PMJDY: Milestones Reached, Yet Miles To Go – Customer Side Story Part 2

The blog highlights the positive impact of the Pradhan Mantri Jan Dhan Yojana scheme on the financial behaviour of rural customers.

In the first part of this blog, we discussed the demand-side findings of PMJDY Wave III survey conducted by MicroSave in December 2015. The blog highlights the positive impact of the PMJDY scheme on the financial behaviour of rural customers. Rural customers, including women, have enthusiastically contributed to the success of the scheme and have started to make small savings in these accounts. This blog presents the other side of the coin and highlights some of the areas where things are not working quite as well.[1]

1. Expectation mismatch because of low awareness on ‘Jan Suraksha’ scheme 

Despite their success, the PMJDY schemes (PMJJBY, PMSBY, and APY) have not been able to build required trust among customers. The low trust can mostly be attributed to low scheme awareness (among customers and Bank Mitrs (BMs)) and process inefficiencies. “Customers visited my place to claim money for natural death as they were unaware that the claim can only be made for accidental cases,” said a BM in Vidisha district of MP. BMs report of difficulty in getting customers to sign up for schemes, since customers are not sure whether these schemes would continue beyond the current government, and also whether the claim would be settled successfully. A customer in Odisha raised his doubts: “I have enrolled for INR 330 [US$4.85] insurance, but no amount has been deducted from my account. Where will we go if an accident happens now?”

Miscommunication of the Overdraft.[2] (OD) facility as “free money” has been one of the motivations to open PMJDY accounts. Customers did not perceive OD to be a credit product and enthusiastically opened bank accounts to ‘receive’ INR 5,000 (US$ 73). A BM in Ghazipur district of Uttar Pradesh said: “Around 50% of the accounts have been opened with the intention of receiving ‘free money’ of INR 5,000.” BMs report that such customers do not want to take the OD when they realise that they have to repay the amount with interest.

On the other hand, banks are reluctant to provide OD to customers presumably because the perception is that these will turn into non-performing assets. BMs reported submitting OD documents to the bank branch and not receiving any information thereafter.

2. Mismatched expectations has led to account duplication and dormancy

Customer dormancy, i.e., the number of PMJDY accounts where no transactions have been conducted in the last three months, stands at 28%. The high level of customer dormancy can be attributed to reasons such as lack of customer awareness (misconception that PMJDY account is a must to avail of government benefits) and false expectation of receiving free money (overdraft) in bank accounts. Of the total customers interviewed during Wave III surveys, 67% reported that PMJDY is their first formal bank account.

However, it is important to note that 33% of the PMJDY customers reported having alternate bank accounts (other than PMJDY account) and 31% of such customers actively use their alternate account. A significant portion of overall PMJDY account dormancy can also be attributed to these customers, who open multiple accounts just to avail benefits of facilities such as OD and insurance.

3. Low pace of Aadhaar seeding and RuPay Card distribution 

The rate of RuPay card distribution (47%) and Aadhaar seeding  (62%) is slow. Only 33% of the PMJDY customers are “RuPay transaction-ready” (i.e., customers who carry activated RuPay cards) and only 26% of the customers have ever used their RuPay card.

PMJDY customers who have received RuPay card as well as PIN, find it difficult to activate the RuPay cards and to use it continuously. Only 24% of BMs have RuPay card-enabled devices;  most customers have to visit the nearest ATMs to activate their RuPay cards and to change personal identification numbers (PINs). Since first-time activation happens at the issuing bank terminals/ATMs, PMJDY customers find it cumbersome, owing to unavailability of ATMs in the vicinity; this leads to RuPay card turning dormant.  BMs report that risks (fraud/misuse of RuPay card by relatives) associated with the card also demotivates PMJDY customers from maintaining active RuPay cards.

4. Unfair charges/practices may reduce customer’s trust in PMJDY

PMJDY scheme was launched with the intent of financially including the otherwise traditionally excluded customer segments. Since these customers lack experience of transacting on formal financial channels, they are susceptible to risks such as overcharging or unfair practices by BM, bank staff and/or BCNM. A few BMs in Vidisha, MP, stated that customers were charged for all withdrawal as well as deposit transactions in their PMJDY accounts. The branch had not provided any plausible explanation for these charges, even after multiple complaints by the BM and customers. Deductions from these accounts have reduced their trust in formal financial channels.

A bank in Mahasamund, Chhattisgarh, provided PMSBY to MGNREGA account holders by debiting INR 12 from their wage payments without the customers’ prior consent. Some of these customers had already enrolled for PMSBY and lost money on the same scheme. One of the leading banks, in its attempt to tackle zero-balance accounts, deposited INR 10 in each zero-balance account, and the BM was asked to put another INR 2 from his/her commissions. This process disappointed most BMs associated with the bank.

For more details on the assessments please visit our website. 

[1] 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.

[2] Overdraft facility is a general purpose loan to provide hassle-free credit of up to INR 5,000 to low-income group / underprivileged customers.

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Written by


Sakshi Chadha

Market Engagament Manager Asia at GSMA