Pradhan Mantri Jan-Dhan Yojana (PMJDY) is National Mission for Financial Inclusion to ensure access to financial services, namely, Banking/ Savings & Deposit Accounts, Remittance, Credit, Insurance, Pension in an affordable manner. It will complete its eight year of implementation in August 2022.
Dipa Sinha and Rohit Azad write that while there has been a tremendous increase in the number of bank accounts opened, the data show that the average balance in these accounts is low and a significant proportion of the accounts are inoperative.
They believe that very few people have benefited from the overdraft facility that is supposed to be provided by the accounts under the scheme. Issues of access to banking in rural areas remain.
A Santhosh Mathew writes that the current focus on financial inclusion has opened up solutions to reduce leakages in central and state government schemes. For these solutions to have a sustainable impact, deeper issues in public fund management must be addressed, which revolve around three key challenges:
"first-mile" problems of transferring central and state funds to local implementation agencies in a timely, efficient and transparent manner;
"last-mile" problems of sending benefits to beneficiary or vendor bank accounts without delays; and
"beyond-the-last-mile" challenges of ensuring rural beneficiaries have adequate access to remote banking services.
Shailla Draboo writes that on the question of financial inclusion of the marginalized sections, Digital India has turned out to be an important intervention. However, according to JN Niranjan, the most common barriers to the digital financial inclusion include the non-availability of suitable financial products, lack of skills among the stakeholders to use digital services, infrastructural issues, teething problems between various systems, and low-income consumers who are not able to afford the technology required to access digital services.
Shailla Draboo believes that another challenge to digital financial inclusion arises from the attitude of the stakeholders. For instance, in the case of Jan Dhan bank accounts, the opening of many dormant accounts which never saw actual banking transactions, incurred costs on the institutions, and thus, huge operative costs only proved to be detrimental to the actual objective, Hence all stakeholders need to bear responsibility for allowing the scheme to succeed.
Another major bottleneck faced by Digital India, with respect to financial inclusion, is the heavily dominated cash economy in the country. The data from RBI reveals that cash circulation has increased in 2018 after demonetization. As per a report of the International Labour Organization (ILO), about 81% of the employed persons in India work in the informal sector (ILO 2018). The combination of a huge informal sector along with a high dependence on cash mode of transaction poses an impediment to digital financial inclusion.
There is also a gender dimension to financial inclusion in the country. According to the 2017 Global Findex database, 83% of males above 15 years of age in India held accounts at a financial institution in 2017 compared to 77% females (World Bank 2018). This is attributed to socio-economic factors, including the availability of mobile handset and internet data facility being higher among men than women.
In conclusion, for the success of digital initiatives, there has to be a multidimensional approach through which existing digital platforms, infrastructure, human resources, and policy frameworks are strengthened. More importantly, human resources should be leveraged by skilling and positively engaging with them to achieve the last-mile connectivity of financial institutions.