[Banking] PM Jan Dhan Yojana: Salient Features, Benefits, Limitations & truckload of criticism

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  1. Prologue
  2. Disturbing numbers
  3. PMJDY: Salient Features:
  4. Jan-Dhan: Benefits, Pro-Arguments
  5. Criticism / Anti-Arguments
    1. Multiple accounts to get more insurance
    2. Money laundering
    3. Insurance thuggary in small fonts
    4. BCA model is EPICFAIL
    5. DBT Epicfail => vicious cycle
  6. Mock Questions


Topics part of the [Current] series

  • August: scheme launched
  • September week3: Rajanbhai finds faults in Jan Dhan scheme while speaking in a seminar.  Taking cue from him, all the columnists have jumped in a competition – who can criticize this scheme more?

Disturbing numbers

Lack of financial inclusion in India
Only 59% Of Indian households have bank accounts (Census 2011)
50% Of the bank accounts are not operated at all. Most probably those accounts opened part of MNREGA and other campaigns.
~46,000 Villages have bank branches. (total villages are above 6 lakhs.)
3.3 lakh Villages have Banking Correspondent Agents (BCA) . But this model is epicfail, we’ll see it further in this article.
34% is the average loan interest charged by local money lenders.
55% Of Rural Dalit families have to borrow money from  local moneylenders / Shroffs.
  • Is the average loan-interest rate charged by Private microfinance institutions (MFIs).
  • by 2010, Microfinance agents even started ‘goondagiri’ to recover loan money, and this model began to decline.

It doesn’t mean Government and RBI haven’t nothing. Since independence, they have launched many initiatives for financial inclusion- Bank Nationalization, Regional Rural banks, cooperative banks, Banking correspondence agent, Swabhiman, Swavlamban, Microfinance, No-frills account, 25% rural branch rule, Bharatiya Mahila Bank and so on.
You can read more details about them under Mrunal.org/economy – particularly under the [Nachiket Mor] Committee article series. Anyways, moving on:

PMJDY: Salient Features:

Who Department of Financial Services under Finance ministry
When 15th August 2015
Purpose se Financial inclusion
Target Open bank accounts for 7.5 crore families in one year.
motto Meraa Khaataa Bhagya Vidhata
Prime minister Jan Dhan Yojana PM-JDY features pillars benefits

PMJDY scheme has 6 pillars in two phases


Phase 1: Three pillars (2014 to 2015, 15th August)
1.Service area
  • Country will be divided into sub-service areas (SSA)
  • Each SSA will cover 1000-1500 households
  • Each household will have a banking outlet within 5 km distance.
  • Each household will have atleast one bank account.
  • Even minors of 10 years and above age, can open.
  • With a Rupay debit card
  • Rs. 1 lakh accident cover per account.  Conditions:
    • 1 individual and multiple bank accounts = still maximum 1 lakh cover
    • 1 family, husband-wife separate accounts= each gets 1 lakh cover.
  • If you open account before 26th January 2015, you’ll get additional Rs.30,000 life insurance cover.
  • If your good credit history for first 6 months=>Rs.5,000 overdraft facility. If same family has multiple accounts then only 1 account gets this benefit- first preference to woman’s account.
3.Literacy Financial literacy programmes to make juntaa aware of benefits of saving and investing money properly.


Phase 2: Next Three pillars (2015 to 2018)
4.CGF Credit guarantee fund- to cover losses in overdrafts. (Because some villagers might use overdraft for desi liquor and then default in repayment)
5.Insurance If JDY account holder is interested, he can buy micro insurance product.
  • Earlier Government launched Swavalamban Yojana to make unorgnized sector workers join NPS scheme.
  • Those people will get NPS-pension directly in these Jan-Dhan accounts.
  • Government will also try for direct benefit transfer (DBT) i.e. sending scheme-subsidy money directly to beneficiaries’ jan-dhan accounts.

How to open Jan Dhan account?

  • if you already have a bank account, no need to apply again. Just get a “ruPay” debit card, and you get automatically enrolled into this system.
  • Jan Dhan accounts are put under Core Banking solution (CBS) platform, therefore it can be transferred from one branch to another, as per your request.
  • if you don’t have any account, open a new account with any one of the following documents: Aadhar Voters card, Driving licenses, PAN, Passport etc.

Small account

  • If a person doesn’t have any official documents, still bank can open its account- with just his photo and signature.
  • But such account will be called “Small account”. RBI has put following restrictions on them
  1. not more than 1 lakh rupee loan per year
  2. cannot withdraw more than 10,000 rupees per month.
  3. cannot deposit more than 50,000 rupees in account
  4. Valid for 12 month only.

Jan-Dhan Yojana: Benefits, Pro-Arguments

  • Will aid financial inclusion, will rescue villagers from the clutches of evil money lenders. You can cite those ‘disturbing numbers’ to justify your “pro” stand in the group discussion (GD) when other candidates (brainwashed by theHindu) try to create fish market in GD by criticizing everything under the sun.
  • Could boost household savings rate similar to Bank Nationalization in 1960s.
  • Direct Benefit transfer (DBT) money will flow into those accounts (and from there again as “loans” to other needy people.) Thus savings will turn into capital. Subsidy leakage will decline.
  • Will increase Insurance penetration.
  • Overdraft only after monitoring performance => win-win, rare chances of NPA/defaults.

Jan-Dhan Yojana: Criticism / Anti-Arguments

Prime Minister’s Jan Dhan Yojana (PMJDY) will fail because:

RBI Raghuram Rajan against PM Modi Jan Dhan Yojana

Rajan’s worry: money laundering and Multiple Accounts in Jan Dhan Yojana

Multiple accounts to get more insurance

Rajanbhai is concerned that:

  • Jan Dhan scheme gives Rs. 1 lakh insurance on each account.
  • To get large insurance or overdraft facility, same person might open multiple accounts in multiple banks- one with Aadhar card, one with PAN card, one with voters card.
  • Sarkaari banks may also overlook nuisance, in order to meet their ‘targets’. Recall the earlier article on PJ Nayak Committee. Since Government is the majority shareholder in sakaari banks=> Chairman and board of directors have pressure from Government => they pressurize bank staffs to enroll maximum bank accounts so that Modi can brag about it during his Madison square speech.
  • RBI suggestion: banks should establish a single information sharing system to weed out such multiple accounts.
  • Counter argument: State bank of India has made clear guidelines that even if multiple accounts of same person, he will get only 1 lakh cover. And since all accounts are put under Core banking solution (CBS) platform = duplication / mischief unlikely.

Money laundering

Rajanbhai is also worried that JDY accounts could be used for money laundering and Hawala operations.

  • Hawala Operators can spilt the whole amount (say 1 crore) into several small units into several JDY accounts
  • Then send money overseas without coming under the watchful eyes of Income tax or Enforcement directorate.
Money mules
  • Just like those “Drug mules” who ingest condom packed with narcotic drugs and deliver it to other country via airplanes.
  • Money mules= individuals with JDY accounts, who facilitate Hawala operators to send money via their account.

Insurance thuggary in small fonts

  • Jan Dhan gives you free accident insurance cover worth Rs.1 lakh.
  • But there is a secret condition- you must use RuPay debit card atleast once every 45 days.
  • This is not be possible for poor families in remote tribal areas. So, they’ll lose the benefit due to inactivity.

Why this secret condition?

  • Because insurance money doesn’t fall from sky. Even if you’re getting it for free, still someone has to pay the premium, right? In this case, Modi is not paying the premium. (Because he wants to keep fiscal deficit low).
  • Your premium is paid by NPCI. National Payments Corporation of India owns the rupay card system. Therefore, they want you to frequently use the card.


Jan Dhan Yojana BCA problem

Just like a coaching walla doesn’t finish syllabus if students are less, BCA will run away if commission is low

  • Jan Dhan aims to divide entry country into sub-service areas (SSA)
  • Within those SSA, each household will have a banking outlet within 5 km distance.
  • Since banks cannot open branches everywhere, Government aims to achieve this target via Banking Business Correspondence Agents (BCA) or Bank Mitra.

What’re the Problem with BCA model?

  1. They get 2% commission on each transaction. Monthly income ~2000 rupees.
  2. As a result, they quickly lose interest in this game, being some other side jobs. So, BCA are never available when customer needs them. 47% of the BCA are untraceable. (says RBI survey)
  3. Allegations of malpractice. For example
    1. For opening new account, they ask separate 100 rupees as ‘service charge’ (although no bank or RBI has authorized such payment).
    2. Some BCA ask separate commission / bakshish from illiterate villagers for withdrawing money from account (beyond the official 2%)
    3. For loan processing too, they demand separate commission, outside bank’s knowledge.

Jan-Dhan relies on the failed BC model=> Jan dhan will fail as well.

DBT Epicfail => vicious cycle

PMJDY aims to make all scheme-subsidy payments directly to Jan-Dhan bank accounts. But this Direct benefit transfer (DBT) itself is a failure because:

  • Aadhaar project is yet to cover all residents.
  • Aadhar project facing court cases, because UIDAI is not a statutory body, backed by any law.
  • UPA Government had to admit in court that “Aadhar-number” is not compulsory get Sarkaari-scheme benefits=> Juntaa won’t be motivated to get Aadhar cards=> Jan Dhan will have trouble transferring money.
  • AT BCA level, Biometric authentication (finger scan) = showing 25-30% errors. So citizens will have difficulty in withdrawing money even if they’ve Aadhar card.
Now if you join the dots
Dot-A BCA will get 2% commission on transaction
Dot-B DBT will fail = junta won’t get much money in Jan-Dhan accounts and there are fingerprint problem=less transactions.
  • Prime Minister Modi believes in free-market economy and minimum governance.
  • Similarly state governments too, will reduce their subsidy burden to comply with FRBM act.
  • Gradually, less subsidies on food, fertilizer and fuel. So, even if DBT works fine, juntaa won’t get much money in their accounts =less transaction= less commission to Bank Mitra.
  • Join Dots A+B+C = BCA (Bank Mitra / Banking correspondence agent) will get very low commission, he’ll lose interest and service quality will declining- just like those coaching wallas, who don’t finish syllabus if batch strength is low.
  • Bad customer experience= People can’t use Ru-pay cards every 45 days = insurance protection also gone = further negative experience = Jan Dhan accounts will become dormant. Households will again resume saving money in gold or wasting on desi liquor.

Misc. Anti arguments

  1. JDY is just old wine (no frills account) in new bottle (Jan Dhan Account). when earlier scheme didnot improve financial inclusion, there is no chance, new one will succeed.
  2. Systematic and well planned reforms necessary- as recommended by Nachiket Mor Committee- payment banks, wholesale banks, UEBA etc. But Government is in haste to capture media attention.


  • Rural incomes will improve because of other Government schemes- skill India, make in India etc.
  • So, People will use bank accounts, even if Government gives them no subsidies / DBT / MNREGA.
  • With penetration of mobile, internet banking and digital literacy, people will be able to make transactions online. BCA will become irrelevant.

Therefore, even if Aadhar card, DBT or BCA model fails, it is not necessary that Jan Dhan will automatically fail.

Mock Questions about PM Jan Dhan Yojana


  • In bank and RBI exams- MCQs about trivial facts and figures. Example-
    • On which day was JDY launched?
    • How many accounts will be opened in one year?
    • How much overdraft offered?
    • What is the motto of this scheme etc.
  • In CSAT-2015: they’ll give you a few statements about JDY’s salient features. You’ll have to find correct of them. Only 1 and 2; only 1, 2 and 4….and so on.


Answer following in 200 words each

  1. “Though ambitious, PMJDY faces certain operational difficulties.” Elaborate
  2. Discuss the initiatives taken since the independence, for the financial inclusion of rural families.
  3. Enumerate the salient features and benefits of PMJDY.

Interview/ GD: PMJDY- pro and anti-arguments. And what steps should be taken to ensure its success.

Mrunal recommends

167 Comments on “[Banking] PM Jan Dhan Yojana: Salient Features, Benefits, Limitations & truckload of criticism”

  1. Didn’t clear……2nd attempt in a row……unable to cross prelims hurdle ……. am i morally eligible to give my 3rd attempt ? So much confusion….feeling sick…Almost self study in hyderabad with a year partial coaching in hyd itself…ufffff….life seems tk be sunk……

    1. buddy the selection in pre does not mean success in itself. 17000 out of 450000. this is tough than iit jee. but that does not mean you are not elligible. 430000 did not get selected. i dont think i need to say more.

  2. cleared 213 GC,,,,,,,,,,,,,,,,,,,,,88 in GS as per MRUNAL SIR’s answer key but there were 3 Qs which have two answers and sir was not clear………….and 125 as per GAURAV AGGARWAL’s answerkey…………….thanks a lot sir for your valuable guidance

    1. Sahil, are you sure you were getting 213 and cleared the prelims. I belong to obc and was expecting 214 acc to career launcher and vajiram answer keys. I have mot cleared. Are you sure abt gen cat???

      1. me too obc getting 104+ and 110+ at least 214 from all keys. not cleared

      2. sorry not exactly 213, In GS1 44 net correct as per MRUNAL SIR’s answer key but there were 3 Qs whose answer was given with 2 options,and i had ticked one of the options but while calculating my marks i considered these 3 answers WRONG. in GS2 50 net correct as per GAURAV AGGARWAL’s answer key. that’s how the total was 213. i had doubt that 3-4 Qs in GS2 were also correct like one where we have to fill the missing no. in the square i ticked 8 others 15 so i considered these Qs also wrong. so every further correct answer in GS1 would have given me 3 marks and 3.5 in GS2

  3. Pre Not cleared. I have checked from different books, mrunal – My marks is in between – 195-200(GC).


  5. It was my first attempt and cleared it. very happy at this moment. I’m a hindi medium candidate and I heartily request you Mrunal sir to help me about ethics(paper 4) material in hindi as I don’t have contact with other hindi medium candidates. If anybody else can tell me about notes or books of the same, please please please do reply. thanks!

    1. dont worry…these are numbers of photostat shops..09540467939,09540528336…please contact them and ask for deepak kumar notes for ethics…so far best for hindi medium…vaise agar aap hindi achche se likh lete ho…to bas basic definitions dekh lo kahin se bhi aur paper mein soojh-boojh se answers likho…number achche aayenge…

      1. okay thanks :-)
        could you tell me how are the notes of synergy for this?? I just now read about them on a few sites….

        1. yes thats also good..u can choose either but try to stick to only one as time is very less and precious too…

  6. Thank you Mrunal sir for all ur guidance , seriously missing your articles as you are you nobody can replace you …

  7. nt cleared :(…my marks between 205 to 210 (gen) from various keys….hard luck or bad luck….i hv to prepare myself for next attempt..>:((

  8. getting 194 . General category.. didnt clear.. what is the cut off for general?

    Honestly, only ONE month is left for preparation. Rest 15-20 odd days for revision.
    Time is running out.
    BTW thank Mrunal. Your articles helped me to cover missed topics.
    Paper 1 : 105-110 approx. Paper -II : 125-130

  10. Congratulations to everyone who made it.
    I couldn’t make it this time around.

  11. not cleared:( second attempt. lekin himmat abhi baki hain. Haar nahi manooga jabtak jaan hain. Thanks mrunal for your support. Kami mere mein hi thi.. last 1 month studied hard and realised my mistakes. hope not to repeat those in 2015 attempt and come out with flying colors. Although challenges bahut hain paise ka, family ka par ek umeed hain ki kar loonga.

    1. this is the spirit!!!!!!!!!!!!

    2. Best of luck bro..u will…InsahAllah

  12. not cleared.. was expecting around 191(obc) as per cl key

  13. cleared UPSC Prelims 2014 ……….. my score was around 220-230 depending on key used………… Thanx a lot Mrunal sir for the valuable guidance you are providing …..

  14. hello, anyone know about gujarat gov. scheme or any other private bank scheme for providing loan at less interest to pay fees for private IAS coaching, especially for girl, OBC…. If have any information regarding this than reply as soon as possible. kindly help me

  15. Congratulations to all you who successfully completed first step of upsc. .and all the best for mains also.
    I have started my preparation for upsc since one month and I’m opt pol sci as my optional. I have one query, is ncert sufficient for pol sci or do we need to refer IGNOU as well?.im starting for gauba now please let me know should I start for Gauba or do I need to finish ignou material first?

  16. 178 (obc) not cleared

  17. PMJDY was a just a ballon ,,so…has burst

  18. hi,,,,,,,,not cleared pre. in both ias n ifos ………..any idea about ifos cutoff ………i m in obc……….i will start again a fresh preparation ………..never give up…….

    1. IFoS cut-offs are always higher than the CSAT itself. Because most people who have a science background apply for both. So, if you are not * through the list of CSP it’s almost impossible to get into IFoS unless you have applied only for the latter.

    2. So, if you are not * through

  19. pehle prelims clear karne ki tension thi..aur ab mains ke liye prepare karne ki…

    Mrunal sir..please give ur strategy..wat all u r planning for mains..to help us..so tat we can prepare complementary to that..

    any plans to conduct ‘write to win’ contest to prepare ‘ready to revise’ write ups??

  20. another great article sir, though off topic, but i was pleasantly surprised to known that you wrote ibps exam, but i known the reason , just to keep yourself in touch with ground zero, may be , but great,

    sir comment is not getting posted, its saying you are posting comment to quickly,

  21. comment got posted

  22. Congrats everyone .. I have a request to those who cleared it in first attempt … Can someone plz tell the strategy to complete syllabus in 9 months ..as now only 9 months left for 2015.. Sometime itseems like very difficult to complete syllabus considering the quantum of current affairs ,, I started preparing in august but yet not able to complete even a sigle subject .. Really tensed .. Plz suggest

    1. stick to basics pick up selected materials don,t run for everything available in d market..do them three or four times…focus on editorials(i took hindu)
      i gave 5-6 hrs daily cleared wid around 235(cl key) in 6 months along with my engineering 2014 batch

  23. 180-185 ST cleared

  24. Did not clear in the 2nd attempt! Dont know wat went wrong..highly dissappointed.does any know general cutoff?
    To all the people who cleared best of luck:)

    1. Dear Aishwarya,

      I failed consecutively in 2009 and 2010 in Prelims..Decided not to attempt the exam until i was thoroughly prepared..
      Third attempt in 2013…Cleared mains with 598 marks and 174 in interview..missed final list by 3 marks..
      Cleared prelims this year too…and mains prep is better than that of last attempt…

      Just for info i work with Tata Steel @12 LPA package…UPSC is a subset of life..and the motto of life should be ” I will never quit”..
      Life is all about exploring your luck with hard work…Dont lose that battle…All d best..

  25. HY Friends congratulation to for clearing pre and accept my blessing to mains

    although i did not clear it. so not feeling well.

    there is many another problems but thinking start once again to prepare and clear this. my teacher says, those plants living in tolerant conditions they turns potential medicinal property and convert valuable plants.


    1. dear SUN, I know people who are clearing prelims in every attempt but cannot make through final list and also there r those people who r
      not clearing prelims in first attempt but they r in the final list in succeeding attempts.I think shena agarwal was also not able to clear prelims in first attempt.So dont lose hope,prepare well,do smart work,revise and pray to God.There r many more exams like capf ,rbi etc.Try for them as well but do not deviate from your core track.

  26. thnx sir.. for giving this detailed info..

  27. I am a working professional and this year is my second attempt of CSE and again couldn’t qualified. by different keys scored around 100 in paper 1 but epic fall in paper 2. Next year would be my last attempt if I consider age limit 30 year although it is 32 presently but I don’t think this would continue in near future. I have decided to quit my job and fully engrossed to study. Anxiously waiting for “Qatl ki Subah” 23 Aug 2015.

  28. Not able to download pdf.. Some one plz help.
    After clicking html opens up. I am using chrome (updated today 13/10/2014).
    help plz..

    1. Got it. Thnx Anyways.

  29. Failed consecutively 2nd time….. Don’t know what’s wrong with me… Feeling sad…. I ll fight again q ki picture abhi baaki hai mere dost!!!!!!!!!!!!

  30. PMJDY : Sir, It should be 2014

    When 15th August 2015

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