Pradhan Mantri Jan Dhan Yojana (PMJDY) is now the world’s most successful financial inclusion scheme. The scheme envisages universal access to banking facilities with at least one bank account for every household, in addition to access to credit, insurance, and pension facilities. As of March 15, 2016, the scheme has mobilised approximately INR 335 billion (US$ 4.9 billion) through 210 million new bank accounts ― a significant achievement, considering that the scheme was launched on August 28, 2014.
MicroSave conducted three rounds of PMJDY assessments (waves I, II and III) from October 2014 to December 2015. The key aim of the three assessments was to analyse and assess the impact of, and challenges associated with, PMJDY from the perspective of beneficiaries and channel partners (specifically Bank Mitrs (BMs) or agents). The study was conducted with support from the Bill & Melinda Gates Foundation (BMGF) and the results were shared with the Department of Financial Services, Ministry of Finance, Government of India.
This blog highlights the demand-side findings of the final round of PMJDY assessment (Wave III), conducted in December 2015. Wave III incorporated a nationally representative survey, conducted with 1,627 BMs and 4,859 PMJDY account holders, in 42 districts across 17 states and one Union Territory.
1. Acceptance of PMJDY scheme has increased
Pinki, a PMJDY customer in Khadoli village of Dadra and Nagar Haveli, summarised: “Jan means poor people and dhan means money.
Therefore, jan-dhan means wealth of the poor”. Pinki summarises the top-of-the-mind perception customers have about PMJDY scheme. PMJDY is positioned in customers’ minds as a useful government scheme that provides low-cost insurance facility and an opportunity to open a bank account for free.
PMJDY has led to universalisation of accounts and provided easily accessible banking to customers in their neighbourhood. Most PMJDY customers (78%) use BM to make their regular financial transactions. A BM in Ghazipur, Uttar Pradesh, said, “The number of bank accounts have increased from 15 to 500 in the village. Villagers have understood banking.”
80% of PMJDY customers who regularly transact, ranked Bank Mitr agents as their first preference to conduct banking transactions. The main reasons for this are: proximity of the BM location to their home and work place; quick and convenient processes; and availability of BMs beyond bank working hours.
PMJDY scheme has also led to inclusion of women in the financial mainstream. For every three PMJDY customers who opened a bank account for the first time, one was a female customer. “900 accounts out of 1,540 are of females. If it is convenient, we collect deposits from their houses”, said a BM in Bhadrak, Odisha
2. Saving behaviour has been induced among rural customers
There is significant shift in savings behaviour of PMJDY customers; the percentage of those who do not save has come down from 12% in Wave II to 8% in Wave III . Similarly, the number of customers who save at home has gone down (21% in Wave II to 17% in Wave III). These customers have started to use their own savings account to save (up from 77% in Wave II to 86% in Wave III). Additionally, there is a small increment in number of customer transactions per month from last wave of PMJDY survey. A total of 65% of customers transact at least once in a month at a BM location, compared to 58% in Wave II. A recent study in rural households of Karnataka highlights that PMJDY has led to significant increase in total household savings and savings in bank accounts.
“Non-skilled labourers have greatly benefited. They save out of their daily wage income” - BM, Ghazipur, U.P.
3. Product uptake is not only limited to savings
PMJDY has helped improve uptake of financial products; customers have enthusiastically enrolled for PMJDY life and accident insurance policies due to the value proposition that they offer and the low cost. These schemes are popularly known as “12 aur 330 rupaya wala bima” (i.e., insurance for INR 12 (PMSBY) and INR 330 (PMJJBY))
By paying a nominal premium of INR 12 (US$ 0.18) per person per year, PMJDY account holders can avail of an accidental insurance scheme under the Pradhan Mantri Suraksha Bima Yojana (PMSBY) with a maximum insurance cover of INR 200,000 (US$ 3,077) in case of accidental death or permanent disability. For a premium of INR 330 (US$ 5.1), a PMJDY account holder can avail life insurance cover of INR 200,000 (US$ 3,077) under the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY). Another interesting product available for Jan Dhan account holders is Atal Pension Yojana (APY), specially designed to cater to pension needs of the unorganised sector. See Jansuraksha: India’s New Tryst with Mass Insurance for more details of these schemes.
The number of customers who have either enrolled for insurance or pension scheme has increased to 56% from 43% in Wave II. A PMJDY customer from Sonitpur district of Assam said “I am fine now but that may not be the case later. INR 50 is spent on tea and snacks, so spending INR 330 for such a nice insurance facility is not a problem.” The uptake of accident insurance scheme (60%) among surveyed PMJDY customers is higher than for life insurance (49%) and pension scheme (6%).
Life insurance scheme is found to be popular among female customers, as women feel that there are less likely to be involved in accidents as compared to male members. On the other hand, pension scheme has been popular among literate and relatively higher-income customers. Low-income customers find this scheme costlier (INR 504 or US$ 7.52). They also find it burdensome to make regular monthly contribution over a long period. Further, customers who are receiving old age pension under National Social Assistance Programme (NSAP) do not want to pay for another pension scheme.
 Multiple responses received from customers for this question
 3,273 out of a total 4,859 PMJDY customers interviewed have PMJDY as first and only account
 Survey results of PMJDY Wave-III are not strictly-speaking statistically comparable with PMJDY Wave-I and II surveys due to differences in sample frames. The comparisons presented in the blog are for the purpose of convenience and are indicative in nature.