Context: Recently, Pradhan Mantri Jan-Dhan Yojana (PMJDY) - National Mission for Financial Inclusion, completed its six years of successful implementation.

• The PMJDY provided every adult with a bank account that has been instrumental in disbursing funds under direct benefit transfers, COVID-19 financial assistance, PM-KISAN, increased wages under MGNREGA, life and health insurance cover.

Background
Financial Inclusion is a national priority of the Government as it is an enabler for inclusive growth. It provides

• An avenue to the poor for bringing their savings into the formal financial system, 
• An avenue to remit money to their families in villages, 
• Helps them in coming out of the clutches of the usurious money lenders. 

Ministry of Finance is committed to provide financial inclusiveness and support to the marginalized and hitherto socio-economically neglected classes.

• A key initiative towards this commitment is the Pradhan Mantri Jan Dhan Yojna (PMJDY), which is one of the biggest financial inclusion initiatives in the world.

About PMJDY

• It was announced by the Prime Minister of India in his Independence Day address on 15th August 2014.
• It is a National Mission for Financial Inclusion to ensure access to financial services, namely, Banking/ Savings & Deposit Accounts, Remittance, Credit, Insurance, Pension in an affordable manner.

Objectives

• Ensure access of financial products & services at an affordable cost
• Use of technology to lower cost & widen reach

Basic tenets of the scheme

• Opening of basic savings bank deposit (BSBD) account: With minimal paperwork, relaxed KYC, e-KYC, account opening in camp mode, zero balance & zero charges.
• Securing the unsecured: Issuance of Indigenous Debit cards for cash withdrawals & payments at merchant locations, with free accident insurance coverage of Rs. 2 lakh.
• Funding the unfunded: It includes financial products like micro-insurance, overdraft for consumption, micro-pension & micro-credit.

Salient Features: 6 pillars of the scheme are

• Universal access to banking services
• Basic savings bank accounts with overdraft facility of Rs. 10,000/- to every household.
• Financial Literacy Program: Promoting savings, use of ATMs, getting ready for credit, availing insurance and pensions, using basic mobile phones for banking.
• Creation of Credit Guarantee Fund: To provide banks some guarantee against defaults
• Insurance: Accident cover up to Rs. 1,00,000 and life cover of   Rs. 30,000 on account opened between 15 Aug 2014 to 31 January 2015.
• Pension scheme for Unorganized sector.

Important approach

• Online accounts: Opened in the core banking system of banks, in place of earlier methods of offline accounts opening with technology lock-in with the vendor.
• Interoperability: Through RuPay debit card or Aadhaar enabled Payment System (AePS).

Fixed-point Business Correspondents.

• Simplified KYC / e-KYC in place of cumbersome KYC formalities.
• Extension of PMJDY with New features: The Government decided to extend the comprehensive PMJDY program beyond 2018 with some modifications
• Focus shifts from ‘Every Household’ to Every Unbanked Adult’.
• RuPay Card Insurance: Free accidental insurance cover on RuPay cards increased from Rs. 1 lakh to Rs. 2 lakh for PMJDY accounts opened after 28.8.2018.
• Enhancement in overdraft facilities: OD limit doubled from Rs 5,000/- to Rs 10,000/-.  OD upto Rs 2,000/- (without conditions).
• Increase in upper age limit for OD from 60 to 65 years.