transfer.

2012: Aadhaar Payment Bridge System (APBS) was introduced for centralised credit
of Social Benefits.

Guidelines on Direct Benefit Transfer issued by Government of India.

2013: To ease the account opening process RBI permitted to use e-KYC.

TRAI issued guidelines on USSD based mobile banking services for FI.

2014: RBI issues guidelines for scaling up of Business Correspondent model.

2.8.1 GLIMPSE OF EXTENT OF FINANCIAL INCLUSION IN THE COUNTRY

Number of No-Frill Accounts 28.23 million (as on Dec. 31, 2008)
Number of rural bank branches 31,727 constituting 39.7% of total bank branches
(as of June. 31, 2009)
Number of ATMs 44,857 (as on May 31, 2009)
Number of POS 4,70,237 (as on May 31, 2009)
Number of Cards 167.09 million (as on May 31, 2009)
Number of Kisan Credit cards 76 million (Source: CMIE publication 2007-08)
Number of Mobile phones403 million (as on Apr.30, 2009) out of which 187
million (46%) do not have a bank account
Position of household availing banking services:
Chart 2.1:Availability of Banking services

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Source-www.pmjdy.gov.in
Bank-Branch and ATM Net-work
Table 2.1: No. of branches of Scheduled Commercial Banks as on 31st March,
2013:

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Source-Reserve Bank Bulletin

No. of functioning branch of commercial Banks
Table 2.2: No of functioning branch of schedule commercials banks during
last five years:

Source-Reserve Bank Bulletin

No. of branches opening by commercial banks in five years
Table 2.3: No. of branches opening by schedule commercial bank in five years:

Source-Reserve Bank Bulletin

Table 2.4: No. of Villages and average population per Branch

Source-Reserve Bank Bulletin

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Table 2.5: No. of bank branches of SCB over the year

Source-Reserve Bank Bulletin

Table 2.6: No. of ATM in the country as on 31st march, 2013

Source-Reserve Bank Bulletin

Chart 2.2: Source of Financing:

Source-RBI working paper

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2.9 ROLE OF TECHNOLOGY IN FINANCIAL INCLUSION:

Technology and financial inclusion are the popular coinage In banking parlance in the
country. Main hurdle in financial inclusion so far has been large numbers and low volumes,
translating into unaffordable costs. The only way to bring down the cost to an affordable level
and to improve the reach to the farthest / remotest corner of the country is by effectively
leveraging the Technology. In order to make available the banking facilities across the length
and breadth of the country, latest technological products like e-KYC, IMPS, AEPS, mobile
banking etc. have the potential to emerge as a game changer in terms of costs, convenience,
and speed of reach. Business models of banks, telecom operators and other stakeholders need
to converge. Under the guidance of RBI various organisations like National Payments
Corporation of India (NPCI), Institute for Development & Research in Banking Technology
(IDRBT) etc. are contributing significantly in bringing new technology based products.
Reserve Bank has, thus, been actively involved in harnessing technology for the
development of the Indian banking sector over the years. A major technological development
in banking sector is the adoption of the Core Banking Solutions (CBS). CBS is a step towards
enhancing, customer convenience through, Any-where, Anytime Banking. It is important to
leverage this technological advancement to look at areas beyond CBS that can help in not just
delivering quality and efficient services to customers but also generating and managing
information effectively. The adoption of CBS led to various technological products like
NEFT, RTGS, mobile banking, Internet Banking, ATMs, etc. Some of the Technological
based products have made significant changes in the banking out reach the masses are
appended below:
Adopting core banking solution (CBS) by the Banks, including all Regional Rural
Banks (RRBs).
Next, a multi-channel branchless approach using handheld devices, mobiles, cards,
micro-ATMs and kiosks can be used.
Transactions put through such front-end devices are seamlessly integrated with the
banks' CBS.
Implementation of the electronic payment system such as RTGS (Real Time Gross
Settlement),
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 Electronic Clearing Service (ECS),

Electronic Funds Transfer (NEFT),
Cheque Truncation System (CTS),
Banking transaction by using Mobile phones etc.
The present plan of the PMJDY under National Mission on Financial Inclusion
proposed to use the Technology in a big way to achieve the goal in a time bound
manner. Some of the major products are appended hereunder.
(i) Electronically Know Your Customer (e-KYC):
In the year 2013, RBI permitted e-KYC as a valid process for KYC verification under P r e v
e n t i o n o f M o n e y L a u n d e r i n g (Maintenance of Records) Rules, 2005. In order to
reduce the risk of identity fraud documentary forgery and have paperless KYC verification,
UIDAI has launched its e- KYC services. Under the e-KYC process under the explicit
consent of the customer and after his or her biometric authentication from UIDAI data base
individual basic data comprising name, age, gender and photograph can be shared
electronically with Authorised Users like Banks, which is a valid process for KYC. The
aforesaid process is paperless and has made the account opening of customers having
Aadhaar number much easier. Almost all the banks have either adopted this process or in the
advance stage of putting the system live. The e-KYC process would be used in large scale for
opening accounts in future.
(ii) Transaction through Mobile Banking:
The mobile-phone revolution that is transforming the country could also turn into a banking
revolution in terms of reach and transaction. Today, the number of mobiles in India is 886
million. The reach of mobile to the remote village and its usage by the common man has
become order of the day the and it is estimated that around 1/4 of mobile users are residing in
villages/small towns. The coverage of mobile phones and the use of such instruments by all
section of the population can be exploited for extending financial services to the excluded
populations. It enables the subscribers to manage their financial transactions (funds transfer)
independent of place and time. The subscriber can approach a retailer of mobile network for
withdrawal/deposit of money and the transaction takes place using SMS messages. The
Mobile Banking services are generally available through a java application on Blackberry,
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Android, iPhones and Windows mobile phones. Various banking services like Funds
Transfer, Immediate Payment Services, Enquiry Services (Balance enquiry/ Mini statement),
Demat Account Services, Requests for Cheque Book, Bill Payments, etc. may be carried out
through mobile banking. There are transaction limits for mobile banking and these services
are free of charge. The mobile banking services are also available over SMS. The basic
financial transactions from the Bank accounts can be executed through a mobile based PIN
system using "Mobile Banking". Mobile banking through mobile wallet was also launched in
2012. Mobile telephony and prepaid wallets would also be utilized for coverage of
households under the Financial Inclusion campaign.
(iii) Immediate Payment System (IMPS):
Immediate Payment Service (IMPS) was launched by NPCI on 22 November, 2010. It offers
an instant, 24X7, interbank electronic fund transfer service through mobile phones process of
remittances across the bank there are four stakeholder i.e. (i) Remitter (Sender), (ii)
Beneficiary (Receiver), (iii) Banks & (iv) National Financial Switch - NPCI. In order to remit
fund through IMPS, the sender should use mobile banking to send money, the receiver
mobile number should be registered with his bank and the money is credited to receivers
account instantly. For registration the Remitter must register for mobile banking and get
Mobile Money identifier (MMID) & Mobile Banking PIN (MPIN) for initiation of a
transaction. MMID is a 7 digit number, to be issued by the bank to the customer upon
registration and the Beneficiary must Register his/her mobile number with the bank account
and get MMID. A remitter can initiate an IMPS transaction by sending an SMS to his bank
typing the Beneficiary Mobile Number, Beneficiary MMID and Amount. The receiver will
get an SMS confirmation for the credit of his account. Payments Corporation of India
(NPCI), is facilitating the Interbank Mobile Payment Service (IMPS).
(iv) Micro-ATMs:
Micro-ATMs are biometric authentication enabled hand-held device. In order to make the
ATMs viable at rural / semi-urban centres, low cost Micro-ATMs would be deployed at each
of the Bank Mitra location. This would enable a person to instantly deposit or withdraw funds
regardless of the bank associated with a particular Bank Mitra / Business Correspondent. This
device will be based on a mobile phone connection and would be made available to every
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Bank Mitra / Business Correspondent. Customers would have to get their identity
authenticated and withdraw or put money into their bank accounts. This money will come
from the cash drawer of the Bank Mitra /Business Correspondent. Essentially, Bank Mitras
will act as bank for the customers and all they need to do is verify the authenticity of
customer using customer's UID. The basic transaction types to be supported by micro ATM
are Deposit, Withdrawal, Fund transfer and Balance enquiry. Micro-ATM offers one of the
most promising options for providing financial services to the unbanked population. MicroATMs would have various options of authentication like biometric, PIN based etc. and it
would also be used as mobile ATMs to enable transactions near the door step of the
customers. The Micro-ATMs offer an online interoperable, low-cost payments platform to
everyone in the country.
(v) National Unified USSD Platform(NUUP):
Mobile banking is one one of the most potent mode for increasing reach of banking facilities
to the masses. Today, mobile phones have become a household device in India, with almost
900 mn mobile phones connection. Mobile banking service can be initiated using SMS - an
unencrypted service, considered unsafe - or using mobile banking app. Though very
interactive, the major problem with mobile banking apps is that these need to be downloaded
and installed on the mobile phone. Less than 40% of Indian users have compatible J2ME
handsets and GPRS connection on their mobile phone, as required by this system. To resolve
aforesaid issues, an alternative solution on USSD platform is available. Customers can avail
USSD solution through any mobile phone on GSM network, irrespective of make and model
of the phone. This does not require any application to be downloaded on customer's mobile
phone and need for GPRS connectivity. USSD is user friendly so it is easy to communicate
and educate customers as well. USSD alleviates the need for application download and is
more secure than SMS channel. Banking customers can use this service by dialing *99#, a
"Common number across all Telecom Service Providers, (TSPs)" , on their mobile and
transact through an interactive menu displayed on the mobile screen. Using *99#, a customer
will be able to access both financial like fund transfer as well as nonfinancial services like
balance enquiry and mini statement of bank account, at his/her own convenience. Key
services that NUUP will offer include, interbank account to account fund transfer, balance
enquiry, mini statement besides host of other services. A notable inclusion in the NUUP
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service is a new addition in the form of Query Service on Aadhaar Mapper (QSAM). Under
this feature a user can come to know about his/her AADHAAR seeding status with the banks,
a service that will find tremendous utility for the government's direct subsidy disbursals
programme. This product is scheduled to be launched on 28 August, 2014.
(vi) RuPay Debit cards:
RuPay is a new card payment scheme launched by the National Payments Corporation of
India (NPCI), to offer a domestic, open-loop, multilateral system which will allow all Indian
banks and financial institutions in India to participate in electronic payments. "RuPay", the
word itself has a sense of nationality in it. "RuPay" is the coinage of two terms Rupee and
Payment. RuPay Cards address the needs of Indian consumers, merchants and banks. The
benefits of RuPay debit card are the flexibility of the product platform, high levels of
acceptance and the strength of the RuPay brand-all of which will contribute to an increased
product experience. The main features are as under:
Lower cost and affordability
Customized product offering
Protection of information related to
Indian consumers
Provides electronic product options to untapped/ unexplored consumer segment

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2.10IMPACT OF FINANCIAL INCLUSION ON HOUSEHOLD:

Figure 2.2 impact of Financial Inclusion on households
.

Source-Google

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2.11 COMPARATIVE ANALYSIS OF FINANCIAL INCLUSION: WITH

REFERENCE TO FOREIGN COUNTRY:
Table 2.7: comaparative analsis of financial inclusion

Source-Financial Access Survey, IMF

As we can see, India ranks very poorly on several fronts, be it bank branch density, bank
deposits or accessibility for bank credit. With the state of affairs being this, we feel that the
country needs more than just photo-ops to realise the long standing dream of complete
financial inclusion in the strictest sense. Instead of focussing on just speedy opening of bank
accounts, the focus should be to ensure delivery of all operational facilities associated with
these accounts and much more importantly, focus is needed on the generation of wealth at the
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grassroots which would prevent these accounts from being dormant. Otherwise, this scheme
would turn out to be just another addition to a series of schemes that have failed miserably at
the grassroots.

2.12CONCLUSION:
Steps taken towards bringing lower income groups to the banking system has been successful
to a significant extent, as the main causes observed earlier like distance of bank branch,
unawareness about banking services has improved. While doing survey it was found that people
are not voluntarily excluding themselves from banking system, most of them have faith in
banking and feels that they need banking services. The need varies from managing cash flow as
they earn on daily basis or irregular basis. The reasons behind not approaching banks are mainly
the minimum balance requirements which have been taken care by No Frills Bank Account but
most of the respondent was not aware about this type of account. Hence it needs to be
advertised; literacy level and awareness about various other products/services. It was also
found that people prefer to borrow from personal/informal sources when the purpose is
personal or consumption. Where the amount to be borrowed is generally small, the people
found to be reluctant to approach banks, whereas for other productive purposes they borrow
from banks.

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3.1INTRODUCTION:
Hon'ble Prime Minister, Sh. Narendra Modi on 15 August 2014announced"Pradhan Mantri
Jan-Dhan Yojana (PMJDY)" which is a National Mission for Financial Inclusion. The task
is gigantic and is a National Priority. This National Mission on Financial Inclusion has an
ambitious objective of covering all households in the country with banking facilities and
having a bank account for each household. It has been emphasised by the Hon'ble PM that
this is important for including people left-out into the mainstream of the financial system.
The Pradhan Mantri Jan-Dhan Yojana will be launched on 28 August, 2014, across the nation
simultaneously. It will be launched formally in Delhi with parallel functions at the state level
and also at district and sub-district levels. Camps are also to be organized at the branch level.
The Pradhan Mantri Jan-Dhan Yojana lies at the core of development philosophy of "Sab Ka
Sath Sab Ka Vikas". With a bank account, every household would gain access to banking
and credit facilities. This will enable them to come out of the grip of moneylenders, manage
to keep away from financial crises caused by emergent needs, and most importantly, benefit
from a range of financial products. As a first step, every account holder gets a RuPay debit
card with a 1,00,000/- accident cover. Further, they will be covered by insurance and pension
products. There is need to enrol over 7.5 crore households and open their accounts. Earlier
efforts by the Government of India includes setting up a committee on financial inclusion
under the chairmanship of Dr. C. Rangarajan. The committee finalized its report in early
2008. As is evident from the preamble of the report, the committee interpreted financial
inclusion as an instrumentality for social transformation "Access to finance by the poor and
vulnerable groups is a prerequisite for inclusive growth. In fact, providing access to finance is
a form of empowerment of the vulnerable groups. Financial Inclusion denotes delivery of
financial services at an affordable cost to the vast sections of the disadvantaged and lowincome groups. The various financial services included credit, savings, insurance and
payments and remittance facilities. The objective of financial inclusion is to extend the scope
of activities of the organized financial system to include within its ambit people with low
incomes. Through graduated credit, the attempt must be to lift the poor from one level to
another so that they come out of poverty." It is a known fact that in India, while one segment
of the population has access to a s s o r t m e n t o f b a n k i n g s e r v i c e s encompassing
regular banking facilities & portfolio counselling, the other segment of totally deprived of
even basic financial services. Exclusion of large segments of the society from financial
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services affects the overall economic growth of a country. It is for this reason that Financial
Inclusion is a global concern. In Sweden and France, banks are legally bound to open an
account for anybody who approaches them. In Canada, law requires Banks to provide
accounts without minimum balance to all Canadians regardless of employment / credit
history. In the United States, the Community Reinvestment Act (1977) is intended to
encourage depository institutions to help meet the credit needs of the communities in which
they operate, including low and moderate income neighbourhoods, consistent with safe and
sound operations. In India, the Banking industry has grown both horizontally and vertically
but the branch penetration in rural areas has not kept pace with the rising demand and the
need for accessible financial services.
Even after decades of bank nationalization, whose rationale was to shift the focus from class
banking to mass banking, we still find usurious money lenders in rural areas and urban slums
continuing to exploit the poor. After economic reforms of 1991, the country can ill-afford not
to include the poor in the growth paradigm. Financial Inclusion of the poor will help in
bringing them to the mainstream of growth and w o u l d a l s o p r o v i d e t h e F i n a n c i a
l Institutions an opportunity to be partners in inclusive growth. Experiences in India and
abroad has shown that traditional Banks have struggled to reach the poor with financial
services. Recognizing this fact, many countries such as Brazil, Indonesia, Malaysia, Mexico
etc. have allowed non-banks to offer payments, deposits and cash-in/cash-out services.
Similarly, in India, enabling an inclusive competitive landscape should be a top priority. India
has several strategic assets providing favourable initial conditions for transformational
change towards digital financial inclusion:

A strong banking network (1,15,000 branches) linked to eKuber (RBI's Core Banking
Solution), now spreading into unbanked rural areas.

A significant outreach of India Post (1,55,000 outlets), PoS and ATM terminals which
can facilitate a vibrant cash-in/cash-out network across the country.

A nation-wide telecom network with 886 million mobile connections and 72% mobile
penetration.

Strong network of computer based service providers in the form of Common Service
Centres (CSC) promoted by Dept., of IT.

40 | P a g e

A strong national payments infrastructure that includes an Inter- Mobile Payments

Service / Immediate Payment System (IMPS) to transfer funds over mobile phones.

A world class national ID system covering the largest (650M) headcount and
expanding by 30M citizens per month.

The scheme will ensure financial access to everyone who was not able to get benefits of
many other finance related government schemes. These financial services include
Banking/ Savings & Deposit Accounts, Remittance, Credit, Insurance, Pension which will
be made available to all the citizens in easy and affordable mode. According to the data
issued by finance ministry, till September 2014 around 40 million (4 crores) bank
accounts have been opened under the Pradhan Mantri Jan Dhan Yojana since the scheme
launched. However there was another financial scheme (Swabhimaan) launched earlier in
which the target of opening the bank accounts was for villages only. But in Pradhan
Mantri Jan Dhan Yojna the entire individuals irrespective of their area (rural or urban)
can get a bank account without depositing any amount if they fulfill other eligibility
criteria. This scheme is very beneficial for the rural population where banking services
and other financial institution are rarely available. Under the Jan Dhan Yojna anyone who
is Indian citizen above age of 10 years and does not have a bank account, can open the
account with zero balance. Account can be opened in any bank branch or Business
Correspondent (Bank Mitr) outlet, specially designed for the purpose of opening the
accounts under this scheme. The scheme also provides facility of accidental insurance
cover up to rupees one lac without any charge for the account holder.

3.2 AIM OF PMJDY:

Objective of "Pradhan Mantri Jan-Dhan Yojana (PMJDY)" is ensuring access to various
financial services like availability of basic savings bank account, access to need based credit,
remittances facility, insurance and pension to the excluded sections i.e. weaker sections &
low income groups. This deep penetration at affordable cost is possible only with effective
use of technology.
To bring poor financially excluded people into banking system.
It covers both urban & rural areas.
Raise of Indian Economy.
41 | P a g e

 To decrees corruption in Govt. subsidy schemes.

Digital India.

3.3 PRADHAN MANTRI JAN DHAN YOJANA: A SNAP SHOT

3.3.1 Feature of PMJDY:
Figure 3.1 feature of PMJDY

Source:-PMJDY website:

42 | P a g e

3.3.2 Six pillars of PMJDY:

Figure 3.2 Six Pillars of PMJDY

Source-www.pmjdy.gov.in
The PMJDY is based on Six Key elements
1. Universal access to banking facility: The First aim is to reduce and remove the
exclusions in financial sector. District will be divided into sub service area catering to 1000 to
1500 household for access to basic banking facility by 14 august 2015.
2. Providing Basic Banking Accounts with overdraft facility and RuPay Debit card to
all households: The effort would be to first cover all uncovered households with banking
facilities by August, 2015, by opening basic bank accounts. Account holder would be
provided a RuPay Debit Card. Facility of an overdraft to every basic banking account holder
would be considered after satisfactory operation / credit history of six months.

43 | P a g e

3. Financial Literacy Program: Financial literacy would be an integral part of the Mission
in order to let the beneficiaries make best use of the financial services being made available
to them.
4. Creation of Credit Guarantee Fund: Creation of a Credit Guarantee Fund would be to
cover the defaults in overdraft accounts.
5. Micro Insurance: To provide micro- insurance to all willing and eligible persons by 14
August, 2018, and then on an on going basis.
6. Unorganized sector Pension schemes like Swavalamban: By 14 August, 2018 and then
on an on-going basis.
3.3.3 Documents required for opening an account under PMJDY:
Should have valid current or permanent address proof like passport, aadhar card etc. Aadhar
card is very important document that everyone should have. If you have applied for aadhar
card then you check the status of aadhar card online If the address is changes he/she should
have valid documents mentioning the transfer of address 2 passport size photographs If
he/she does not have valid

residential proof, one can also show identity proof that has been

issued by government of India One can also arrange for an authority letter from the gazette
officer giving an assured that an individual is a resident of India and hold an Indian
Nationality. If the individual fails to provide any of the above proofs, then the bank can do a
ground check of the individual. If the approached bank finds the individual to fall under low
risk category then he/she will be given a chance to open a temporary account for 12 months
known as small account. For converting this account into permanent account one has to
submit valid documents before the completing the tenure of 12 months with the bank.
3.3.4 Participatory Banks:There are 27 public sector banks in India and at all these banks you can open Jan Dhan
Yojana Account. Below is the list of banks who are authorized to open accounts in Jan Dhan
Yojana scheme

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Public Sector Banks:

Allahabad Bank
Andhra Bank
Bank Of Baroda (BoB)
Bank Of India (BOI)
Bank Of Maharashtra
Bhartiya Mahila Bank
Canara Bank

Central Bank Of India

Corporation Bank
Dena Bank
IDBI Bank
Indian Bank
Oriental Bank of Commerce
Punjab National Bank (PNB)
Punjab & Sind Bank

State Bank of India (SBI) and all its 5 affiliated banks State Bank of Bikaner & Jaipur,
State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala, State Bank of
Travancore
Syndicate Bank
Union Bank of India
Vijaya Bank

Private Sector Banks:

Jan Dhan Account can be opened in these

ICICI Bank Ltd.

banks
IndusInd Bank Ltd.
Axis Bank Ltd.
Karnataka Bank Ltd.
Dhanalaxmi Bank Ltd.
Kotak Mahindra Bank Ltd.
Federal Bank Ltd.
YES Bank Ltd.
HDFC Bank Ltd.
45 | P a g e

3.3.5Eligibility:
Jan Dhan Yojana Account scheme was launched by the Pradhan Mantri Shri Narendra Modi
with the motive of inviting every family to have one bank account where their money will be
safe. Facilities like zero balance were given to the individual who opens the account. He is
also eligible for a RuPay card and can apply for a loan of INR5000.00 after having the
account operative for a period of 6 months. The major aim was to make the rural population
participate and open a bank account where their money is utilized in the right way. All
nationalized banks and a couple of international banks have actively participated in this
scheme have set up camps in different locations to invite the individuals to come and open
bank accounts under Jan Dhan Yojana scheme.
3.3.6Benefits:
The Pradhan Mantri Jan- Dhan Yojana or more popularly known as PMJDY scheme is
planning on revolutionizing the traditional banking system in India by providing the banking
opportunity and insurance coverage to all including the poor. It is an initiative taken by the
Prime Minister Narendra Modi who started this ambitious project to help the poor become
more financially confident through this venture and allowing every citizen the right to have
their own bank account and insurance coverage which was previously impossible for most of
the population under poverty. The purpose of this scheme will definitely benefit the overall
economy of the country and the scheme provides some lucrative benefits which should
certainly be availed and considered. Here is listed some important benefits of the Pradhan
Mantri Jan Dhan Yojna (PMJDY) scheme which would certainly inspire the country to a
more prosperous future for all.

Life insurance Benefit: Under the PMJDY scheme the

account holders will be given worth Rs.30000 insurance coverage if they comply with certain
specification of the scheme which includes opening an account by January 26, 2015 and
having an accidental insurance coverage of over Rs. 100000. Loan benefits: The account
holder can take loan benefit of up to Rs.5000 from the bank after six months from opening
the account. Though the amount might seem insignificant for many but we have to realize the
scheme is directed mostly towards people below the poverty line and who are struggling
desperately to sustain their everyday living. The loan benefit can be a scintilla of hope for
those people who could utilize the loan amount and invest it in a more profitable outcome,
particularly in farming or other agricultural prospect.
46 | P a g e

3.3.7Timeline for Achievement:

Comprehensive Financial Inclusion of the excluded sections is proposed to be achieved by 14
August, 2018 in two phases as under:
Phase I (15 Aug, 2014 - 14 Aug, 2015)
Universal access to banking facilities in all areas except areas with infrastructure
and connectivity constrains like parts of North East, Himachal Pradesh, Uttarakhand,
J&K and 82 Left Wing Extremism (LWE) districts.
Providing Basic Banking Accounts and RuPay Debit card which has inbuilt
accident insurance cover of ` 1 lakh. Aadhaar number will be seeded to make
account ready for DBT payment.
Financial Literacy Programme
Phase II (15 Aug, 2015 - 14 Aug, 2018)
Overdraft facility up to ` 5000/- after six months of satisfactory operation / history
Creation of Credit Guarantee Fund for coverage of defaults in A/Cs with overdraft
limit up to ` 5,000/-.
Micro Insurance
Unorganized sector Pension schemes like Swavalamban
Some of the Phase II activities would also be carried out in Phase I. In addition, in this phase,
coverage of households in hilly, tribal and difficult areas would be carried out. Moreover, this
phase would focus on coverage of remaining adults in the households and students.

47 | P a g e

3.3.8Success Story:
Table 3.1 No. of accounts opened till 5th August 2015

Source-www.pmjdy.gov.in
Chart 3.1 trends of Zero Balance Accounts

Source-www.pmjdy.gov.in

3.4STRATEGY OF PMJDY:
In order to achieve the above objectives, a broad collaborative strategy with all stake holders
is proposed. It is proposed to encourage Public-Private partnerships. Moreover, interdepartment convergence and synergies will be gainfully utilised. The existing rural
48 | P a g e

infrastructure of post offices having Gramin Dak Sewaks would be optimally utilized to
become Bank Mitr (Business Correspondent) of the Banks. One of the key strategies will be
deployment of online fixed point Bank Mitr (Business Correspondent) to deliver basic
banking services near to the customer doorstep. There are 1.26 lakhCommon Service Centres,
out of which only 12,000 are BCs of the Banks The strategy is to take forward the Bank Mitr
(Business Correspondent) model for expansion of banking services by modifying it to ensure
both operational flexibility and viability of the Bank Mitr (Business Correspondent).
Technological innovations like RuPay card and mobile banking would be made use of. Banks
will use the RBI's scheme for subsidy on rural ATMs and UIDAI's scheme for subsidy on
micro ATMs to augment their resources at the village level. Convergence with the National
Rural Livelihood Mission (NRLM) in rural areas and National Urban Livelihood Mission
(NULM) in urban areas would be sought for in covering each household with bank accounts.
The expansion plans of the Department of Telecom to provide telecom connectivity in
difficult areas would be effectively utilized for the provision of banking facilities in these
areas. Department of Telecom has been requested to ensure that problems of poor and no
connectivity are resolved on priority.

3.5CHALLENGES BEFORE PMJDY:

Though the Pradhan Mantri Jan Dhan Yojana has successfully exceeded its financial
inclusion target by opening 115 million bank accounts, most of these are zero-balance.
According to data released by the ministry, only 28 per cent of the accounts opened under the
scheme are active, with about Rs 9,000 crore deposited in these. The ministry feels it is
imperative to keep accounts opened under the scheme active. It has already put in place
various measures such as connecting the Direct Benefits Transfer (DBT) scheme to these
accounts. So far, the DBT for liquefied petroleum gas, along with those for a few other
schemes, have been linked with these accounts. The department of financial services has
decided to give banks commission, to ensure these accounts are kept active. A circular to this
effect has already been issued to banks. Of the accounts opened at public sector banks (PSBs)
under the Jan Dhan Yojana, 71 per cent are zero-balance, against 64 per cent for private
banks. Among private lenders, the percentage of zero-balance Jan Dhan accounts at YES
bank is 89, Kotak Mahindra Bank 77 and Axis Bank 75. Among PSBs, 95 per cent of State
Bank of Indias Jan Dhan accounts are zero-balance; for Indian Overseas bank, it stands at 84
49 | P a g e

per cent. Of the bank accounts opened under the scheme, about 90 million were at PSBs,
while private banks accounted for only 4.1 million accounts (3.6 per cent of the overall
number). The rest were accounted for by regional rural banks. Five major private lenders
ICICI bank, Kotak Mahindra Bank, YES Bank, IndusInd Bank and Karur Vyasya Bank
have opened 0.9 million accounts under the scheme. The Jan Dhan scheme is yet evolving. At
the moment, it even conflicts with payment banks meant to reach the unbanked customers
that were recommended to be created to give fillip to financial inclusion by the Nachiket Mor
committee and accepted by the RBI. There are speculations now on the respective domains of
payment banks and the Jan Dhan Yojana because of their overlapping nature. Moreover, it is
the economics of the scheme that has drawn attention the most. Experts are still figuring out
the average monthly balance figures that could help banks meet the costs. Besides, the staterun Life Insurance Corporation (LIC) is still in the process of structuring the Rs 30,000-life
cover to be offered under the scheme after the finance ministry asked it for the details.
Preliminary reports suggest that even though the government is targeting to open 7.5 crore
bank accounts underthe scheme, the life policy could be issued to only around 2-3 crore
people because of the following riders:
Only those who are above 18 and below 59 will be eligible for the life cover.
Though the accounts are not mandatorily linked to the Aadhaar numbers, the life
cover is strictly open for only those who have the Aadhaar numbers.
Under the RBI-spearheaded financial inclusion programme, banks opened about six crore
basic banking accounts in the whole of fiscal year 2014. As against this, under the Jan Dhan
Yojana, banks have already opened more than 10 crore accounts since the scheme was
launched in August last year. Prima facie, this appears as a very encouraging sign and yet
another major achievement of Modi, who is known for his task mastering skills as a leader.
But the major difference with the RBIs rather slow-paced financial inclusion and Modis
brand-new, rocket-paced financial inclusion is KYC (know your customer). Unlike the
conventional plans, Jan Dhan Yojana significantly diluted KYC norms by permitting
customers to produce any document such as PAN card, Aadhhar card, driving licence etc to
open the account. Absence of uniform identity proof resulted in large chunk of duplicate
accounts. The RBI has indicated that some 30 percent of the accounts opened under Jan Dhan
Yojana are duplicate. Under the Jan Dhan Yojana, customers will be eligible for Rs 5,000
50 | P a g e

overdraft facility, free insurance facility and a free debit card. This is something the RBI has
acknowledged several times and has cautioned. Many customers have opened multiple
accounts using multiple documents as proof to avail the freebies. Yes, there were cases
where people believed only new accounts would give entitlement to benefits. I can't give
exact no of duplicate accounts but some surveys done show 30 per cent duplicity.
Disregarding the same, residual figure is still near original target, one of the deputy
governors of the RBI, SS Mundra said recently. To be sure, duplicate banking accounts, in a
banking system, is not illegal. But if they remain inoperative, it leads to big burden for banks
besides causing multiple issues including the gross misuse of these accounts, again something
which the RBI has cautioned in the past. At present, majority of these accounts (about 70-75
per cent) still do not have any money in them, even though the scenario can change once the
governments direct benefit transfer start flowing in through this accounts. The real problem
is that after opening several crores of duplicate accounts, it may not be easy to rectify the
mistakes at a later stage. Thats because Aadhaar linkage takes time and by then the system
will effectively create millions of non-operative accounts. In the past, the central bank had
highlighted the problem of crores of non-operative zero-balance accounts in the banking
system, most of which were opened under the financial inclusion programme rolled out by
the RBI. The RBI had given a call to banks to exercise abundant caution while opening
accounts under Jan Dhan Yojana.

3.6IMPLEMENTATION OF PMJDY:
The first and basic pillar of PMJDY is the expansion of banking network of the country to
reach out to the financially excluded segments of the population.
3.6.1 Bank Branches & ATMs: In the year 2013-14, the Public Sector Banks (PSBs) set up
7840 branches across the country of which about 25% were in rural areas. More than 40,000
ATMs were also set up pursuant to the Budget announcement of 2013-14 of providing an
ATM at every branch. The present banking network of the country (as on 31.03.2014)
comprises of a bank branch network of 1,15,082 and an ATM network of 1,60,055. Of these,
43,962 branches (38.2%) and 23,334 ATMs (14.58%) are in rural areas and the remaining in
semi-urban and metropolitan areas. In the year 2014-15, the Public Sector Banks propose to
set up 7332 branches and 20,130 new ATMs. However, given the staff constraints of banks
51 | P a g e

and the viability of opening full fledged branches in rural areas, the demands for branch
expansion far exceed the supply. The efficient and cost effective method to cover rural areas
is by way of mapping the entire country through Sub Service Area (SSA) approach and
deploying fully enabled online fixed point Bank Mitr (Business Correspondent) outlets.
Public Private Partnerships in this area shall facilitate the process and promote efficiency and
pace of coverage.
3.6.2 Swabhiman Villages: In the year 2011-12, Banks covered more than 74,000 villages,
with population more than 2,000 (as per 2001 census), with banking facilities under the
"Swabhimaan" campaign. Looking to viability of each centre, banks would strive to set up a
brick and mortar branch with minimum staff strength of 1+1 or 1+2 in 74,351 villages having
population of 2000 or more which were covered by BCs in the earlier campaign. This can be
done in a phase manner in a period of 3-5 years.
3.6.3 Mapping Sub Service Areas (SSAs):
Under the present plan, all the 6 lakh villages across the entire country are to be mapped
according to the Service Area of each Bank to have at least one fixed point Banking outlet
catering to 1000 to 1500 households, called as Sub Service Area (SSA). Villages with
Panchayat offices can be made the nodal point
3.6.4 Coverage of SSAs: It is proposed that SSAs shall be covered through a combination of
banking outlets i.e. branch banking and branch less banking. Branch banking means
traditional Brick & Mortar branches. These branches are manned by Bank staff and offer
complete banking services including third party payments and processing of loan
applications. Branchless banking comprises of fixed point Bank Mitr (Business
Correspondent), who act as representatives of Bank to provide basic banking services i.e.
opening of bank accounts, cash deposit, cash withdrawal, transfer of funds, balance enquiries
and mini statement facility. Besides, they also provide value added additional services to the
bank. Villages without Brick and Mortar branches of banks would be covered by fixed
location Bank Mitr (Business Correspondent) outlets preferably at the panchayat office/bus
station/local market. The Bank Mitr (Business Correspondent) may cater to the neighbouring
villages in his area on pre defined time and days. The working and visit timing would be
prominently displayed at his place of working. Every habitation will have access to
52 | P a g e

bankingservices within 5 km by August, 2015, except parts of J&K, Himachal Pradesh,

Uttarakhand, North East and the 82 Left Wing extremism affected districts which Have
teleconnectivity infrastructure constraints. RBI had directed Banks to cover all villages by
March, 2016. This task would now need to be proposed to August, 2015, except the hilly,
tribal, desert and difficult areas having challenge of Telecom connectivity.
3.6.5 Urban Financial Inclusion: As per Census 2011, there were 7.89 crore Urban
households out of which 5.34 crore households were availing banking services. As on 31
March, 2014, the Banking network has 71,120 branches and 1,36,721 ATMs in urban, semiurban and metropolitan areas. In Urban areas too, the Banks would engage Bank
Mitr(Business Correspondent) wherever required. The exact number of uncovered
households at present is not available with Banks but is estimated to be about 1.5 crore. In the
Urban centres of the district, the Lead District Managers (LDMs) would be responsible to
coordinate with all available banks in the centre to cover all households. The Urban centre
saturation would be measured by opening at least 150% accounts of the Urban households in
that centre as per Census 2011.
3.6.6 Working of Bank Mitr (BusinessCorrespondents): The Bank Mitr(Business
Correspondent) outlets (in both rural and urban areas) would be fully equipped with the
required infrastructure including the computers and other peripherals like Micro ATM, Biometric scanners, Printer, Web cam and internet connectivity. Bank Mitr (Business
Correspondent) need to carry out online transactions for which internet connectivity is
essential. However, as per the present status there may be certain connectivity related issues
particularly in hilly and tribal areas of the country which need to be addressed immediately.
Hence, there would be a committee consisting of various stakeholders including BSNL to sort
out technology related issues. Each Bank Mitr (Business Correspondent) would be given
proper training about basic banking, insurance and pension products and also on Customer
handling . Adequate compensation to the Bank Mitr (Business Correspondent) would be
ensured for enabling him to provide uninterrupted services particularly in the difficult rural
and remote areas. The suggested remuneration to reach the last mile Bank Mitr (Business
Correspondent) would be at least ` 5,000/- pm comprising of fixed amount and additional
transaction/ activity based variable component. While deciding upon the remuneration

53 | P a g e

structure it would be ensured that the costs on rent, electricity, internet, travelling etc. are also
accounted for.
3.6.7 Mobile Banking: The Inter-Ministerial group on delivery of basic financial services
through a comprehensive frame work envisaged the creation of "Mobile and Aadhaar linked
Accounts" by Banks. The basic financial transactions on these accounts can be executed
through a mobile based PIN system using "Mobile Banking PoS". Mobile banking through
mobile wallet was launched in 2012. Under this service, RBI has authorized 3 telcos and 5
non-telcos to launch this service. Three Telcos, Airtel under brand name Airtel Money,
Vodafone under Brand name Vodafone m-pesa and Idea vide Idea Money are active in the
space. They control over 80,000, 70,000 & 8,000 agents respectively.
3.6.8 National Unified USSD Platform(NUUP): USSD based mobile banking can work on
all GSM handsets (93% of current 900 mn). Through USSD mobile banking services like
Balance Inquiry, Mini Statement and Fund transfer will be provided. NPCI to provide
Gateway for all the banks with single short code - *99#. Currently, all smart cell phone
already enabled to use mobile banking application and basic cell phones are being enabled
now under this platform. USSD based mobile banking services is th proposed to be launched
on 28 August, 2014. The services will be provided by 40 banks initially and will be joined by
100 banks. Agreement has already been done with 11 telecom service providers.
3.6.9 Credit Guarantee Fund: The fourth pillar of this plan is the creation of a Credit
Guarantee Fund. It is proposed to be housed in National Credit Guarantee Corporation
(NCGC). As per RBI estimates, up to March 2014, 5.90 million Basic banking accounts
availed Over Draft facility of `16 billion (These figures respectively, were 3.92 million and
1.55 billion in March, 2013). However, considering that 242 million such accounts were
opened by March, 2014, the Over Draft facility has been availed in a very small fraction of
these accounts.
3.6.10 Micro-Insurance: The fifth pillar of this plan is to provide micro insurance to the
people. Insurance Regulatory and Development Authority (IRDA) has created a special
category of insurance policies called micro-insurance policies to promote insurance coverage
among economically vulnerable sections of society. The IRDA Micro-insurance Regulations,

54 | P a g e

2005 defines and enables micro-insurance. A micro-insurance policy can be a general or life
insurance policy with a sum assured of ` 50,000 or less.
3.6.11 Unorganised pension scheme: The sixth and final pillar of this plan relates to old age
income security. Almost 400 million people (more than 85% of the working population in
India) work in the unorganized sector. Of these, at least 120 million ar women and the
majority had no access to any formal old age income security scheme. Tenuous labour market
attachment, intermittent incomes, poor access to social security renders the unorganized
workers highly vulnerable to economic shocks during their working lives. The Swavalamban
scheme is a historic.

3.7 MONITORING MECHANISM:

A web portal shall be created by DFS at 'financialservices.gov.in' for online monitoring of the
creation of Bank Mitr (Business Correspondent). In the field, it shall be the tool to ensure
proper coverage of villages. The reports to be generated would be district wise/state wise and
would include
a) Covered villages with uncovered households needing opening of fresh account
b) Covered villages with uncovered households needing at least one fully enabled
account per family or reactivation of earlier account
c) Uncovered villages with households needing fresh accounts to be opened
d) Urban area with uncovered households needing fresh account/ account
reactivation
e) Number of new Bank Mitr (Business Correspondents) set up in Rural and Urban
areas
Each Bank would have a structured System generated MIS system to monitor the function of
Bank Mitr (Business Correspondent) in the field. The format would be standardised across
the system for ease and uniformity purposes. This shall be uploaded regularly on the Portal
created by DFS for this purpose. This MIS would have a linkage with the portal for DFS i.e.
55 | P a g e

'financialservices.gov.in'. All banks have already been provided with the necessary ID and
password to access this portal. The MIS reports to be collected for monitoring during the
campaign will have two parts, one would be the reports generated by the banks from the CBS
which shall be weekly and the second part will have reports from the SLBCs which will also
involve surveys of the ground level position. The ground level survey should be completed
within 3 months of the start of the campaign. It was decided to link the lady of the house as
head of the household with the other members in the CBS so that the number the households
that are covered during the campaign can be ascertained. IBA will have a monitoring
committee which shall review the progress on weekly basis. The information for monitoring
shall be extracted from the DFS portal. A Project Management Group would be set up in
DFS comprising of sector experts to do a day to day monitoring. SLBCs will have a Toll Free
Number connected to a call center. Citizens facing difficulty in opening of account may call
on this number where his/her complaint shall be registered. The same shall then be forwarded
to the concerned.

3.8 MEDIA AND PUBLICITY:

Adequate publicity would need to be carried out in structured manner based on different tiers
like Central level, State level and Districts / Local level. Structure & Mechanism for publicity
would be devised by Indian Bank Association (IBA) and NABARD in coordination with
Banks and other stake holders. There would be a common fund to be contributed by the
Banks for publicity. In the states, State Level Bankers Committees (SLBCs) would
coordinate based on broad guidelines of the IBA/NABARD. However the local level
publicity would be taken up by the respective Lead District Managers. All publicity material
like posters, banners etc would be in local/regional language. Broadly, modes for campaign
shall be used as under:
Central level
Print
Electronic
Radio
Local level (vernacular)
Posters
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Banners
Brochures
Outdoor Publicity
Wall Painting
Hoardings
Posters

3.9COMPARATIVE ANALYSIS WITH SWABHIMAAN:

Table 3.2 comparative analysis of PMJDY with SWABHIMAAN
SL.

SWABHIMAAN

PMJDY

Villages with population greater

Focus on household, Sub

than 2000 covered, thus limited

service Area for coverage

geographical coverage

of the whole country

2.

Only rural

Both rural and urban

3.

Offline accounts opening

Only online accounts in

NO.
1.

CBS of the bank

4.

No use of mobile banking

Mobile wallet and USSD

based mobile banking

5.

Financial literacy had no focus

Focus

on

literacy

financial

with

proper

mechanism
6.

No

grievance

redressal

mechanism

Grievance

redressal

atSBLC level in every

states

7.

8.

Providing credit facilities was

OD

limit

after

not encouraged

satisfactory operation

Cumbersome KYC formalities

Simplified KYC or eKYC

9.

Monitoring left to banks

Structured

monitoring

mechanism

at

centre,

state, district
10.

No

active

states\district

involvement

of

State\district

monitoring committee to
be set up

Source-www.pmjdy.gov.in

57 | P a g e

level

3.10 FINANCIAL INCLUSION UNDER PMJDY: A CASE STUDY OF

BANK OF BARODA
Models used by Bank of Baroda for FI
BOB has adopted various models for providing banking services under financial
inclusion such as:
ICT (Information & Communication Technology) based BC model and POS (Point
of Sale/Service)
Kiosk

Brick & Mortar Branches

Mobile Van

Information

and

Communication

Technology

(ICT)

based

Business

Correspondent (BC) model: POS based BC Model

This solution is based on Application Service Provider (ASP) model with smart cards based
technology for financial inclusion. Under this model, Business Correspondents are appointed
by banks through service providers who are provided with point-of-service (POS) devices,
using which, they carry out transactions for the smart card holders at their doorsteps. The
customers can operate their accounts using their smart cards through biometric
authentication. In this system, all transactions processed by the BC are online real time basis
in CBS of the bank.

Kiosk Bc Model:

It is a web-based application that can be accessed through internet connectivity on laptop or

desktop by authorized individuals. The CSC e-governance Service India Ltd, FIAT
technology Services Pvt Ltd and Geosansar are appointed as BCs for providing banking
services in the villages allocated to the Bank as well as for implementation of Urban
Financial Inclusion. This is a card less solution; account holder can operate the account on the
basis of account number as well as Aadhaar number. The Kiosks are connected with your
58 | P a g e

Banks CBS through web-based connectivity from authentication on online real time basis.
As on 31st March, 2014, your Bank covered 7,525 villages through 2,780 Kiosk centres and
also established 1034 urban kiosk centres across the country the computer system/laptop of
the kiosk operator. The transactions are processed through biometric.

Mobile Van:

The customized vehicle (van) is specifically designed for the purpose of banking activity.
Theexterior of the van is covered with the Bank advertisements and information about
products offered by the Bank in rural areas. Thereby, it is also an advertising media for the
Bank in rural segment. The van is equipped with computer hardware and connectivity to
access the CBS. The Bank staff is deployed on the van to provide banking services in the
villages. The van is moving into the cluster of villages on predetermined days and time which
are in proximity to the existing branches, for providing online banking services. The banking
services are being provided during fixed days in a week. At present, 15 mobile vans have
been deployed for catering financial services to 211 villages in the states of Uttar Pradesh,
Rajasthan, Gujarat, Uttarakhand, Bihar and Goa.

Brick and Mortar Branch:

The brick and mortar branches are opened in a comparatively bigger village having the
potential and viability. Such centres are identified during the course of finalization of the
Banks branch expansion plan. As per the Banks FIP, 1,772 rural branches have been opened
as against a target of 1,554 for the current financial year. Your Bank had annual target for
opening 334 branches in un-banked rural area as per the disintegrated FIP submitted to the
RBI, which is comfortably achieved by opening of 430 branches in FY15.
3.1.1 New Initiatives of Bank of Baroda under PMJDY:
Kiosk banking Model: The Kiosk banking model was launched by Shri S.S.Mundra,
Chairman & Managing Director, by virtually inaugurating 1,000 Kiosks on the 106th
foundation day of Bank i.e. 20th July 2013. The Bank has arrangements with Common
Service Centres (CSCs) to avail their services as Business Correspondent of your Bank for
running the Kiosk centres. The common service centres are ICT enabled front end service
59 | P a g e

delivery points at the village level and urban centres for delivery of government, financial,
social & private sector services in the areas of agriculture, health, education, entertainment,
banking, insurance, pension, utility payments, etc. Bank of Baroda has also engaged other
service providers for similar banking Kiosks in urban/rural centres. These Kiosks would be
connected with the CBS of your Bank through web-based connectivity from the computer
system/laptop of the kiosk operator.
Urban Financial Inclusion: The rural inhabitants have largely remained the focus of the
financial inclusion efforts since, a large proportion of the villages are still unbanked. Besides
people living in rural and far flung areas, urban poor still have no access to formal financial
products and services like savings, credit, remittance and insurance, forcing them to depend
on usurious informal sources to meet their personal, health, and livelihood-related needs.
Many of those are normally migrant labours, hawkers, slum dwellers from rural areas that
generally leave their villages for livelihood.
Recurring Deposit (RD) Account: This is money back RD facility duly designed for
financial inclusion account holders to provide liquidity. The product offers money back
facility, at the end of six months, an amount equivalent to 50.0% of the outstanding credit
balance in the account can be paid back as per the requirement of depositor.
Baroda Kisan Credit Card (BKCC): This product is for farmers which cover their needs
like production credit, investment credit, personal loan needs as well as consumption needs. It
is flexible in utilization of the limit as he can utilize the limits as per his requirements during
the year.
Baroda General Credit Card (BGCC):

The BGCC is implemented through all the

branches of Baroda Bank. The credit facility offered under the scheme would include
working capital and term loan requirements of the entrepreneurs.
Baroda Swabhimaan Suraksha (Low Premium Insurance):

Bank of Baroda has

introduced life insurance product with low premium for financial inclusion customers in
coordination with India-first Life Insurance Company. An insurance cover of Rs 5,000 to Rs
50,000 is available at premium of Rs 20.88 per thousand for five years.

60 | P a g e

Financial Literacy: A Key to Successful Inclusion The desired objective of

Financial Inclusion can be achieved only when we are able to generate equal responses from
the villages. In order to invoke responses amongst villagers, there is a need to educate them
on various banking facilities and its benefits to them. In other words, financial literacy would
be the key for success of financial inclusion initiatives of the bank. Therefore, all constituents
of FI need to develop a bond with each other for not only to provide banking facilities, but
also to create a massive awareness of banking and banking products amongst the population
through Financial Literacy, wherever implementing Financial Inclusion programme. The
Banks link branches are arranging Financial Literacy campaign by conducting meetings and
addressing the habitants in different forums.
Baroda Swarojgar Vikas Sansthan (Baroda RSETI) is a trust formed by the Bank
way back in 2003 for undertaking skill building activities for unemployed rural youth
and providing hand holding support to them till their settlement in their venture.
Around Forty six Financial Literacy & Credit Counselling Centres (FLCCs)
SAARTHEE are operational across the country. Since inception, around 19,731
individuals visited FLCCs of which in 10,460 cases, the issues were resolved.
Around Fifty two Baroda Grameen Paramarsh Kendras facilitate financial education,
credit counselling, information sharing and problem solving on technical issues,
synergy & liaison with other organizations for value added services and development
activities in rural areas.
BYST-BoB Entrepreneurship Development Programme (BYST) provides end-toend support to disadvantaged young dynamic micro-entrepreneurs in the form of
Loans,

Highlights of the Banks Performance under Financial Inclusion in FY14

Bank of Baroda covered 14,161 villages against a target of 11,124.

It opened 74.66 lakh Basic Savings Bank Deposit Account against target of
63.74 lakh, out of which 18.71 lakhs accounts were opened through the Business
Correspondents.

The balance outstanding in the Basic Savings Bank Deposit Account of Baroda
Bank is around Rs 1,918 crore.

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Baroda Bank has sanctioned overdraft of Rs 11.31 crore as against a target of Rs.
6.22 crore in Basic Saving Bank Deposit Account.

Bank of Baroda opened 2,584 Ultra Small Branches (in villages with population
above 2,000) to strengthen functioning of BC model.

Bank of Baroda approved a disaggregation plan up to the branch level to

implement its FIP for 21,526 villages by March 2016.

This Bank has launched its Urban Financial Inclusion drive by opening more than
1,000 Kiosk at various locations in metro and urban centers across the country.
Also, it surpassed all targets set under disaggregated FIP for FY14.

3.11CONCLUSION:
Financial Inclusion is needed for rural and downtrodden masses that are the future growth
engine of the economy. The role of various tools and associated technologies in providing
financial solutions to the unbanked is also substantial. In spite of various initiatives taken up
by RBI/ Government of India, current position is still not at satisfactory level. Various
limitations and considerations led to the introduction of the PMJDY which have considerable
merits. But achieving its goals will not be either quick or automatic. The PMJDY should not
be regarded as a standalone initiative but as one of several integrated initiatives designed to
realize progress in financial inclusion to expand choices and capabilities of the beneficiary
households for pursing better livelihoods. The success of the PMJDY should be measured by
the progressive reduction in the number of households needing the assistance from this
initiative after around 2020. Accountable and transparent organizational structure for
implementing PMJDY in an integrated manner suggested in this column should be regarded
as essential for realizing the desired societal outcomes.

62 | P a g e

I. PUBLIC SECTOR BANKS PARTICIPATION IN PMJDY:

4.1INTRODUCTION:
Public Sector Banks (PSBs) are banks where a majority stake (i.e. more than 50%) is held by
a government. The shares of these banks are listed on stock exchanges. There are a total of 27
PSBs in India [19 Nationalised banks + 6 State bank group (SBI + 5 associates) + 1 IDBI
bank (Other Public Sector-Indian Bank) = 26 PSBs + 1 recent Bhartiya Mahila Bank]. The
Central Government entered the banking business with the nationalization of the Imperial
Bank of India in 1955. A 60% stake was taken by the Reserve Bank of India and the new
bank was named as the State Bank of India. The seven other state banks became the
subsidiaries of the new bank when nationalized on 19 July 1960. The next major
nationalization of banks took place in 1969 when the government of India, under Prime
Minister Indira Gandhi, nationalised an additional 14 major banks. The total deposits in the
banks nationalised in 1969 amounted to 50 crores. This move increased the presence of
nationalised banks in India, with 84% of the total branches coming under government
control. The next round of nationalisation took place in April 1980. The government
nationalised six banks. The total deposits of these banks amounted to around 200 crores. This
move led to a further increase in the number of branches in the market, increasing to 91% of
the total branch network of the country.
Table 4.1: Total no. of Account holders under PMJDY by public sector banks

Source: www.pmjdy.gov.in
Findings:- Table no:.4.1 shows total no. of accounts holders to open under PMJDY by
public sector banks, in the month of September 2014. 43954669 accounts were opened under
63 | P a g e

the PMJDY, of which 53.85 per cent of accounts (23673628) were opened in rural areas, and
46.14 per cent of accounts (20281041) were opened in urban places. In the month of October
2014, 55447338 accounts were opened under the PMJDY, of which 54.10 per cent of
accounts (29999614) were opened in rural areas, and 45.89 per cent of accounts (25447724)
were opened in urban places. In the month of November 2014, 66831507 accounts were
opened under the PMJDY, of which 54.37 per cent of accounts (36342450) were opened in
rural areas, and 45.62 per cent of accounts (25447724) were opened in urban places. In the
month of December 2014, 83091061 accounts were opened under the PMJDY, of which
54.30 per cent of accounts (45119636) were opened in rural areas and 45.69 per cent of
accounts (37971425) were opened in urban places. In the month of January 2015, 98447525
accounts were opened under the PMJDY, of which 54.14 per cent of accounts (53300249)
were opened in rural areas and 45.85 per cent of accounts (45147276) were opened in urban
places. In the month of February 2015, 107297643 accounts were opened under the PMJDY,
of which 54.06 per cent of accounts (58005517) were opened in rural areas and 45.93 per
cent of accounts (49292126) were opened in urban places. In the month of March 2015,
115444945 accounts were opened under the PMJDY, of which 54.16 per cent of accounts
(62535017) were opened in rural areas and 45.83 per cent of accounts (52909928) were
opened in urban places.
RUPAY DEBIT CARDS:
RuPay is an Indian domestic card scheme conceived and launched by the National Payments
Corporation of India (NPCI). It was created to fulfil the Reserve Bank of Indias desire to
have a domestic, open loop, and multilateral system of payments in India. RuPay facilitates
electronic payment at all Indian banks and financial institutions, and competes with
MasterCard and Visa in India. NPCI maintains ties with Discover Financial to enable the card
scheme to gain international acceptance.

64 | P a g e

Table 4.2: Public sector banks provided RuPay card under PMJDY

Source:www.pmjdy.gov.in
Findings:- Table no: 4.2 above Public Sector Banks Provided RuPay Debit Card under
PMJDY, in the month of September 2014; 3.82 per cent of accounts (18098246) were
provided with RuPay Debit Card by public sector banks. In the month of October 2014, 7.12
per cent of accounts (33722980) were provided with RuPay Debit Card by public sector
banks. In the month of November 2014, 10.39 per cent of accounts (49216661) were
provided with RuPay Debit Card by public sector banks. In the month of December 2014,
15.44 per cent of accounts (73130361) were provided with RuPay Debit Card by public
sector banks. In the month of January 2015, 19.26 per cent of accounts (91232024) were
provided with RuPay Debit Card by public sector banks. The month of February 2015, 21.13
per cent of accounts (100092148) were provided RuPay Debit Card by public sector banks. In
the month of March 2015, 22.82 per cent of accounts (108110088) were provided with RuPay
Debit Card by public sector banks.
Table 4.3: Total No. of account holders opened under PMJDY by public
sector banks

Source-www.pmjdy.gov.in
65 | P a g e

Findings:- Table no: 4.3 noted the total number of accounts holders opened under PMJDY
by public sector banks. In the month of September 2014, 7.70 per cent of accounts
(43954669) were opened under the PMJDY by public sector banks. In the month of
October14, 9.71 per cent of accounts (55447338) were opened under the PMJDY by public
sector banks. In the month of November 2014, 11.71 per cent of accounts (66831507) were
opened under the PMJDY by public sector banks. In the month of December 2014, 14.56 per
cent of accounts (83091061) were opened under the PMJDY by public sector banks. In the
month of January 2015, 17.25 per cent of accounts (98447525) were opened under the
PMJDY by public sector banks. In the month of February 2015, 18.80 per cent of accounts
(107297643) were opened under the PMJDY by public sector banks. In the month of March
2015, 20.23 per cent of accounts (115444945) were opened under the PMJDY by public
sector banks. On the whole, a maximum of accounts (7.70% to 20.23%) were opened under
PMJDY by public sector bank.
Table 4.4: Total amount of balance of account holders opened under PMJDY
by public sector banks.

Source-www.pmjdy.gov.in
Findings:- Table no: 4.4 indicates the total amount of balance of account holders opened
under PMJDY by Public Sector Banks, Rs. 21131.88 lakhs as balance in the accounts in
September 2014, and Rs. 428777.26 lakhs as balance in the accounts in October 2014, and
Rs. 519593.09 lakhs as balance in the accounts in November 2014, and Rs. 657866.33 lakhs
as balance in the accounts in December 2014, and Rs. 817463.04 lakhs as balance in the
accounts in January 2015, and Rs. 993720.28 lakhs as balance in the accounts in February
2015, and Rs. 1218505.25 lakhs as balance in the accounts in March 2015. As on whole, a

66 | P a g e

maximum of amount of the accounts were recorded Rs. 1218505.25 during the period of
September 2014 to march 2015.
Table 4.5: Total no. of accounts with zero balance amounts in PMJDY by public sector
banks

Source: www.pmjdy.gov.in
Findings: Table no: 4.5 explains the total no. of accounts with zero balance amount in
PMJDY by Public Sector Banks. In the month of September 2014, 33414430 accounts were
with zero balance, and in the month of October14, 41863112 accounts with zero balance, and
in the month of November 2014, 49354870 accounts with zero balance, and in the month of
December 2014, 60404902 accounts with zero balance, and in the month of January 2015,
65541407 accounts with zero balance, and in the month of February 2015, 66368364
accounts were with zero balance, and in the month of March 2015, 66782945 accounts with
zero balance. On the whole, a maximum of account holders with zero balance in amount were
66782945 during the period from September 2014 to March 2015

67 | P a g e

.II. A CASE STUDY ON KENDRAPARA DISTRICT:

4.2 KENDRAPARA DISTRICT: A DEMOGRAPHIC PROFILE
Kendrapara is known for Tulasi Khetra of Odisah. Its place of holiness and purity.
Kendrapara is one of the district of Odisha. It was created in the year of 1993 by Odisha
government. It situated near the bay of Bengal and east of Odisha as well as India. So that it
is one of the coastal district of Odisha. It is mostly affected by cyclone, flood and natural
calamities. The district covers 2644 sq km area of Odisha near to Bay of Bengal. It covers
1.70% of total area of state. According to census 2011 total population of district is
14,39,891. Out of which 7,17,695 are male and 7,22,196 are female. Sex ratio of the district
is quite high i.e 1006. It is one of the rich educated district of Odisha, so that literacy rate is
85.93%. The district consists of nine Blocks and 230 panchayats with 1540 villages. Most the
people are lived in rural areas. They mostly cultivate paddy, vegetables, cereals and
sugarcane. The people are culture oriented. They are rational believed.
.ANALYSIS OF DATA:
To study the performance of PMJDY for achieving financial inclusion, an attempt is made in
this research by collecting primary data through the structured questionnaires. For this
purpose sample 400 respondents are selected including Daily labourer, farmer, mason, youth,
women, govt. servants, students, private employee, self-employed people et
Question: Are you aware of PMJDY?
Table 4.6: No. of individual aware about PMJDY
Nature
of Yes
Respondents
Individual
364
Source- self complied

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No

Total

36

400

Chart 4.1: No. of individual aware about PMJDY

9%

Aware
Not Aware
91%

Source-self complied
Findings:

Most the people aware of PMJDY i.e 91%. It indicates the publicity was so good and
media coverage. So that people aware off

Only 9% of people did not aware of PMJDY. It may be some lacuna in publicity or
lack of interest of people.

Question: Have you opened Bank account under PMJDY?

Table 4.7: Account open under PMJDY
Nature
of Yes
Respondents

No

Individual
280
Source- self complied

95

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Convert
account
PMJDY
25

the Total
into
400

Chart 4.2 Accounts open under PMJDY

6.25%
23.75%
open
not open
70%

convert the a|c

Source- self complied

Findings:

About 70% of the people have opened account in PMJDY those had not a
bank account before.

Only 23.75% of the people have not opened account in PMJDY. They might
have bank account.

Around 6.25% of the people have converted their existing account into
PMJDY account.

Question: In which bank you have opened your account?

Table 4.8: Account open in different category banks
Nature
of Public
Respondents
bank

Household
323
Source- self complied
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sector Private
bank

47

sector Regional rural Total

bank
or
Cooperative
bank
30
400

Chart 4.3: Account open in different category banks

7.50%
11.75%
public sector bank
private sector bank
80.75%

RRB or cooperative bank

Source- self complied

Findings:

Most of the respondents i.e 80.75% have opened account in public sector
banks. It is because of penetration of branches in rural areas by PSB.

Only 11.75% of the respondent have opened account in private sector banks
due to high interest rate and technological advantages.

About 7.5% of the respondent have opened account in RRB or cooperative

banks for availing credit facility to agriculture.

Question: Do you know about the facilities of PMJDY account?

Table 4.9: facilities of PMJDY
Nature
of Overdraft
Respondent
facility
Individual
168
Source- self complied

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Insurance
coverage
85

RuPay debit All of these

card
35
12

Total
400

Chart 4.4: facilities of PMJDY

8.75%

3%

overdraft facility
42%

21.25%

insurance coverage
rupay debit card
all of these

Source- self complied

Findings:

Most of the respondent i.e 42% knows about the overdraft facility. It attracts
them to draw extra amount on their deposits after completion of six months.

Around 21.25% of the total respondents know about the insurance coverage
of 100000. It is addition to their accounts.

About 8.75% of respondents know about RuPay debit card. It is newly

featured card equivalent with other cards.

After all only 3% of the respondents know about all the facilities of PMJDY.

Question: What facilities of PMJDY you like most?

Table 4.10: Most like facilities of PMJDY
Nature
of Overdraft
Respondents facility
Individual
90
Source- self complied
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Insurance
coverage
65

Rupay debit All of these

card
45
200

Total
400

Chart 4.5: Most like facilities of PMJDY

22.50%
50%

overdraft facility
16.25%

insurance coverage
rupay debit card
all of these

11.25%

Source- self complied

Findings:

Maximum respondents i.e 50% mostly like to all the facility of PMJDY. So
that it is policy getting acceptance of people.

Around 22.50% of respondents like for overdraft facility due to unique

features.

About 16.25% of respondents go for insurance coverage of 100000.

Almost 11.25% of respondent like to RuPay debit card due to availability to

every account holders.

Question: Is it better policy than SWABHIMAAN?

Table 4.11: Comparative analysis of PMJDY with SWABHIMAAN
Nature
of Yes
Respondents
Individual
303
Source- self complied
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No

Cants say

Total

37

60

400

Chart 4.6: Comparative analysis of PMJDY with SWABHIMAAN

15%
9.25%
yes
no
75.75%

can't say

Source- self complied

Findings:

Most of the respondent i.e 75.75% gives opinion on favour of PMJDY than
SWABHIMAAN. It is because of some extra feature of PMJDY.

About 15% of respondent cant differentiate between PMJDY and

SWABHIMAAN.

Around 9.25% of respondents like to SWABHIMAAN than PMJDY.

Question: From your family, how many have opened account under PMJDY?
Table 4.12: No. of accounts opened by individuals and their family members
Nature
of One
respondents

Two

More
two

Individual
220
Source- self complied

85

25

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than None

70

Total

400

Chart 4.7: No. of accounts opened by individuals and their family members

17.50%
6.25%
one
55%
21.25%

two
more than two
none

Source- self complied

Findings:

About 55% of the respondents say that only one member from his/her family
have opened account. They have not any account before PMJDY.

Around 21.25% of respondents reply that two members from his/her family
opened account.

Only 6.25% of respondents answer that more than two members of his /her
family have opened account.

At last 17.5% of respondents as well as his/her family members have not

opened any account under PMJDY.

Question: Is it helpful to develop your saving habits by opening account in PMJDY?

Table 4.13: Develop of saving habits of people through PMJDY
Nature
Respondent
Individual

of Yes

No

285

45

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To the
extent
70

some Total
400

Source- self complied

Chart 4.8: Develop of saving habits of people through PMJDY

Sales

17.50%
11.25%
yes
no
71%

to the some extent

Source: self-complied
Findings:

Most of the respondent i.e 71.25% agree that saving habits can be developed
through an account in PMJDY.

Almost 17.50% of respondent answer that it can develop savings habit to some
extent.

But about 11.25% of respondent disagree with the statement that it cant
develop saving habit.

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Question: How far is bank from your home?

Table 4.14: Distance of bank from home
Nature
Respondent

of Below 2k.m

Individual
77
Source:- self complied

2k.m-10k.m

Above 10k.m

Total

38

285

400

Chart 4.9: Distance of bank from home

19.25%
9.50%
below 2k.m
71.25%

2k.m-10k.m
above 10k.m

Source:- self complied

Findings:

About 71.25% respondents say that bank is above 10k.m distance from home.
So it is not easy to transact with bank frequently.

Around 19.25% of the respondents answer that bank is below 2k.m distance
from home. It indicates banking penetration is spreading in some extent.

But only 9.5% respondents tell that bank is 2k.m to 10k.m far from home. It
shows that bank is nearer to home.

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Question: How often you transact with bank?

Table 4.15: Frequency of transact with banks
Nature
Respondent

of Fortnightly

Individual
65
Source:- self complied

Weekly

Monthly

Total

100

235

400

Chart 4.10: Frequency of transact with banks

16.25%

25%

58.75%

fortnightly
weekly
monthly

Source: self complied

Findings:

Almost 58.75% of respondents are transacting with bank monthly. It is for

bank is too far from home or few transactions with bank.

Only 25% of respondents are transacting weekly with bank. it is for only
higher transaction values.

But 16.25% of respondents are transacting with bank fortnightly or daily.

They have frequent meet with bank to satisfy their needs.

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Question: Do you maintain minimum cash balance in your account or there is zero?
Table 4.16: Maintenance of minimum balance or zero balance in account
Nature
of Yes
Respondent
Individual
215
Source: self complied

No

Total

185

400

Chart 4.11: Maintenance of minimum balance or zero balance in account

46.25%
53.75%

yes
no

Source: self complied

Findings:

About 53.75% of respondents are maintaining a minimum balance in their

respective account. It is good sign for financial inclusion.

But only 46.25% of respondents are not maintaining minimum balance.

They have zero balance in account. It is a challenge for PMJDY decline the
rate of zero balance account.

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Question: Are you satisfying the services offered under PMJDY?

Table 4.17: Satisfaction level of respondents of PMJDY services
of Yes

No

Cant say

Total

Individual
280
Source: self complied

50

70

400

Nature
Respondent

Chart 4.12: Satisfaction level of respondents of PMJDY services

Sales
17.50%
12.50%
yes
no
70%

can't say

Source: self-complied
Findings:

It shows that almost 70% of respondents are satisfied with the service offered
under PMJDY and its implementation mechanism.

But 17.5% of respondents are not able to give answer because they might not
be opened account under PMJDY.

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Around 12.5% of respondent are not satisfied with the services of PMJDY. It
is because of banks dis cooperation in opening an account or people might be
getting problem for access the service.

4.3CONCLUSION:
To sum up, it can be concluded with the suggestion of making it more pro people and
reaching the all facility to last mile users. This chapter covers the analysis part of PMJDY
and to what extent it achieves the financial inclusion. Really it is pro people policy or only in
the pen and paper.so planning without implementation is a paper of desire and wishes. We
have to look at the implementation part od this policy. So as we can made India free from
financial exclusion.

81 | P a g e

5.1 MAJOR FINDINGS:

A maximum of accounts (53.85% to 54.37%) were opened in rural places during the
period from September 2014 to March 2015.
A maximum of RuPay Debit Cards were provided (3.82% to 22.82%) by Public
Sector Banks during the period from September 2014 to March 2015.
A maximum of accounts holders (7.70% to 20.23%) opened accounts under PMJDY
by public sector banks.
A maximum amount of Rs. 1218505.25 was recorded during the period from
September 2014 to march 2015.
A maximum of account holders with zero balance in amount were 66782945 during
the period from September 2014 to March 2015.
Most of the people aware about the PMJDY, which is good signal for the
implementation part. It indicates that media and publicity is good, so that information
can channelize to public.
In other part some of the people dont aware about this policy. To achieve financial
inclusion, everyone should aware of that.
Many people open accounts in public sector banks than private sector or RRBs. It
shows public sector bank fully participate in this policy and penetrate the banking
branches in typical rural areas than private sector bank.
It found that many people well known about the facility of this policy and specially
for overdraft facility and insurance coverage. So that they are interested to open
account.
The people are mostly like for overdraft facility and insurance coverage. It is because
of they are insured their life with opening an account. In other part they also get
overdraft facility.
One interesting findings is people mostly like to PMJDY than previously policy
SWABHIMAAN. It means that it has accepted by people and well known about it.
In this study, it is found that people are opening one and more than one account from
one family. It is because of they have need to transact with bank.
By opening account, people also develop their savings habits. In this study, it is
found that they had no account before.so now they can save some amount.
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 It is found that bank branches are quite far distance from home. In some cases it is
little distance. So it is a problem for PMJDY.
People are transacting more with bank now. In the study, it is found that people are
transacting with bank in every weekly or fortnightly frequently. But most the people
still are make distance from bank.
It is found that people are maintaining minimum balance in their account than zero
balance. So that there more live account in PMJDY scheme. It decreases the trend of
zero balance account.
At last, it is interesting talk to that most of the people is highly satisfied with the
service offered in PMJDY. But some of people still are dissatisfied.

5.2 SUGGESTIONS:
Public-Private partnerships should encourage.

Establishments and expansion of Business

Correspondent model. Gramin Dak Sewaks of post offices should be optimally
utilized to become Bank Mitr (Business Correspondent) of the Banks. 3. Online fixed
point Bank Mitr (Business Correspondent) should set up to deliver basic banking
services near to the customer doorstep.
Technological innovations like RuPay card and mobile banking would be made use
of.
Banks should use existing schemes like RBI's scheme for subsidy on rural ATMs and
UIDAI's scheme for subsidy on micro ATMs to augment their resources at the village
level.
Convergence with existing missions like National Rural Livelihood Mission
(NRLM) in rural areas and National Urban Livelihood Mission (NULM) in urban
areas should be emphasised.
Department of Telecom should ensure effective telecom connectivity in difficult
areas for proper implementation of plans.
Ensure financial literacy among every section of society.
Reserve bank of India is one of the backbones of all the commercial banks. Besides it
has been launched many more schemes in India, but a few schemes are not yielding
results and people do not have awareness of those schemes and financial literacy is at
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very low level in rural areas. So Public Sector Banks attract at people all income
level, to enrol themselves in the PMJDY scheme.
There should be more bank branches in rural areas by both public sector banks as
well private sector bank.
More financial literacy programmes should be conducted by both government and
non govt. organisations.
Private Banks should be encouraged to participate in PMJDY in large manner.
More focus on last mile financial institutions to achieve financial inclusion.
Highly media and publicity coverage should be required.
There should be one bank branch at a village with population of five thousands.
There should be a law which will protect the people from chit fund or other
unauthorised money lenders.
Every bank should be forced to establish a customer care /May I help you Counter at
every branch so that new customer should be guided and relevant information is
provided.
To increase the awareness, there is a good scope of having financial literacy cell or
credit counselling centres in each district so that it can take care of
uneducated/illiterate individuals.
Every bank should be made to offer No frill saving account with basic services
without terms & conditions which are class/group specific but are applicable to all.
Private sector should be involved in process of financial inclusion and they should be
made realise that it is not only a business opportunity for them but corporate social
responsibility too.

5.3 SCOPE FOR FUTURE STUDY:

The features of PMJDY outlined above suggest that from the societys perspective. The first
type is the initial capital and related costs of opening the bank account, and costs associated
with pricing (costing) of the insurance cover based on rigorous actuarial projections. This
study is one of the intensive study regarding the Pradhan Manrti Jan Dhan Yojana. In this
study, an effort is made to find out the what extent financial inclusion can be achieved
through PMJDY. It helps to other researcher to giving some primary data collected from
various sources. It draws some major findings which is a researchable topic.
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5.4 CONCLUSION:
The test of our progress is not whether we add more to the abundance of those who
have much; it is whether we provide enough for those who have too little.
- Franklin D. Roosevelt
Financial Inclusion is needed for rural and downtrodden masses that are the future growth
engine of the economy. The role of various tools and associated technologies in providing
financial solutions to the unbanked is also substantial. In spite of various initiatives taken up
by RBI/ Government of India, current position is still not at satisfactory level. Various
limitations and considerations led to the introduction of the PMJDY which have considerable
merits. But achieving its goals will not be either quick or automatic. The PMJDY should not
be regarded as a standalone initiative but as one of several integrated initiatives designed to
realize progress in financial inclusion to expand choices and capabilities of the beneficiary
households for pursing better livelihoods. The success of the PMJDY should be measured by
the progressive reduction in the number of households needing the assistance from this
initiative after around 2020. Accountable and transparent organizational structure for
implementing PMJDY in an integrated manner suggested in this column should be regarded
as essential for realizing the desired societal outcomes. Public Sectors Banks play a major
role to promote the PMJDY which was introduced by our Indian Prime Minister Narendra
Modi to eradicate the financial untouchability in the country. Pradhan Mantri Jan Dhan
Yojana has achieved a high target in India. Its contribution and transaction are the basic
features of the banking sectors. Therefore of all income level people should easily deposit
and save amount in banking sectors. Hence is concluded that PMJDYs has been more useful
and peoples life has improved through new banking technology.

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BIBILIOGRAPHY:
CGAP publications, 2012, Financial Inclusion and the Linkages to Stability, Integrity
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WEBSITES:
www.pmjdy.gov.in
www.rbi.org.in
www.wikipedia.org
www.grameeninfo.org
www.dfs.gov.in
www.scribd.in
NEWS PAPERS & MAGAZINE:
THE HINDU, OUTLOOK, FINANCIAL EXPRESS, YOJANA, FRONTLINE, INDIAN
JOURNAL OF COMMERCE,
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