Jan Dhan deposits, whose spike after demonetisation to more than Rs 74,000 crore at the end of November last year, had created surprise, are shrinking.

In about three-and-a-half months between November 30 and March 15 close to Rs 10,500 crore was withdrawn from Jan Dhan accounts. According to the data on the Jan Dhan website, as on March 15, deposits in Jan Dhan accounts stood at around Rs 63,836 crore, against Rs 74,321 crore at the end of November.

“Jan Dhan accounts have almost reached a level of saturation,” said a senior banker at a public sector bank. “Also, as withdrawal limits in banks are getting eased, deposits are coming down. Now, the focus has shifted to the Aadhaar card linkage, Rupay Card and Atal Pension Yojana.”

Notably, Jan Dhan was a mission-mode plan. Launched on August 28, 2014, the target to open an account per household was achieved by January 26, 2015.

Rise and fall

Jan Dhan accounts had seen an almost 45% surge in deposits in about 23 days between November 8, the day Prime Minister Narendra Modi announced demonetisation, and November 30, when the deposits had peaked. Deposits had swelled from around Rs 45,000 crore to close to Rs 74,000 crore in the period. Doubts were expressed if unaccounted money was being diverted to Jan Dhan accounts.

Banks were asked to provide details to the government on high-value deposits in Jan Dhan accounts after demonetisation. “We will have to wait for the data after March 13, when caps on withdrawals were removed, to assess the extent of withdrawals,” said Pawan Bajaj, managing director and chief executive officer, United Bank of India.

RK Takkar, managing director and chief executive officer of UCO Bank, said: “We have seen some withdrawals in Jan Dhan accounts in the past two months. However, so far, it is not something alarming.”

Uttar Pradesh and West Bengal had been the leading states in terms of deposits in Jan Dhan accounts. After demonetisation, in about one month, between November and December, while Uttar Pradesh received more than Rs 4,500 crore, in the case of West Bengal the addition was over Rs 2,900 crore.

Deposits in West Bengal had increased from about Rs 6,286 crore to Rs 9,193 crore, while in the case of Uttar Pradesh, it increased from about Rs 7,493 crore to Rs 12,021 crore in one month between November 8, 2016, and December 8, 2016.

Uttar Pradesh and West Bengal continue to lead in terms of deposits. As on March 15, Jan Dhan deposits in the states stood at Rs 10,154 crore and Rs 8,213 crore, respectively.

So far, about 65% of Jan Dhan accounts have been linked to Aadhaar, or unique identification numbers. Of nearly 280 million accounts, nearly 178-million have been Aadhaar-seeded.

Low-cost deposits from Jan Dhan accounts had improved liquidity in banks. However, much of the gain of low-cost deposits has been offset by the huge cost of maintaining the accounts.

This article first appeared on Business Standard.