It’s been three years since the Prime Minister Narendra Modi flagged off the country’s biggest ever bank account opening drive – Jan Dhan Yojana – which aims to give every household access to banking facilities by offering them zero-balance accounts across all commercial banks.

On August 27, to mark the three years since the financial inclusion scheme was launched, the prime minister tweeted that the scheme had been a huge success as it had resulted in “near universal” access of citizens to banking services in the country. This was echoed by multiple BJP ministers, who claimed that 99.99% of households have at least one bank account, thanks to Jan Dhan Yojana.

However, recent studies suggest that the percentage of households that have at least one bank account may be lower than what the government claims. Moreover, a large proportion of people who opened bank accounts under the programme already have a regular savings account, meaning that the scheme was not as much a boost to financial inclusion as it purported to be.

According to a paper published in May by Manuela Kristin Günther from the Overseas Development Institute, 90% of Indian households have at least one bank account as opposed to the government’s claim of over 99%. Of these, the paper pointed out that 79% of the households with Jan Dhan accounts also have a regular bank account.

Banking facilities

When the Pradhan Mantri Jan Dhan Yojana was launched in August 2014, apart from bringing every Indian household into the banking system, it also aimed to improve access to banking amenities such as ATM transactions, overdraft facility, short-term credit and insurance, among others.

By August 16 this year, a massive 29.51 crore accounts had been opened under the scheme. However, there is little evidence to show that the Jan Dhan Yojana has been successful in achieving all its other objectives. Moreover, dormant accounts still make up for about one-fifth of all Jan Dhan accounts.

For instance, the number of zero-balance accounts has always been a cause of concern. In September 2014, three months after the scheme was launched, 76.81% accounts were empty.

An Indian Express investigation last year revealed that bankers in public sector banks were allegedly putting paltry amounts of Rs 1 to Rs 10 in several Jan Dhan accounts, ostensibly to reduce the percentage of zero-balance accounts.

On August 27, Finance Minister Arun Jaitley claimed that the number of zero-balance accounts had come down to 21.41% of the total. This claim could not be verified, because the Jan Dhan Yojana website no longer has the updated data of zero- balance accounts. Even the archival reports of the progress made under the scheme seem to have been taken off for the period between August 2014-April 2017 – meaning 33 months of data that was earlier available on the site was wiped out as of August 29. A questionnaire on the disappearance of data sent to the ministry of finance went unanswered.

Screen grabs from the Pradhan Mantri Jan Dhan Yojana website, taken on September 5.
Screen grabs from the Pradhan Mantri Jan Dhan Yojana website, taken on September 5.

However,’s archival data from the official Jan Dhan website for of May 2015 showed that more than 25.6% of all Jan Dhan accounts had zero balance.

So, even if one goes by the finance minister’s claim that 21.41% of all the accounts opened under the scheme have zero balance, that’s not a significant reduction from the May 2015 figure. Reports such as this one published in Hindu Business Line suggest that zero-balance in January were 24.6% of the total (a slight rise from the 23.86% recorded in December, after the Narendra Modi government had demonetised Rs 500 and Rs 1,000 notes that were in circulation till November 8).

The Reserve Bank of India had also noted in one if its recent papers that Jan Dhan accounts saw “unusual cash deposits” during demonetisation as they received additional deposits of Rs 59,810 crore during the period between November 8 and December 31.

Financial inclusion remains a pipe dream

Even the government’s basis of evaluating the success of Jan Dhan Yojana may not be indicative of financial inclusion.

The government evaluates the scheme’s progress based on the number of households covered under it (as opposed to individuals), presumably on the assumption that one account in a household can be used by other members as well, but research doesn’t back this theory. The paper written by Gunther said that only a few people use someone else’s accounts for their banking needs.

“Only 2% of non-account owners use someone else’s account, perhaps calling into question the notion that account ownership of one household member translates into access for all others,” it stated.

The paper further said, “Despite visible progress, I note that growth in account activity is nearly half of that observed for access to accounts,” meaning that the number of accounts opened increased at a rapid rate, but that was not matched by the activity in these accounts.

Moreover, the progess on other objectives of the scheme – access to ATM withdrawal facilities, insurance and overdraft – has been at best, lukewarm,’s analysis found.

For instance, under the scheme, everyone with an active account can access an overdraft loan of up to Rs 5,000. However, only 44.28 lakh accounts ( of the total 29.51 crore accounts) got an overdraft sanction under the scheme as on December 23, 2016, according to the government’s official press release. Of these, almost half the beneficiaries did not avail the loan, while while those who did received Rs 316.56 crore in total (an average of just Rs 1,327 per disbursal) – implying that people were not reaping the maximum benefits of the facility.

Another achievement under Jan Dhan Yojana that the government has highlighted is the issuance of Rupay debit cards to account holders. The Rupay card was devised as India’s answer to global giants such as Mastercard and Visa. While the scheme was sanctioned in 2012, it picked up pace with Jan Dhan Yojana’s rollout, as Rupay cards were to be given to each account holder. However, only 76% of account holders were given a Rupay card, as on August 16, according to data from the Jan Dhan Yojana website.

Additionally, AP Hota, former chief of National Payments Corporation of India, which runs the Rupay business, said that it had been observed that at least one in five cards were usually dormant.

Hota said that it’s difficult to arrive at exact numbers for Jan Dhan-related benefits since banks do not have clear divisions in their database. For instance, he said, banks have provided Rupay cards to regular customers as well as Jan Dhan customers. This, Hota said, often leads to inflation of numbers, as banks sometimes report all the Rupay cards issued as Jan Dhan Yojana’s achievements.

In addition, the Jan Dhan Yojana also had a stated objective to provide life insurance cover of Rs 30,000 to all those who opened accounts under the scheme between August 2014 to March 2015.’s analysis showed that more than 14.71 crore accounts were opened during this period, all of which are eligible for life cover. However, till December 23, 2016, the ministry of finance received only 3,936 claims for life insurance and disbursed 3,421 of them, while rejecting others. This amounts to just 0.002% of total eligible beneficiaries.

Another study published in May, conducted by researchers from the Indian School of Business, said that in the first three years of the scheme’s operation, it has been observed that activity in the accounts picks up over time – it took two years for a Jan Dhan account to match the level of activity seen in regular savings accounts. The study pointed out that after six months of opening the account, there were an average .61 transactions per Jan Dhan account, as compared to 1.72 transactions for regular accounts. Among these, passive transactions such as receipt of interest, subsidies or charges levied by bank are more than active transactions.

“Active transactions such as withdrawals from ATMs, cash or cheque deposits, and cash withdrawal require active involvement of the account holder,” the study found. “Such transactions account for 41% of the PMJDY [Pradhan Mantri Jan Dhan Yojana] accounts compared to 46% for non-PMJDY accounts.”