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As per RBI Report on Trend and Progress of Banking in India 2017-18, the proportion of persons joining the Formal Financial System in terms of an account at Financial Institutions has more than doubled since 2011 and by 2017, it had reached 80 per cent of the Indian population

February 12, 2019
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Ministry of Finance

Posted On: 12 FEB 2019 5:40PM by PIB Delhi

As per the Reserve Bank of India’s (RBI) Report on Trend and Progress of Banking in India 2017-18, powered by the drive to mobilise account ownership among unbanked adults through the Pradhan Mantri Jan Dhan Yojana (PMJDY), the proportion of persons joining the formal financial system in terms of an account at financial institutions has more than doubled since 2011 and by 2017, it had reached 80 per cent of the Indian population – comparable with China and better than other BRICS peers.

Within a span of four years, the total number of accounts opened under the PMJDY expanded to 328 million, with ₹ 851 billion deposits as on September 28, 2018.  Of these accounts, 59.1 per cent were opened at branches located in rural and semi-urban centres.  Recovery in usage of these accounts has been setting in during 2018-19 (up to September 28). Up to August, 2018, with all scheduled commercial banks taken together, 23% of these accounts received direct benefit transfers (DBTs).  According to the report, during 2017-18 the dip in the opening of new bank branches in 2017-18 was on account of banks with high stress on their balance sheet undertaking branch rationalisation, including turning to business correspondent (BC) in order to contain expenditure. The number of brick-and-mortar branches and branches in business correspondent (BC) mode declined in rural areas partly due to rationalisation of branches by banks through closing down of branches which were either unviable or located in close proximity to each other. Furthermore, some banks disengaged with corporate BCs due to non-performance.  At the same time, the number of BCs in urban areas increased partly attributable to absorption of erstwhile pre-paid payment instruments (PPIs) providers into the BC fold.

The report also records that the role of business correspondents (BCs) in expanding the reach of banking services in rural areas is gaining acceptance and recognition which is evident from the growth of 28 per cent in the number of transactions put through by BCs through the information and computer technology (ICT) channel.

As per the report for the period ending March, 2018, both the number of Basic Savings Bank Deposit (BSBD) accounts and the deposits in these accounts have increased.  Furthermore, the branch authorisation policy recognises BCs which provide banking services for a minimum of four hours per day and for at least five days a week as banking outlets. This propelled a sizable increase in the number of accounts opened through BCs who are also generating robust growth in ICT-based banking services.

With a view to increase banking penetration and promote financial inclusion, Pradhan Mantri Jan Dhan Yojana (PMJDY) was launched on 28th August, 2014 to provide affordable financial services to all citizens within a reasonable distance. As on 23.01.2019, a total of 34.03 crore accounts have been opened under PMJDY with deposit balance of ₹ 88,566.92 crore. While 53% of the Jan Dhan account holders are women, 59% accounts are in rural and semi-urban areas. To facilitate banking transactions, 27.17 crore RuPay Debit cards with an in-built accident insurance coverage have been issued to beneficiaries under PMJDY. Also, an overdraft (OD) facility of ₹ 5,000 (since revised to ₹ 10,000) is available  to provide hassle free credit to the beneficiaries under PMJDY for meeting their exigencies, without insistence on security and end-use. PMJDY account holders are also eligible for loans under Pradhan Mantri Mudra Yojana (PMMY) and other loan products offered by different banks. To give impetus to financial inclusion initiatives of the Government, the PMJDY program has been extended beyond 14.8.2018 with the focus on opening of accounts shifting from “every household” to “every unbanked adult” and making the scheme more attractive with following modifications:

(i)  Existing OD limit revised from ₹ 5,000 to ₹ 10,000.

(ii) No conditions attached for active PMJDY accounts availing OD upto ₹ 2,000.

(iii) Age limit for availing OD facility revised from 18-60 years to 18-65 years.

(iv) Accident Insurance cover for new RuPay card holders raised from existing ₹ 1 lakh to ₹ 2 lakh for new PMJDY accounts opened after 28.8.2018.

This was stated by Shri Shiv Pratap Shukla, Minister of State for Finance in written reply to a Question in Rajya Sabha today.

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