Pradhan Mantri Jan-Dhan Yojana (PMJDY) Scheme announced by the Hon’ble Prime Minister of India on the eve of the 68th Independence Day in 2014, was an instant success as a record 1.8 Cr people opened bank accounts within a week of the launch. PMJDY, as of now, has opened more than 27.64 Cr bank accounts making it the world’s biggest financial inclusion drive. Despite its success in opening accounts, the sustained engagement of account holders has remained a challenge. The scheme has, for long, been suffering from a high percentages of zero balance, dormant and low savings accounts. At the time of its first anniversary, in August, 2015, about 50% of PMJDY accounts had zero balance and the average balance was only about INR 1277.

To address these challenges, CDFI and Bill & Melinda Gates Foundation (BMGF) supported the Ministry of Finance, Government of India, to identify areas of improvement in program implementation and design. Therefore, a research study covering 1200 PMJDY account holders and business correspondents was conducted in 17 different locations, covering almost every part of India.

The study was done in two stages. The first stage was an immersion phase which was meant to understand the on-ground situation and frame issues that are relevant for further research. This stage defined the hypotheses that were relevant for the main phase of research. 22 PMJDY account holders in low-income housing projects and slums in Mumbai, Lucknow and Chennai were interviewed. For the rural perspective, villages and small towns within a ~300 km radius around the three urban centres: Solapur in the west, Barabanki in the north and Kanchipuram in the South were covered. Besides other stakeholders such as bank mitras and bankers were also spoken to.

The second phase of the study was more comprehensive covering over 1,000 PMJDY account holders and 200 bank mitras across six diverse regions across the country. These regions had similar numbers of PMJDY account holders with identical population size, keeping in view the geographical and coterminous constraints.

The research sample was divided into quantitative and qualitative segments. 745 account holders and 134 bank mitras were made to answer objective questions about their asset-liability profiles, their experiences, trials and tribulations in opening and engaging with their PMJDY accounts as well as banking in formal and informal channels in general. On the other hand, 349 users and 66 bank Mitras, were interviewed following partaking in bias-negating game exercises.

Some of the key findings of the research are

  • Most people are in debt
  • Users are already engaged with a variety of financial products
  • User look at their ability to manage a loan and the repayment, not the cost of finance
  • Users understand the basic principles of financial engagement
  • Banks are difficult when it comes to loans – for the wrong reasons
  • Primary reasons for opening a bank account was to save and receive Government benefits
  • Bank opening experience was quite smooth but subsequent engagement with the bank was low

The research suggests that

  • Goals need to made salient and emotionally relevant
  • Products need to bridge the gap between the present and the future
  • Overdraft facility offered under PMJDY to be simplified
  • Business Correspondents need to address psychological barriers to engagement in addition to proximity
  • There is a need to overhaul the financial literacy initiatives
  • The perception that products linked PMJDY accounts are “free” needs to be addressed

The complete report can be downloaded from the Reports section of the website.


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