Pradhan Mantri Jan Dhan Yojana
Also written PMJDY · Pradhan Mantri Jan Dhan Yojana (PMJDY) · Jan Dhan Yojana · Jan Dhan account
The Government's financial inclusion scheme launched in August 2014: a zero-balance bank account with a RuPay debit card, insurance cover, an overdraft facility and direct benefit transfers.
In plain language
Jan Dhan Yojana was launched to make sure every Indian without a bank account gets one, and with it the basic financial services that come through a bank.
The account needs no minimum balance. It comes with a RuPay debit card, accident insurance and life cover (subject to conditions), a small overdraft facility, and a channel for government benefits paid directly into the account.
It can be opened at any bank branch or with a Business Correspondent (Bank Mitra), a bank representative who comes to villages and remote areas.
How it works
From the booklet (Chapter 9):
Objective: launched in August 2014 by the Government of India to ensure financial inclusion of every individual who does not have a bank account, and to give affordable access to banking, savings and deposit accounts, remittance, credit, insurance and pension.
Where to open: any bank branch or Business Correspondent (Bank Mitra).
Facilities:
- Zero balance account; no minimum balance required.
- RuPay debit card.
- Accidental insurance cover and a life cover of a certain amount, paid on the death of the beneficiary, subject to conditions.
- Overdraft facility up to a certain amount, available against one account per household.
- Mobile banking for balance checks and fund transfers across India.
- Interest on deposits.
- Direct Benefit Transfer for beneficiaries of government schemes.
- Easy access to pension and insurance products.
One condition: to get a cheque book, the holder must meet minimum balance criteria.
Overdraft, as the booklet defines it: a facility for a bank customer to take a short-term loan for urgent needs, with a promise to repay within timelines agreed between the bank and the customer.
A worked example
Amounts are illustrative. The booklet does not state the overdraft or insurance amounts, so none are assumed here.
Shanti and her husband Ramu farm two acres near Raichur. They have never had a bank account; the cash from selling their crop is kept at home.
A Bank Mitra visits their village. Shanti opens a Jan Dhan account with no deposit and receives a RuPay debit card. A government benefit of Rs 2,000 is credited to it by Direct Benefit Transfer, instead of being collected in cash.
If Ramu opens an account of his own as well, the overdraft facility is still available against only one account per household, so the family can draw an overdraft through just one of the two accounts.
Before sowing, Shanti needs Rs 4,000 for seed, and uses the overdraft for a short-term loan, repaying it after harvest on the terms agreed with the bank.
When she asks for a cheque book, the bank explains that she must first meet its minimum balance criteria. The account itself never needed a balance; the cheque book does.
Why NISM asks about it
Chapter 9 (Government Schemes for Various Savings and Investment Options) lists PMJDY with its objective, launch date and facilities; Chapter 4 introduces the Business Correspondent who helps open such accounts. Expect: launch year (2014), zero balance, RuPay card, overdraft per household, and the cheque book condition.
Common exam traps
- Launched in August 2014.
- Zero balance, but the cheque book needs a minimum balance. This is the most tested exception.
- Overdraft: one account per household, not per individual.
- The debit card is RuPay.
- Insurance and life cover are "subject to conditions"; the booklet gives no amounts, so do not pick an option that invents one.
- Opened at a bank branch or a Business Correspondent, not at a post office in the booklet's description.
Check yourself
1.Which statement about Pradhan Mantri Jan Dhan Yojana is correct?
- a)It requires a minimum balance of ₹500 and offers a cheque book free of cost
- b)It is a zero balance account with no minimum balance mandated, though a cheque book requires fulfilling minimum balance criteria; the overdraft facility is available against one account per household
- c)Accounts can only be opened at a bank branch, not through a Business Correspondent
- d)It was launched in 2018 to replace all existing savings accounts
Show the answer
Answer: (b) It is a zero balance account with no minimum balance mandated, though a cheque book requires fulfilling minimum balance criteria; the overdraft facility is available against one account per household
PMJDY was "launched in AUGUST 2014... to ensure FINANCIAL INCLUSION OF EVERY INDIVIDUAL WHO DOES NOT HAVE A BANK ACCOUNT IN INDIA." The facilities include a "Zero balance account", "Not mandated to have a minimum balance in the account", a RuPay debit card, accidental insurance cover and a life cover, mobile banking, interest earned on the deposits, Direct Benefit Transfer and easy access to pension and insurance products — with two qualifications that are exactly what examiners test: "Overdraft facility up to a certain amount. THIS FACILITY IS AVAILABLE AGAINST ONE ACCOUNT PER HOUSEHOLD", and "To get a cheque book, the individual will have to fulfil MINIMUM BALANCE CRITERIA." Option (c) is wrong on a stated fact: "Accounts can be opened with ANY BANK BRANCH OR BUSINESS CORRESPONDENT (BANK MITRA)" — which is how the scheme reached villages without branches.
2.A village household has no bank account, no branch nearby, and no spare money for a minimum balance. Why does opening a Jan Dhan account come before everything else in this chapter?
- a)Because it is the only scheme that pays interest
- b)Because the bima schemes debit premiums from a bank account, Atal Pension Yojana is for bank account holders, and Direct Benefit Transfer and the credit schemes all require one
- c)Because it replaces the need for any insurance
- d)Because a Jan Dhan account is compulsory by law
Show the answer
Answer: (b) Because the bima schemes debit premiums from a bank account, Atal Pension Yojana is for bank account holders, and Direct Benefit Transfer and the credit schemes all require one
Almost every scheme in the chapter runs through a bank account. Both bima schemes work by "a fixed annual premium... deducted from the bank account of the insured through AUTO-DEBIT facility"; Atal Pension Yojana "may be opened for ALL BANK ACCOUNT HOLDERS"; Direct Benefit Transfer needs one by definition; and the credit schemes are bank lending. That is why PMJDY exists — "to ensure FINANCIAL INCLUSION OF EVERY INDIVIDUAL WHO DOES NOT HAVE A BANK ACCOUNT IN INDIA", providing "banking, savings and deposit accounts, remittance, credit, insurance and pension in an affordable manner to all." Each of the household's obstacles is answered: no branch — "any bank branch OR BUSINESS CORRESPONDENT (BANK MITRA)"; no minimum balance — "zero balance account" and "not mandated to have a minimum balance." Chapter 4 adds the deeper reason: cash at home is unsafe, earns no interest, and creates no credit eligibility.
Where this is taught
Free preparation for NISM Series SEBI-ICERelated terms
- Basic Savings Bank Deposit AccountA zero-balance bank savings account, needing no opening deposit, introduced to bring everyone into the banking system. A holder cannot open any other savings account in the same bank.
- Business CorrespondentA representative of a bank, also called a Bank Mitra, who goes to customers in remote places and villages to open accounts, take deposits, transfer funds and give small loans.
- Debit cardA card linked to your own bank account, used at ATMs and to pay at shops. It spends money you already have, so there is no interest and no credit history needed to get one.
- Financial inclusionGovernment and RBI efforts to bring every household into the formal banking system — zero-balance accounts, low-cost demat accounts and schemes like Jan Dhan Yojana are the booklet's three examples.
- OverdraftA bank facility that lets a customer take a short-term loan to meet urgent needs, and repay it within the timeline agreed with the bank. PMJDY accounts carry one, limited to one account per household.
- Small Finance BankA category of bank introduced by the RBI that takes small deposits and gives small loans, mainly to people and small businesses the banking system does not reach well.
- Pradhan Mantri Suraksha Bima YojanaA government accidental insurance scheme for bank account holders aged 18 to 70, with a fixed annual premium auto-debited from one savings account.
- Pradhan Mantri Jeevan Jyoti Bima YojanaA government life insurance scheme for bank account holders aged 18 to 50, with a fixed annual premium auto-debited from one savings account.
- Pradhan Mantri Jan Aarogya YojanaA government healthcare scheme, also called Ayushman Bharat, giving free hospital treatment to families identified in the 2011 SECC database, with no restriction on family size, age or gender.