Context:
A decade after the launch of the Pradhan Mantri Jan Dhan Yojana (PMJDY) in 2014 to promote financial inclusion, the Union Finance Ministry is now exploring Phase 2 reforms aimed at deepening banking access and enhancing account activity, especially for the 110 million inoperative accounts.
Key Upgrades Under Consideration
Cheque Book Facility
- Jan Dhan account holders may soon receive chequebooks, expanding their transactional capabilities and financial credibility.
Enhanced Overdraft Limit
- The existing ₹10,000 overdraft limit may be increased, subject to eligibility.
- Aims to improve access to emergency funds and support consumption in rural/low-income households.
Low-Value Credit Cards (Proposed)
- The government is considering low-limit credit cards for eligible Jan Dhan account holders to:
- Promote digital credit access.
- Encourage credit discipline among first-time borrowers.
- Partner with banks and microfinance institutions for roll-out.
Problem of Inoperative Accounts
Alarming Inactivity
- Over 20% of Jan Dhan accounts (≈110 million) were classified as inoperative by December 2024, despite verification drives.
Reasons for Dormancy
- Immediate cash withdrawals post-benefit transfer.
- Lack of awareness about account benefits (e.g., insurance cover, overdraft).
- Perceived irrelevance after one-time transactions.
