21% of Pradhan Mantri Jan Dhan Yojana accounts turned inoperative by Dec

Number of such accounts stands at 110 million

More than one in every five accounts under the Pradhan Mantri Jan Dhan Yojana (PMJDY) has turned inoperative by December 2024, despite the finance ministry’s push to make them operational by fast-tracking the verification process, according to a government official. This translates to approximately 110 million inoperative accounts.

 

A bank account is classified as “inoperative” if there are no “customer-induced transactions” for a continuous period of 24 months. Inoperative Jan Dhan accounts rose from 19 per cent of total accounts in March 2024 to 21 per cent in December that year.

 

Bank of Baroda has the highest number of inoperative accounts at 29 million, followed by Punjab National Bank (20 million), State Bank of India (18 million), and Bank of India (12.6 million).

 

Launched by Prime Minister Narendra Modi on August 28, 2014, PMJDY aims to provide universal access to banking facilities for all households across the country.

 

Experts attribute the rise in inoperative accounts to the initial opening of multiple accounts by customers, many of which have since been converted to regular savings accounts.

 

“Many recipients may not even be aware of the benefits available to them under PMJDY, leading to a lack of account usage. Additionally, once funds are deposited, many beneficiaries withdraw the money immediately, rendering the accounts inactive. These factors significantly contribute to the high number of inoperative accounts,” said Subhash Chandra Garg, former finance secretary of India.

 

In June 2024, Business Standard reported that the finance ministry had instructed public sector banks (PSBs) to activate inoperative PMJDY accounts.

 

“We have been directed to focus on inactive PMJDY accounts as part of our financial inclusion efforts,” stated a senior banker.

 

According to government data from August 2024, total deposits under PMJDY accounts stand at ~2.31 trillion, with an average deposit of ~4,352 per account.

 

“Most PMJDY accounts are primarily used for direct benefit transfer (DBT). While we have improved banking penetration, there is still a lack of engagement with other financial instruments,” noted Charan Singh, chief executive officer (CEO) and founder director of EGROW Foundation.

 

In terms of opening new PMJDY accounts, PSBs have performed well. As of December 2024, UCO Bank exceeded its FY25 target, achieving 1 million, or 110 per cent of its target. Punjab National Bank reached 4.1 million, or 98 per cent of its target, while Bank of Baroda achieved 2.95 million, or 89 per cent of its target, and State Bank of India reached 6.6 million, or 86 per cent of its target. In total, the banks collectively achieved 23.6 million, or 79 per cent of the overall target of 30 million.

 

In November 2024, M Nagaraju, secretary of the Department of Financial Services (DFS), chaired a meeting with stakeholders to initiate a re-KYC (know your customer) process for PMJDY account holders in New Delhi. He emphasised the importance of using all available means for re-KYC, such as fingerprints, facial recognition, and declarations for accounts with unchanged KYC documents, across various channels, including ATMs, mobile banking, and internet banking. In the same meeting, Nagaraju urged banks to replicate the zeal they demonstrated during the PMJDY launch, and complete the re-KYC process in a timely manner, deploying additional staff as needed to minimize customer inconvenience.