International Journal of Science Technology & Management www.ijstm.com Volume No.04, Special Issue No.02, February 2015 ISSN (Print) 2394-1529, (Online) 2394-1537 A STATISTICAL NOTE: FINANCIAL INCLUSION- PRADHAN MANTRI JAN- DHAN YOJANA Rajeev Singh Bhandari Research Scholar, Invertis Institute of Management Studies, Invertis University, Bareilly, U.P. ()

ABSTRACT Financial inclusion is becoming the success mantra in achieving the inclusive growth. Every country wants to connect its people to the mainstream banking. Studies have proved that connecting unbanked people and households to the mainstream banking helps both society and economy. Financial inclusion should not turn out to be a mere number game. Connecting households or individuals by opening their bank accounts will definitely increase the financial inclusion count but this will surely not provide a surety for a better or inclusive growth. Government’s shift from financial inclusion plan to comprehensive financial inclusion plan will not surely solve the problem. Need of the hour is a responsible Financial inclusion plan which will not only see the growth quantitatively but qualitatively also. Financial inclusion policy has to be more holistic and practical so that the actual benefits, both economically and socially, and reaches the last man of the society.

Keywords: Debit Card, Financial Inclusion, Insurance and Inclusive Growth.

I. INTRODUCTION

An inclusive financial system not just helps in increasing economic growth but leads to better opportunities and reduction of poverty of the underprivileged sections of the society. A well developed financial system is essential for a faster and broad-based economic growth. It is highly important for economic development and human wellbeing. It brings poor people in to the mainstream of the economy and allows them to contribute more actively to their personal economic development (UN 2006[1]). A well developed financial system brings poor people into the mainstream of the economy and allows them to contribute more actively to economic development both individually and collectively (M.Ramaji, 2009[2]). , Deputy Governor, RBI in her speech on financial inclusion as, “Financial Inclusion , broadly is constructed as the inability to access necessary financial services in the appropriate from due to problems associated with access , conditions , prices ,marketing or self exclusion”. (Usha Thorat, 2008[3].Studies have found that there is a positive correlation between access to finance andfirm creation, economic growth, and poverty alleviation at the country level (World Bank,2008[4], Honohan, 2004[5]). Field research, especially, in the developing countries have explained that how poor households are managing their financial lives in order to achieve their multiple objectives (Collins, Murdoch, Rutherford, and Ruthven 2009[6]). Globally, about half of all working-age adults are excluded from formal financial services. For the lowest income quintile, 77 percent are excluded (Demirgüç- Kunt and Klapper 2012[7]). Studies suggests that financial services do have a positive impact on a variety of microeconomic indicators, including self-employment business activities, household consumption, and well- being (Bauchet et al. 2011[8]). There is evidence that microcredit both spurred new business creation and

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International Journal of Science Technology & Management www.ijstm.com Volume No.04, Special Issue No.02, February 2015 ISSN (Print) 2394-1529, (Online) 2394-1537 benefitted existing micro businesses in Mongolia and Bosnia (Attanasio et al. 2011[9]; Augsburg, de Haas, Harmgart, and Meghir 2012[10]). Study on the state-level panel data in India provides evidence that local differences in opening bank branches in rural unbanked locations were associated with a significant reduction in rural poverty (Burgess and Pande 2005[11]). Census 2011 estimated that out of 24.67 crore households in the country, 14.48 crore (58.7%) households had access to banking services. Of the 16.78 crore rural households, 9.14 crore (54.46%) were availing banking services. Of the 7.89 crore urban households, 5.34 crore (67.68%) households were availingbanking services. In the year 2011, Banks covered 74,351 villages, with population more than 2,000 (as per 2001 census), with banking facilities under the "Swabhimaan" campaign with Business Correspondents had a very limited reach and impact.

II. PRADHAN MANTRI JAN –DHAN YOJANA

PMJDY is a National Mission on Financial Inclusion encompassing an integrated approach to bring about comprehensive financial inclusion of all the households in the country. The plan envisages universal access to banking facilities with at least one basic banking account for every household, financial literacy, access to credit, insurance and pension facility. In addition, the beneficiaries would get RuPay Debit card having inbuilt accident insurance cover of 1 lakh. The plan also envisages channeling all Government benefits (from Centre / State / Local Body) to the beneficiaries’ accounts and pushing the Direct Benefits Transfer (DBT) scheme of the Union Government. 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. Special Benefits under PMJDY Scheme  Interest on deposit.  Accidental insurance cover of Rs.1.00 lac  No minimum balance required.  Life insurance cover of Rs.30,000/-  Easy Transfer of money across India  Beneficiaries of Government Schemes will get Direct Benefit Transfer in these accounts.  After satisfactory operation of the account for 6 months, an overdraft facility will be permitted  Access to Pension, insurance products.  Accidental Insurance Cover, RuPay Debit Card must be used at least once in 45 days.  Overdraft facility upto Rs.5000/- is available in only one account per household, preferably lady of the household. PMJDY comprises of the following six pillars:- 1. Universal access to banking facilities: Mapping of each district into Sub Service Area (SSA) catering to 1000-1500 households in a manner that every habitation has access to banking services within a reasonable distance say 5 km by 14 August, 2015. Coverage of parts of J&K, Himachal Pradesh, Uttarakhand, North

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International Journal of Science Technology & Management www.ijstm.com Volume No.04, Special Issue No.02, February 2015 ISSN (Print) 2394-1529, (Online) 2394-1537 East and the Left Wing Extremism affected districts which have telecom connectivity and infrastructure constraints would spill over to the Phase II of the program (15 August,2015 to 15 August, 2018). 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. 3. Financial Literacy Programme: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 ongoing basis. 6. Unorganized sector Pension schemes like Swavalamban: By 14 August, 2018and then on an ongoing basis. (PMJDY English brochure, 2015[12]).

III. RESEARCH OBJECTIVES

The following are the research objectives of the study: 1. To study the actual overall progress of Pradhan Mantri Jan –Dhan Yojana (18.09.2014 to 19.01.2015). 2. To study the progress of the Pradhan Mantri Jan –Dhan Yojana (Bank account status) a. Bank wise – Total opened bank account status b. Area wise –Total bank account opened 3. To study the progress of the Pradhan Mantri Jan –Dhan Yojana ( Rupay Card issued status) a. Bank wise – Rupay card issued b. State wise – Rupay card issued 4. To study the progress of the Pradhan Mantri Jan –( Average Deposit per bank account) a. Bank wise – Average deposit per bank account b. State wise - Average deposit per account 5. To study the progress of the Pradhan Mantri Jan –( Bank account -Aadhar seeded) a. Bank wise- Bank account – Aadhar seeded b. State wise –Bank account – Aadhar seeded

IV. RESEARCH METHODOLOGY

Data collection and statistical tools: In order to achieve the above mentioned research objectives, data is collected from secondary source. Data is collected from the pmjdy.nic.in. Data is collected on account opening and Aadhar statistics both state wise - bank wise report on 14/01/15. Data is also collected for number of accounts opened under PMJDY as on 18.09.2014 to 19.01.2015.In order to analyze the data and to get the required information tabular analysis, percentage analysis and rank analysis are used.

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International Journal of Science Technology & Management www.ijstm.com Volume No.04, Special Issue No.02, February 2015 ISSN (Print) 2394-1529, (Online) 2394-1537 V. RESEARCH FINDINGS 5.1 Progress of PMJDY (18.09.2014 to 19.01.2015) No. of Accounts opened under PMJDY as on 18.09.2014 No. of Balance In No. of Accounts No. of Bank Rural Urban Rupay Accounts with Zero Balance Accounts Debit Card (Lacs) Private Banks 416964 473024 889988 38745 9762.9 474550 Public sector banks 19090538 16282092 35372630 9204328 248564.6 26777107 Rural Regional Bank 6013211 871242 6884453 259510 24177.85 5709455 Grand Total 25520713 17626358 43147071 9936862 282505.35 32525307

No. of Accounts opened under PMJDY as on 19.01.2015 No. of No. of Accounts No. of Balance In Bank Rural Urban Rupay Debit with Zero Accounts Accounts(Lacs) Card Balance

Private Banks 49626627 42062027 91688654 84959669 717422.49 65565901 Public sector banks 17170174 3040066 20210240 12718442 144540.19 15003261 Rural Regional Bank 2316644 1774622 4091266 3332810 59840.85 2608560 Grand Total 69113445 46876715 115990160 101010921 921803.53 83177722

5.1.1 Number of Zero balance account - Data shows that as on 18.09.2014, the private sector banks (53.32%), public sector banks (75.70%), regional rural banks (82.93%) and all India total (75.38%) were having this much number of zero balance accounts where as the current data shows that the private sector banks (71.51%), public sector banks (74.24%), regional rural banks (63.76%) and all India total is (71.71%). 5.1.2 Number of Rupay debit card issued- Data shows that as on 18.09.2014, the private sector banks (4.35%), public sector banks (26.02%), regional rural banks (3.77%) and all India total (23.03%) were having this much number of Rupay debit card issued where as the current data shows that the private sector banks (92.66%), public sector banks (62.93%) , regional rural banks (81.46%) and all India total is (87.09%). 5.1.3 Average deposit per account - Data shows that as on 18.09.2014, the private sector banks (Rs.1096.97), public sector banks (Rs.702.70) , regional rural banks (Rs.351.19) and all India total (Rs.654.75) were having this much average bank deposit where as the current data shows that private sector banks (Rs.782.46), public sector banks(Rs.715.18) , regional rural banks (Rs.1462.65) and all India total is (Rs.794.73).

5.2 Finding – Bank wise – Total bank account opened status 5.2.1 Bank wise –Total bank account opened – Data shows that amongst all the three banks, public sector banks (79%) outperform both regional rural banks (18%) and private sector banks (3%). The total numbers of bank accounts opened by public sector banks are 87368439, regional rural banks have opened 19793953 and private sector banks have opened 3500025 accounts.

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International Journal of Science Technology & Management www.ijstm.com Volume No.04, Special Issue No.02, February 2015 ISSN (Print) 2394-1529, (Online) 2394-1537

TOTAL BANK ACCOUNT OPENED

87368439

19793953 3500025

PUBLIC SECTOR PRIVATE SECTOR RRB BANK BANK

Figure 1: Bankwise -Bank Accounts Opened 5.2.2 Area wise –Total bank account opened –Data shows that the total number of bank accounts opened were 110662417. Amongst this rural area constitutes of 61 %(66973321) while that of urban area constitutes of 39 %(43689096). In rural areas amongst 29 states, Himachal Pradesh (88.07%), Sikkim (84.79%) and J&K (82.93%) were in top three positions in opening bank account in rural areas. All India rural bank account average was 61%. Sixteen (16) states were above this average rate and 13 states were below this rate and amongst this Maharasthra (48.89%), Manipur (47.51%) and (35.15%) are bottom three states. In urban areas, amongst the 29 states, Mizoram (64.85%) , Manipur (52.49%) and Maharashtra (51.11%)were in top three positions in opening bank account in urban areas. All India urban bank account average was 39%, 13 states were above this rate and 16 states were below this rate and amongst this J&K (17.07%), Sikkim (15.21%) and Himachal Pradesh (11.93%) are bottom three states.

39% RURAL URBAN 61%

Figure 2:Total Bank Accounts-Area Wise

5.3 Finding- Rupay Card Issued Status 5.3.1 Bank wise – Rupay card issued- Data shows that amongst all the three types of banks, public sector banks (92.11%) outperform private sector banks (75.4%) and regional rural banks (58.30%). 5.3.2 State wise – Rupay card issued– Amongst the 29 states, (94.73%), Punjab (93.40%) and Karnataka (93.02%) were the top three states in distributing Rupay card to the account holders. All India Rupay card issued

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International Journal of Science Technology & Management www.ijstm.com Volume No.04, Special Issue No.02, February 2015 ISSN (Print) 2394-1529, (Online) 2394-1537 average was 85.53%, 15 states were above this rate where as 14 states were below this rate and amongst this rate Chhattisgarh(62.94%), Mizoram (57.62%) and J&K (44.48%) are bottom three states.

100.00 92.11 90.00 85.53 80.00 75.46 70.00 58.30 60.00 50.00 40.00 30.00 20.00 10.00 0.00 PUBLIC SECTOR PRIVATE BANKS RRB INDIA BANKS

Figure 3: Bankwise -Rupay Card -% 5.4. Finding - Average Deposit Per Bank Account 5.4.1 Bank wise – Average deposit per bank account- Data shows that amongst all the three banks, private banks (Rs.1420.96) outperform public sector banks (Rs.763.7) and regional rural banks (Rs.709.73).

1600.0 1421.0 1400.0

1200.0

1000.0 763.7 774.83 800.0 709.73

600.0

400.0

200.0

0.0 PUBLIC SECTOR PRIVATE SECTOR RRB INDIA BANKS BANKS

Figure 4:Bank Wise -Account Average Deposit 5.4.2 State wise average deposit per account- Amongst the 29 states, Kerala (Rs. 2158.33), Punjab (Rs.2133.37) and Himachal Pradesh (Rs.2049.64) were in top three positions in highest average deposit per account. All India average deposit rate per bank account was Rs.774.13, 13 states were above this rate and 16 states were below this rate and amongst this rate Chhattisgarh (Rs.382.06), Telangana (Rs.347.20) and Madhya Pradesh (Rs.315.14) are bottom three states.

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2500.00 2000.00 1500.00 1000.00 500.00

0.00

…

Goa

Bihar

Kerala

Assam

Punjab

INDIA

Sikkim

Gujarat

Tripura

Odhisa Odhisa

Manipur

Mizoram

Harayana Nagaland

Rajasthan

Jharkhand Karnataka

Telangana

Meghalaya

TamilNadu

Jammu Jammu and

Chattisgarh Chattisgarh

Uttarakhand

West Bengal West

UttarPradesh

Maharashtra Maharashtra

Andhra Andhra Pradesh

Madhya PradeshMadhya

Arunachal Arunachal Pradesh Himanchal PradeshHimanchal

Figure 5: Statewise Bank Account Average Deposit

5.5 Finding – Bank account -Aadhar Seeded 5.5.1 Bank wise- Bank account – Aadhar seeded- Data shows that amongst all the three types of banks, public sector banks (38.51%) outperform both private sector banks (19.76%) and regional rural banks (19.67%) in bank accounts- Aadhar seeded. 5.5.2 State wise –Bank account – Aadhar seeded- Amongst the 29 states, Sikkim (76.42%), Telangana (75.34%) and Andhra Pradesh (68.84%) were the top three states in Aadhar seeded bank account. All India Aadhar seeded bank account percentage was 34.55%, 14 states were above this rate where as 15 states were below this rate and amongst this rate Arunachal Pradesh (3.64%), Mizoram (3.35%) and Meghalaya (1.26%) are bottom three states .

45.00 40.00 38.51 34.55 35.00 30.00 25.00 19.76 19.67 20.00 15.00 10.00 5.00 0.00 PUBLIC SECTOR PRIVATE BANKS RRB INDIA BANKS

Figure 6: Bankwise Aadhar Seeded -%

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International Journal of Science Technology & Management www.ijstm.com Volume No.04, Special Issue No.02, February 2015 ISSN (Print) 2394-1529, (Online) 2394-1537 REFERENCES

[1]. Blue Book: Building Inclusive Financial Sectors for Development (2006), New York: United Nations. [2]. M.Ramji, 2009. “100% Financial Inclusion: Improving Access and Usage: A study report on Gulbarga district initiative.” [3]. Thorat.S. and Dubey.A. (2013). “How Inclusive Growth been in India during 1993/94-2009/10”, UNDP- INDIA. [4]. World Bank. 2008. “Finance for All? Policies and Pitfalls in Expanding Access” Policy Research Report, The World Bank. [5]. Honohan, Patrick, 2004, “Financial Development, Growth and Poverty: How Close are the Links?” World Bank Policy Research Working Paper WP3203. [6]. Collins, Daryl, Jonathan Morduch, Stuart Rutherford, and Orlanda Ruthven. 2009. Portfolios of the Poor: How the World’s Poor Live on $2 a Day. Princeton, N.J.: Princeton University Press. [7]. Demirgüç-Kunt, Asli, and Leora Klapper. 2012. “Measuring Financial Inclusion: The Global Findex Database.” World Bank Policy Research Paper 6025. Washington, D.C.: World Bank, April. [8]. Bauchet, Jonathan, Cristobal Marshall, Laura Starita, Jeanette Thomas, and Anna Yalouris. 2011. “Latest Findings from Randomized Evaluations of Microfinance.” Forum 2. Washington, D.C.: CGAP, Financial Access Initiative, Innovations for Poverty Action, and Abdul Latif Jameel Poverty Action Lab. [9]. Attanasio, Orazio, Britta Augsburg, Ralph de Haas, Emla Fitzsimons, and Heike Harmgart. 2011. “Group Lending or Individual Lending? Evidence from a Randomised Field Experiment in Mongolia.” Working Paper W11/20. London: Institute for Fiscal Studies. [10]. Augsburg, Britta, Ralph de Haas, Heike Harmgart, and Costas Meghir. 2012. “Microfinance at the Margin: Experimental Evidence from Bosnia and Herzegovina.” Working Paper 146. London: European Bank for Reconstruction and Development. [11]. Burgess, Robin, and Rohini Pande. 2005. “Do Rural Banks Matter? Evidence from the Indian Social Banking Experiment.” American Economic Review, Vol. 95, No. 3: 780–95. [12]. Pradhan Mantri Jan –Dhan Yojana-English brochure 2015, www.finmin.nic.in.

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