The PMJDY is designed to be a highly intensive programme, which will focus on application of human and material resources, to mobilise poor people and link them to the banking system, says Dr Deepali Pant Joshi, in an interaction with Kartik Sharma and Nayana Singh of ENN
The Prime Minister’s Jan Dhan Yojna (PMJDY) is the flagship programme of the Government of India, and the Reserve Bank of India is fully committed to it. It will help promote poverty reduction by building strong institutions and improving access, especially to women, to the mainstream financial institutions. It will also enable the poor to have a range of livelihood opportunities, hitherto denied to them.
Financial inclusion will promote and strengthen the overall livelihood opportunities. It will work by leveraging technologies and skills that people have themselves. It will also provide inputs and market linkages to them and in turn provide sustainable and scalable financial inclusion.
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This programme is distinct in the sense that while our earlier programmes relied on account penetration, the PMJDY offers a holistic package. It gives a RuPay card, insurance facilities, and is a demand-driven strategy. The programme emphasises on financial literacy, whereby there will be flexibility to develop credit absorption capacities, and specially women will benefit by the provision of creating financial infrastructures. This will lead to a situation where there will be enlargement of choices for poorer people, and this multipronged strategy will lead to continuous capacity building of the targeted poor.
In my opinion, these are the most striking dissimilarities between the PMJDY and the previous programmes run by the Government of India. Firstly, the present programme intends to cover all households in all villages; therefore, the focus is much more comprehensive. The focus of the scheme should be the poorest of the poor and our objective should be to ensure outreach to the last mile.
Secondly, this programme also extends itself to urban areas, and thus we should work towards eliminating urban poverty as well. Thirdly, our previous approach focused deeply on business correspondents (BCs), who were peripatetic. The BCs moved around with a point of sale machine or a bank in a box and there was no certainty of their appearance. Therefore, the people were uncertain as to when and how their financial needs would be met through BCs. Therefore, the concept of bank in a box did not work, as the people rely upon face to face advice. A business correspondent in a fixed location will address this problem and will gather trust of the poorer people. This will give them a confidence that their financial needs will be met at a certain place and in a certain time.
“The main purpose of planned growth is to mainstream the marginalised, to correct historical inequities and address factors constraining their participation in the growth process”
Financial inclusion does not only mean account penetration, but it pertains to the entire script: savings, credit, remittance, insurance penetration, and transactions which should be provided so that it builds confidence in the financial system. The monitoring system under the earlier programme was a little loose, but now we are going to have a very close monitoring of the functioning of PMJDY. The Finance Minister himself will be monitoring the scheme, which will be moved from the centre to the state to the district to the block level – which in my opinion is a very comprehensive monitoring mechanism. We must place trust in PMJDY because as the old adage goes, whatever is quantifiable and measurable can definitely be achieved. The glitches of the earlier system can be avoided here by use of the RuPay Debit Card and by extending online operations.
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“The Prime Minister’s Jan Dhan Yojna will work by leveraging technologies and skills that people have themselves. It will also provide inputs and market linkages to them and in turn provide sustainable and scalable financial inclusion”
It is hoped that with all these efforts, all sections of the labour force are included as productive workers and contribute to the larger processes of economic development, as producers and consumers of goods and services. We can hope that now all the people will get an equitable share of the economic development, and the contributions and needs of those who have been hitherto neglected get due recognition.
Maximising returns is the goal of economic behavior and this is conventional rationality. In developing economies such as ours, the poorer people with inadequate resources endure more costs and receive much poorer returns. Hence there is a need for affirmative action of good policies like PMJDY. The main purpose of planned growth is to mainstream the marginalised, to correct historical inequities and address factors constraining their participation in the growth process.
I have openly argued that there is a very strong business case for banks to go to the bottom of the pyramid, but more importantly we must realise that there is a very strong moral imperative of doing this. The cost of not doing this will be much higher than the cost of doing this. Therefore, I place my full commitment to this initiative and invite the participation of all others to make this a success.