INTRO

Jan Dhan Yojana is a people money saving scheme launched by the Indian Prime Minister,

Narendra Modi 28th of August 2014. It is so called as the Pradhan Mantri Jan-Dhan Yojana

which is actually a People’s Wealth Scheme to make some opportunity for common Indian

people living in the rural areas. This scheme was launched by the prime minister to enable poor

people to money saving. To make India an independent India in real mean is to make its living

people independent. India is a country which is still counted as the developing country because

of the backwards conditions of the people living in the rural areas. The rate of people living

under the poverty line is high in India because of the improper education, inequality, social

discrimination and many more social issues.

It is very necessary to increase the awareness among people about the money saving habit so that

they can be independent and grow some confidence to do something better in the future. Through

the saved money they can help themselves in their bad days without the need of other. When

each and every Indian people have their own bank account they can better understand the

importance of money saving.

CRITICISM

Prime Minister Narendra Modi’s latest initiative to push financial inclusion in the country, the

Pradhan Mantri Jan Dhan Yojana, has come under attack from some experts for both its

ideological standpoint as well as for its effectiveness. On August 15, the prime minister

announced the rollout of the scheme under which a free bank account will be opened for each

unbanked household in India. It was also announced that each account holder will also be

provided a debit card, life (Rs 30,000) and accident (Rs 1 lakh) insurance covers apart from a Rs

5,000-overdraft facility (subject to a screening process). About 40 percent of roughly India’s 25

crore households and 60 percent of its 125-crore population, mostly poor, does not have access

to formal banking services, according to government data, as Indian banks do not find operating

in many of the country’s 6 lakh villages profitable. Many, thus, have to resort to seeking credit at

high rates through informal channels and this has also resulted in a parallel informal economy.

Under the Jan Dhan Yojana, the government aims to open about 7.5 crore account before

January 26, 2015, of which about 1.5 crore were opened by public-sector banks on the launch

day (August 28) itself, the PM announced at the scheme’s inauguration. According to some

reports, the government will later aim to open another account in each household, bringing to the

total number of accounts to be created at 15 crore. Some critics said that even as the government

should prioritize promoting greater financial inclusion, it should be done keeping costs in mind.

Under the previous UPA government, about 6 crore so-called no-frills accounts were opened last

year under its financial inclusion initiative but RBI data has shown that more than half remained

dormant, adding up to costs for banks to continue to maintain them. In an interview, former

banker and ex-RBI deputy governor KC Chakraborty had pegged the cost of creating banks

accounts at about Rs 18,000 crore, using the banking correspondent model. Some have picked a

bone with the government’s decision to extend overdraft facilities without incorporating

adequate checks -- calling it subprime lending and a potential harbinger of bad loans for a sector

already reeling under its worst NPA crisis in years. This “will mean Rs 75,000 crore for 150

million accounts,” columnist Swaminathan Aiyer wrote in the Economic Times . “If these are not

repaid, banks will lose Rs 75,000 crore at a time when the PJ Nayak Committee says they need

to raise an additional Rs 5.8 lakh crore just to meet the new Basel norms for capital adequacy.”

Aiyer also took issue with the speed at which banks have been asked to open accounts and

suggested this may have resulted in duplication -- referring to recent reports suggesting many

individuals who already have bank accounts may have had accounts created for themselves,

lured by the insurance covers and overdraft facilities. Officials at some banks, which have fanned

across the country recently to achieve their account-opening targets, have estimated that as much

as 20 percent of 1.5 crore accounts that were created on the launch day must belong to those who

are already “financially-included” and added that a screening process would later be initiated to

weed out such accounts. Defenders of the scheme have said it would go a long way in curbing

corruption, alleviating poverty, enhance savings, reduce leakages in the economic system by

facilitating direct transfer of subsidy benefits to the poor and even tackle Ponzi schemes .

“Nothing could be farther from the truth,” Prashanth Perumal wrote in a Mint column titled

Populism Gone Berserk, while dubbing direct benefit transfers as "a mechanism evolved to keep

up with political competition in spending more on targeted groups". He also questioned the

silence of so-called right-wing economists who had backed Narendra Modi’s bid for power amid

hopes his supposed “free-market” economic thinking would help cut down on some of the

previous government’s “wasteful populism”. “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,” he wrote. “Pradhan Mantri Jan Dhan Yojana is nothing

more than Modi’s 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.”