The Pradhan Mantri Jan Dhan Yojana has continued to grow in strength; total deposits have crossed Rs. 25,000 crores and zero balance accounts have dropped to less than 40% across the country. Analysis of large sample data from State Bank of India (SBI) by Soumya Kanti Ghosh(Chief Economic Adviser, SBI) and Pulak Ghosh (IIM,Bangalore) shows interesting positive trends (TOI, October 30,2015):
- Average number of active accounts (defined as at least one transaction per month) has grown 25 times between August 2014 and May 2015, while dormant accounts multiplied by 10 times.
- The main push in active accounts for rural areas is from the west, followed by the north. Semi-urban regions in the east and south are also showing an exponential growth.
- “Active of the active” accounts i.e. with more than two transactions a month rose from 0% to 16% in the rural east and from 4% to 15% in rural north over the period studied.
- Average balance in rural regions has increased from Rs 250 to around Rs 2,000 over the period – here the east leads, followed by the west. Average balance in rural east (close to Rs 3,000) is even higher than in metro east, indicating the huge untapped potential of this part of India.
- In rural east, remittances now constitute nearly two-third of the total credit deposit as against virtually non-existent transfers in August 2014. Rural south has similar trends, while cash is the increasing trend in rural west and rural north.
While the financial inclusion mission in India is largely focused on banking metrics, SV Divvaakar of ICFI (Financial Express, November 4, 2015) makes the point that reliable connectivity at the last mile is crucial to accelerate financial inclusion. The telecom footprint needs to be monitored more granularly by the PMJDY Mission Directorate to check availability and quality of internet and broadband services at the locations of ‘Bank Mitras’ (business correspondents) across India.
Finally, last month saw partial relief by the Supreme Court on use of Aadhaar - on 14th October, the interim order of August was relaxed, extending the use of the Aadhaar number to the Mahatma Gandhi National Rural Employment Guarantee Scheme, the Pradhan Mantri Jan Dhan Yojana, pensions by central and state governments, and the Employees’ Provident Fund Scheme. This amendment was in response to a large number of state governments, regulators and associations approaching the Court, including the Reserve Bank of India, the Securities and Exchange Board of India, the Telecom Regulatory Authority of India, the governments of Jharkhand, Maharashtra, Uttarakhand, Himachal Pradesh, Gujarat and Rajasthan, the Indian Banks’ Association, and the Unique Identification Authority of India (UIDAI).