Defying the normal pattern, total balance in the basic bank accounts under the Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts is showing a significant spurt.
During the month of March, there was an addition of ₹5,882 crore in the accounts opened under the Centre’s flagship financial inclusion scheme.
The total balance of Jan Dhan accounts stood at ₹1,45,550 crore as on March 31, 2021 with 42.20 crore beneficiaries. In the beginning of the month, the total balance was only ₹1,39, 668 crore.
An analysis of total balance trends shows that generally the increase per month ranges from ₹1,000 crore to ₹1,500 crore.
However, a ₹12,145-crore jump in balance was seen last year from April 2020 to May 2021 due to the special package announced by the Centre under the Pradhan Mantri Garib Kalyan Yojana during the Covid-induced lockdown.
However, the highest spurt in total balance was in just 20 days of last month (between March 3 and March 31) when the amount went up from ₹1,39,668 crore to ₹1,45,550 crore, as per latest data.
“There has always been a surge in account balances during major election season for the reasons which are yet to be fathomed. We saw this in 2019 general elections and during elections in a few States prior to that,” the Chief Executive of a major public sector bank told BusinessLine.
Assam, Puducherry, Kerala and Tamil Nadu went to the polls recently, while the eight-phased election in West Bengal is yet to end.
New accounts
It is interesting to note that there has been an increase in the number of accounts, too. About 50 lakh new accounts were opened in March 2021.
There was a net addition of ₹25,879 crore in the year under PMJDY with an opening of 4.2 crore new accounts.
Over the past six years, India has made significant strides in widening the scale and impact of its financial inclusion efforts. Owing to the Government of India’s initiative to provide a bank account to every household, under the Pradhan Mantri Jan Dhan Yojana (PMJDY),an estimated 80% of Indians presently own a bank account .
But while ownership of Jan Dhan accounts improved remarkably (from 35% in 2011 to 80% in 2017), usage of these accounts continues to remain low. To increase engagement with Jan Dhan’s vast customer base, banks must focus on increasing awareness, reaching out to them via relevant communication and distribution channels, but most importantly, they must acknowledge the potential of women customers as the key lever to household financial empowerment and prosperity.
Low-income women customers are among the most important segment as they form a majority (nearly 55%) of the entire Jan Dhan portfolio . But according to Findex 2017only 33%of women actively use their accounts. This is also because many financial products simply don’t work for women. In the absence of disaggregated data, institutions don’t often realize that women have unique needs and gender neutral policies may be limited in providing solutions tailored to their needs.
Relooking at the financial inclusion agenda with a gender lens has the power to accelerate India’s banking sector’s efforts towards the objective. Data proves that when products are created with women’s specific needs in mind, men are just as or even more interested .Data also shows that any inclusion effort that focuses on women results in better conditions for children, household nutrition, and for the larger community . Women’s increased control over household finances leads to more investment in children and has a positive impact on economic growth. Overall, full, and sustainable financial inclusion of women could have a great impact on the reduction of both poverty and income inequality levels.
How banks can embed a gender focus across financial inclusion efforts
To start with, India’s banking sector needs to understand the unique needs and preferences of its Jan Dhan women customers and design for them. To engage women, banks need to understand their barriers and provide women reasons to proactively engage with the bank. For example, women regularly save small amounts of money, but use informal methods due to habit and convenience. Similarly, a pilot with a large public sector bank found that the promise of an overdraft (linked to small frequent savings) acted as a strong motivator to nudge this behaviour change .
But to understand these differences, it is important for financial service providers to collect and act on sex-disaggregated data in order to understand women customers, and their unique needs, better. Going a step further, regulators can play a crucial role by encouraging, or if needed mandating, sex-disaggregated data collection and usage by FSPs and policymakers.
Secondly, it is important to develop an outreach strategy for the Jan Dhan women customer base that increases their awareness of account benefits and welcomes her. Women customers need to understand how using their Jan Dhan account can benefit them; they need to see the value in changing their established habits of using informal banking methods. Women also find banks unfamiliar and perceive them not be relevant for their small savings. Awareness of savings benefits, low cost micro-insurance, access to overdraft, etc.in the Jan Dhan account is also low among women customers. One of the biggest challenges for the banking sector is to be able to reach women customers directly and through usage of alternate channels. This makes SMS, WhatsApp videos, word of mouth, local community influencers even more important. A sector wide awareness drive supported by government could go a long way in addressing these awareness gaps and provide a boost to financial inclusion.
Finally, India’s banking sector needs to nurture Banking Correspondents as strategic channel partners to deepen the engagement with the Jan Dhan customer base–especially with women. Women prefer transacting at local Banking Correspondent (BC) points because of either proximity or because they trust them .Furthermore, women BCs are natural relationship managers and are better able to deepen banking engagement. In addition, even though 55% of the customer base is female, less than 10% of BCs are women. Banks need to transform this last mile channel into relationship managers who can nudge customers to start small savings in their accounts and cross-sell products that address their needs. Creating a cadre of women banking correspondents will help banks deepen customer engagement beyond transactions and improve the engagement rates of their women customer base.
The road ahead
The Government of India is steadily leading the way for banks to address financial inclusion with a deliberate gender focus. In a revolutionary move announced in March 2020,itundertook a Direct Benefit Transfer (DBT) of INR 500 per month for three months (April2020 to June 2020) targeting women customers under the Pradhan Mantri Garib Kalyan Yojana. The objective of the government was to bolster financial security to the most vulnerable sections of Indian society – low-income women – as payments to women customers further ensures that the money is used for basic household needs5.
As we enter 2021, there is tremendous opportunity for banks to take these efforts beyond mere government cash benefits and embed a gender specific approach to address the needs of the 225 million women Jan Dhan customer base. Building women’s leadership in regulatory organizations is equally important to ensure representation for the cause at senior level and enable a favourable environment at the intersection of leadership development and women’s financial inclusion.
Pallavi Madhok, Senior Solutions Specialist and Ajit Agarwal, Product Manager, Advisory Services at Women’s World Banking)
(The blog has been authored by Pallavi Madhok, Senior Solutions Specialist and Ajit Agarwal, Product Manager, Advisory Services at Women’s World Banking)
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