Inclusive Growth Is Beyond Just Opening Bank Accounts

Inclusive growth is beyond just opening Bank Accounts

                                                                                     
Prime Minister Jan Dhan Yojana (PMJDY) has become a national priority. It is designed to end financial untouchability through Financial Inclusion and to convert our country into a digital India. PMJDY aims to provide all the citizen of India– especially the poor masses- Bank Account, Credit Facility, Insurance Cover and Debit Card. Under the scheme, a record 1.5 crore bank accounts is reported to have been opened across the country on a single day. The speed and number at which such accounts are being opened, the set-target of 7.5 crore accounts is likely to be achieved by the enthusiastic banks well before the Govt. cut off date i.e January 26, 2015.

We do not know how many duplicate accounts will be opened, how many fake accounts will creep into the system, how many accounts will remain operative or dormant and how many overdrafts will become NPA. A study conducted by RBI shows that   out of 6 crore so-called No-Frills accounts opened last year under its financial inclusion initiative, 80 to 90% accounts have become dormant, adding up to costs for banks to continue to maintain them.
The purpose of PMJDY is to provide banking facilities to the excluded house holds. In absence of clarity, people as well as the bankers are not sure whether the existing account holders would get benefits under the scheme or not. Therefore, even those who are already “financially-included” are also rushing into the banks to open new accounts. This mad rush is not for love of Financial Literacy but for the freebies like insurance cover, Rupay card and over draft facility of Rs.5000/-etc….
If banks continue opening such type of accounts merely to achieve the target without proper screening, there will be duplication of financial inclusion and in the process the sanctity of the scheme will be lost and the new drive will be...