How Jan Dhan Accounts Can Make Poor Rich Overnight

PM Jan Dhan Yojna
PM Jan Dhan Yojna

With a view to increasing banking penetration and promoting financial inclusion; and with the main objective of having at least one Jan Dhan account per household across the country, Pradhan Mantri Jan Dhan Yojna was launched on August 28, 2014. Such accounts have a deposit limit of Rs 50,000/-.

World Bank’s Jim Yong Kim believed that India’s Jan Dhan Yojna is a model worth emulating across emerging economies. In a panel discussion on financial inclusion and the challenges of de-risking it, Kim praised the government’s flagship program in October.

However, most Jan Dhan accounts were zero balance accounts as no money was deposited in them.

On November 8, in a surprise move, Prime Minister Narendra Modi announced the demonetisation of Rs 500 and Rs 1,000 currency notes; and since then, long queues before banks and post offices are seen to deposit.

More surprising yet expected fact was a surge in these zero balance accounts. In India, black money hoarders, with a view to save their currency, rushed to look out for Jan Dhan account holders. The deal is simple. The account holder is lured to deposit the money into his account with promise of some commission on withdrawal of money few months later. This is a convenient route for conversion of currency.

In India – where you can buy the most important asset (RIGHT TO VOTE) with a bottle of liquor – this is not a difficult job at all! Black Money hoarders take advantage of poverty and lack of education of Jan Dhan account holders.

According to details available on PMJDY website, 25.51 Crore Jan Dhan accounts were opened throughout India. Out of this, nearly a quarter had not seen any transactions until the PM made his announcement on November 8. This is what makes the sudden surge even more remarkable!

Figures say it all. Jan Dhan Accounts have seen a huge surge in deposits, with Rs 21,000 Crore being parked in such accounts following demonetisation. Mamata Banerjee – ruled West Bengal leads the pack of states which have seen the highest deposits so far; followed by Karnataka.

Finance Minister Arun Jaitley said:

We are getting some complaints that suddenly monies have popped up in the Jan Dhan accounts, so there is a misuse and that is why the rationing in initial days takes place!

Now the biggest challenge for the Government is to control withdrawal of illicit money from these accounts. There is no way PM Narendra Modi can stop an account holder to take out the currency post December 31 as that is his fundamental right. To keep an eye on every account has its own administrative costs as well as is a difficult task.

The key question is the outcome of Rs 21,000 crore. Though the IT officials will know who the account holder is; tracing it back to the actual provider will be a nightmare! Assuming that all accounts saw the maximum limit of Rs 50,000 in deposit, officials will have to chase at least 42 lakh account holders, or around 15% of existing taxpayer base. Does the Income Tax Department has the wherewithal to chase so many small accounts; or will it focus on bigger deposits?

Although the task is tough and the money might slip out; here are few measures that the PMO might consider to lure Jan Dhan Account holders to hold money in their accounts:

  1. Convert deposits of last two months to Fixed Deposit at high rates of interest, say, 12% PA.
  2. Interest free loan against above deposit for higher education and marriage of children
  3. Interest free loan against the above deposit for medical emergencies
  4. Free insurance cover up to 5 times of deposit amount to deposit holder
  5. Medical insurance of 5 times the deposit amount to deposit holder & family
  6. Free loan against deposit to buy land; that too at a cheaper circle rate
  7. The withdrawals need to be monitored by some IT Data Analytics. Expert in the field to can develop it and trace the final destination of the money.
  8. The process of online payments for all practical purposes like medical, Agricultural, education, daily needs must reach to every part of the country including remote villages so that every withdrawal needs to be explained to the bank.

It is not a difficult job. Paytm has spread digital payments across within a few days.

From a roadside egg-seller in Bhopal to a soda hawker in Bangalore – the founder of Paytm has posted snapshots of the unusual array of merchants who ply the teeming streets of India – and are now turning to his digital payments start-up for help.

I have complete faith in our Prime Minister and am sure his management Guru like brains will lead him to the best alternative.

I believe in positivity. So end with this positive note on new currency note

Fascinating profile of a blind sweet shop owner on the Jammu and Delhi highway – Bhisham Das – has honed his sense of touch to detect fake notes of Rs 500 and Rs 1,000; and even supports the demonetisation drive. He added that the government must have added some way for the blind to detect what the notes are. He was right. The new Rs 2,000 notes have the following features for the visually impaired:

  1. Intaglio or raised printing of Mahatma Gandhi portrait, Ashoka Pillar emblem, bleed lines and identity mark
  2. Horizontal rectangle with Rs 2,000 in raised print on the right
  3. Seven angular bleed lines on left and right side in raised print

Only and only Narendra Modi can think on these lines. Dedicated to the role model of many!

15134670_10206154675626496_7427313207222738930_nRenuka Jain