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A STUDY ON PRADHAN MANTRI JAN DHAN YOJANA WITH REFERENCE TO

NATIONALIZED BANK (BANK OF BARODA)
Sri Lakshmi & D.Mamatha Final year MBA & Dr.Ponniah V M, Professor,
Faculty of Management, SRM University, Kattankulathur

Abstract
Even after 60 years of independence, a large section of Indian population still remains
unbanked. In the recent years the government and Reserve Bank of India has been pushing
the concept and idea of financial inclusion. The Financial Inclusion Plan aims at providing
easy access to financial services to those sections of the society who are deprived of it so far
at affordable cost thereby bringing them into the mainstream financial sector.RBI set up the
Khan Commission in 2004 to look into financial inclusion and the recommendations of the
commission were incorporated into the mid-term review of the policy (200506) and urged
banks to review their existing practices to align them with the objective of financial inclusion.
Honourable Prime Minister of India, Sri Narendra Modi announced this scheme for
comprehensive financial inclusion on his first Independence Day speech on 15 August 2014.
The scheme was formally launched on 28 August 2014 with a target to provide 'universal
access to banking facilities' starting with Basic Banking Accounts with overdraft facility of
Rs.5000 after six months and RuPay Debit card with inbuilt accident insurance cover of Rs. 1
lakh and RuPay Kisan Card & in next phase, micro insurance & pension etc. will also be
added.
An attempt is made in this paper to study and cover the following

An overview of Financial Inclusion.

Bank of Barodas performance with reference to Financial Inclusion.

Latest trends being implemented for Financial Inclusion by PMJDY.
Keywords: Financial inclusion, Banking services, Unbanked, Business, Technology

Introduction
Financial Inclusion is delivery of banking services at an affordable cost to the vast sections of
disadvantaged and low income groups. The Financial Inclusion Plan aims at providing easy
access to financial services to those sections of the society who are deprived of it so far at

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affordable cost thereby bringing them into the mainstream financial sector. Implementation
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of Financial Inclusion is not a new concept for your Bank. Financial Inclusion activities are
being implemented by your Bank since inception through various government-sponsored
programmes, lending to the poorest of the poor, lending to the minority communities,
lending to SC/ST, lending to priority sectors, etc. However, the RBI formalized the concept of
Financial Inclusion in 2005, when it permitted rendering of banking services through
Business Correspondent (BC) channel. It then advised all commercial banks in the year 2010
to submit Board-approved Plan for providing banking services in rural unbanked areas under
Financial Inclusion.

Review of Literature
According to Indian institute of banking and finance, financial inclusion is delivery of
banking services at an affordable cost ('no frills' accounts,) to the vast sections of
disadvantaged and low income group. Unrestrained access to public goods and services is
the sine qua non of an open and efficient society. As banking services are in the nature of
public good, it is essential that availability of banking and payment services to the entire
population without discrimination is the prime objective of the public policy." According to
Dr. K.C.Chakrabarty, Deputy Governor, Reserve Bank of India, financial Inclusions the
process of ensuring access to appropriate financial products and services needed by all
sections of the society in general and vulnerable groups such as weaker sections and low
income groups in particular at an affordable cost in a fair and transparent manner by main
stream institutional players.

Need for Financial Inclusion

Creating a platform for inculcating the habit to save money The lower income category
has been living under the constant shadow of financial duress mainly because of the
absence of savings. The absence of savings makes them a vulnerable lot. Presence of
banking services and products aims to provide a critical tool to inculcate the habit to save.
Capital formation in the country is also expected to be boosted once financial inclusion
measures materialize, as people move away from traditional modes of parking their savings
in land, buildings, bullion, etc.

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Providing formal credit avenues So far the unbanked population has been vulnerably
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dependent of informal channels of credit like family, friends and moneylenders. Availability
of adequate and transparent credit from formal banking channels shall allow the
entrepreneurial spirit of the masses to increase outputs and prosperity in the countryside. A
classic example of what easy and affordable availability of credit can do for the poor is the
micro-finance sector.
Plug gaps and leaks in public subsidies and welfare programmes A considerable sum of
money that is meant for the poorest of poor does not actually reach them. While this
money meanders through large system of government bureaucracy much of it is widely
believed to leak and is unable to reach the intended parties. Government is therefore,
pushing for direct cash transfers to beneficiaries through their bank accounts rather than
subsidizing products and making cash payments. This laudable effort is expected to reduce
governments subsidy bill (as it shall save that part of the subsidy that is leaked) and provide
relief only to the real beneficiaries. All these efforts require an efficient and affordable
banking system that can reach out to all. Therefore, there has been a push for financial
inclusion.
Support from RBI for Financial Inclusion
RBI set up the Khan Commission in 2004 to look into financial inclusion and the
recommendations of the commission were incorporated into the mid-term review of the
policy (200506) and urged banks to review their existing practices to align them with the
objective of financial inclusion.

RBI also exhorted the banks and stressed the need to

make available a basic banking 'no frills' account either with 'NIL' or very minimum balances
as well as charges that would make such accounts accessible to vast sections of the
population
Of the many schemes and programmes pushed forward by RBI the following need special
mention.
Initiation of no-frills account These accounts provide basic facilities of deposit and
withdrawal to accountholders makes banking affordable by cutting down on extra frills that
are no use for the lower section of the society. These accounts are expected to provide a

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low-cost mode to access bank accounts. RBI also eased KYC (Know Your customer) norms
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for opening of such accounts.

Banking service reaches homes through business correspondents The banking systems
have started to adopt the business correspondent mechanism to facilitate banking services
in those areas where banks are unable to open brick and mortar branches for cost
considerations. Business Correspondents provide affordability and easy accessibility to this
unbanked population. Armed with suitable technology, the business correspondents help in
taking the banks to the doorsteps of rural households.
EBT Electronic Benefits Transfer To plug the leakages that are present in transfer of
payments through the various levels of bureaucracy, government has begun the procedure
of transferring payment directly to accounts of the beneficiaries. This human-less transfer
of payment is expected to provide better benefits and relief to the beneficiaries while
reducing governments cost of transfer and monitoring. Once the benefits starts to accrue
to the masses, those who remain unbanked shall start looking to enter the formal financial
sector.

Financial Inclusion status of Bank of Baroda as of now

Models used by Bank of Baroda for FI
Your Bank has adopted various models for providing banking services under financial
inclusion such as:
ICT (Information & Communication Technology) based BC model and POS
(Point of Sale/Service)
Kiosk
Mobile Van
Brick & Mortar Branches
Information and Communication Technology (ICT) based Business Correspondent (BC)
model: POS based BC Model
This solution is based on Application Service Provider (ASP) model with smart cards based
technology for financial inclusion. Under this model, Business Correspondents are appointed
by banks through service providers who are provided with point-of-service (POS) devices,
using which, they carry out transactions for the smart card holders at their doorsteps. The
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customers can operate their accounts using their smart cards through biometric
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authentication. In this system, all transactions processed by the BC are online real time basis
in CBS of the bank.
Kiosk Bc Model
It is a web-based application that can be accessed through internet connectivity on laptop
or desktop by authorized individuals. The CSC e-governance Service India Ltd, FIA
Technology Services Pvt Ltd and Geosansar are appointed as BCs for providing banking
services in the villages allocated to the Bank as well as for implementation of Urban
Financial Inclusion. This is a card less solution; account holder can operate the account on
the basis of account number as well as Aadhaar number. The Kiosks are connected with
your Banks CBS through web-based connectivity from authentication on online real time
basis. As on 31st March, 2014, your Bank covered 7,525 villages through 2,780 Kiosk centers
and also established 1034 urban kiosk centers across the country the computer
system/laptop of the kiosk operator. The transactions are processed through biometric
Mobile Van
The customized vehicle (van) is specifically designed for the purpose of banking activity. The
exterior of the van is covered with the Bank advertisements and information about products
offered by the Bank in rural areas. Thereby, it is also an advertising media for the Bank in
rural segment. The van is equipped with computer hardware and connectivity to access the
CBS. The Bank staff is deployed on the van to provide banking services in the villages. The
van is moving into the cluster of villages on predetermined days and time which are in
proximity to the existing branches, for providing online banking services. The banking
services are being provided during fixed days in a week. At present, 15 mobile vans have
been deployed for catering financial services to 211 villages in the states of Uttar Pradesh,
Rajasthan, Gujarat, Uttarakhand, Bihar and Goa.
Brick and Mortar Branch
The brick and mortar branches are opened in a comparatively bigger village having the
potential and viability. Such centers are identified during the course of finalization of the
Banks branch expansion plan. As per the Banks FIP, 1,772 rural branches have been
opened as against a target of 1,554 for the current financial year. Your Bank had annual
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target for opening 334 branches in un-banked rural area as per the disintegrated FIP
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submitted to the RBI, which is comfortably achieved by opening of 430 branches in FY14.
New Initiatives of Bank of Baroda under Financial Inclusion
Kiosk banking Model
The Kiosk banking model was launched by Shri S.S.Mundra, Chairman & Managing Director,
by virtually inaugurating 1,000 Kiosks on the 106th foundation day of Bank i.e. 20th July
2013. The Bank has arrangements with Common Service Centers (CSCs) to avail their
services as Business Correspondent of your Bank for running the Kiosk centers. The common
service centers are ICT enabled front end service delivery points at the village level and
urban centers for delivery of government, financial, social & private sector services in the
areas of agriculture, health, education, entertainment, banking, insurance, pension, utility
payments, etc. Bank of Baroda has also engaged other service providers for similar banking
Kiosks in urban/rural centers. These Kiosks would be connected with the CBS of your Bank
through web-based connectivity from the computer system/laptop of the kiosk operator.
Urban Financial Inclusion
The rural inhabitants have largely remained the focus of the financial inclusion efforts since,
a large proportion of the villages are still unbanked. Besides people living in rural and far
flung areas, urban poor still have no access to formal financial products and services like
savings, credit, remittance and insurance, forcing them to depend on usurious informal
sources to meet their personal, health, and livelihood-related needs. Many of those are
normally migrant labours, hawkers, slum dwellers from rural areas that generally leave their
villages for livelihood. In order to cover them under financial inclusion, the Government of
India has started campaign in all states through SLBC for a to bring these vulnerable groups
under mainstream financial system. Bank of Baroda has introduced urban kiosks at various
locations across the country. Shri S.S. Mundra, Chairman & Managing Director launched
urban kiosk at Abgaonkala in Harda district of Madhya Pradesh on 19th January 2014.
As on 31st March 2014, Bank of Baroda set up more than 1,000 urban kiosk at various
locations across the country. Products Offered under Financial Inclusion Basic Savings Bank
Deposit Account with in-built OD Facility. This product is specially devised for individuals
from Financial Inclusion villages as per the RBI guidelines. The account can be opened
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without depositing any amount which doesnt attract any penalty and will be opened
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through BC. These accounts can be operated through business correspondents as well as at
the branches. Inbuilt overdraft facility up to Rs 10,000 is available under the scheme.
Overdraft of Rs 250 can be availed immediately on opening of the account by the customer
and availability of higher amount of overdraft up to Rs 10,000 is performance linked.
Recurring Deposit (RD) Account
This is money back RD facility duly designed for financial inclusion account holders to
provide liquidity. The product offers money back facility, at the end of six months, an
amount equivalent to 50.0% of the outstanding credit balance in the account can be paid
back as per the requirement of depositor.
Baroda Kisan Credit Card (BKCC)
This product is for farmers which cover their needs like production credit, investment credit,
personal loan needs as well as consumption needs. It is flexible in utilization of the limit as
he can utilize the limits as per his requirements during the year.
Baroda General Credit Card (BGCC)
The BGCC is implemented through all the branches of Baroda Bank. The credit facility
offered under the scheme would include working capital and term loan requirements of the
entrepreneurs.
Baroda Swabhimaan Suraksha (Low Premium Insurance)
Bank of Baroda has introduced life insurance product with low premium for financial
inclusion customers in coordination with India-first Life Insurance Company. An insurance
cover of Rs 5,000 to Rs 50,000 is available at premium of Rs 20.88 per thousand for five
years.
Financial Literacy Key to Successful Inclusion
The desired objective of Financial Inclusion can be achieved only when we are able to
generate equal responses from the villages. In order to invoke responses amongst villagers,
there is a need to educate them on various banking facilities and its benefits to them. In
other words, financial literacy would be the key for success of financial inclusion initiatives
of the bank. Therefore, all constituents of FI need to develop a bond with each other for not
only to provide banking facilities, but also to create a massive awareness of banking and
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banking products amongst the population through Financial Literacy, wherever
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implementing Financial Inclusion programme. The Banks link branches are arranging
Financial Literacy campaign by conducting meetings and addressing the habitants in
different forums.

Baroda Swarojgar Vikas Sansthan (Baroda RSETI) is a trust formed by the Bank way
back in 2003 for undertaking skill building activities for unemployed rural youth and
providing hand holding support to them till their settlement in their venture.

Around Forty six Financial Literacy & Credit Counseling Centres (FLCCs) SAARTHEE
are operational across the country. Since inception, around 19,731 individuals visited
FLCCs of which in 10,460 cases, the issues were resolved.

Around Fifty two Baroda Grameen Paramarsh Kendrasfacilitate financial education,
credit counseling, information sharing and problem solving on technical issues,
synergy & liaison with otherorganizations for value added services and development
activities in rural areas.

BYST-BoB Entrepreneurship Development Programme (BYST) provides end-to-end
support to disadvantaged young dynamic micro-entrepreneurs in the form of Loans,
Business Mentors, Training, Networking and Marketing.
Highlights of the Banks Performance under Financial Inclusion in FY14
Bank of Baroda covered 14,161 villages against a target of 11,124.
It opened 74.66 lakh Basic Savings Bank Deposit Account against target of 63.74 lakh,
out of which 18.71 lakhs accounts were opened through the Business Correspondents.
The balance outstanding in the Basic Savings Bank Deposit Account of Baroda Bank is
around Rs 1,918 crore.
Baroda Bank has sanctioned overdraft of Rs 11.31 crore as against a target of Rs. 6.22
crore in Basic Saving Bank Deposit Account.
Bank of Baroda opened 2,584 Ultra Small Branches (in villages with population above
2,000) to strengthen functioning of BC model.
Bank of Baroda approved a disaggregation plan up to the branch level to implement its FIP
for 21,526 villages by March 2016.

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This Bank has launched its Urban Financial Inclusion drive by opening more than 1,000
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Kiosk at various locations in metro and urban centers across the country. Also, it surpassed
all targets set under disaggregated FIP for FY14.

Latest Trend -Pradhan Mantra Jan Dhan Yojana

Pradhan Mantri Jan Dhan Yojana is an ambitious scheme for comprehensive financial
inclusion launched by the Prime Minister of India, Narendra Modi on 28 August 2014. He
had announced this scheme on his first Independence Day speech on 15 August 2014. In a
run up to the formal launch of this scheme, the Prime Minister personally mailed to CEOs of
all banks to gear up for the gigantic task of enrolling over 6.0 crore (75 million) households
and to open their accounts. In this email he categorically declared that a bank account for
each household was a "national priority".
The scheme has been started with a target to provide 'universal access to banking facilities'
starting with Basic Banking Accounts with overdraft facility of Rs.5000 after six months
and RuPay Debit card with inbuilt accident insurance cover of Rs.1 lakh and RuPay Kisan
Card. In next phase, micro insurance & pension etc. will also be added.
Reports said on August 28, more than 1.5 crore bank accounts were opened in a single
day.

Within a few days of the PM's address on Independence Day, this bank had received
a directive on the scheme.

On August 28, the bank's branches in Ghaziabad, Noida and Greater Noida, had been
given a target to open more than 10 lakh accounts under the scheme.

The Prime Minister said that though the initial target of PMJDY was to open bank
accounts for 7.5 crore families in one year, he had exhorted the concerned officials
to complete the task before the next Republic Day.
On the inauguration day of the scheme, 1.5 Crore (15 million) bank accounts were opened.
Banks Board had approved a Financial Inclusion Plan (FIP) for implementation by your Bank
within a period of three years commencing from 2010-11. The plan had envisaged covering
20,000 villages in a span of three years under Financial Inclusion utilizing various technology
based initiatives. Thereafter, Ministry of Finance and RBI advised your Bank to cover the

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villages having population above 2,000 by March 2012. Accordingly, your Bank was allotted
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2,855 villages which are covered well within the timelines.

References
1. CGAP publications, 2012, Financial Inclusion and the Linkages to Stability, Integrity
and
2. Protection: Insights from the South African Experience
3. Dr. SupravatBagliand PapitaDutta, (Aug. 2012)A Study Of Financial Inclusion In
India, RadixInternational Journal Of Economics & Business ManagementVol.1, Issue
8, pp.1-18.
4. Dr.Chakrabarty.K.C (2013), Financial Inclusion in India: Journey So Far And Way
Forward Keynote address delivered by Deputy Governor, Reserve Bank of India at
the Finance Inclusion Conclave organized by CNBC TV 18 at New Delhi on September
6, 2013.
5. Dr. Chakrabarty. K.C (2012), Financial Inclusion Issues in Measurement and
Analysis Keynote Address by Dr. K. C. Chakrabarty, Deputy Governor, Reserve Bank
of India at the BIS-BNM Workshop on Financial Inclusion Indicators at Kuala Lumpur
on November 5, 2012.
6. FICCI, Promoting FinancialInclusionCan the constraints of political economybe
overcome?,UNDP-NABARD Financial Inclusion Project reportunder a Micro Capital
Grant toFederation of Indian Chamber of Commerce and Industry.
7. Press Information Bureau, GOI (2008),Ministry of Finance Recommendations of the
Committee on Financial Inclusion
8. RajeshJeganathan(2012), Measures for achieving financial inclusion in India Infosys
Finacle, Thought paper, pp.1-5.
9. SeshadriT. V.,Financial inclusion not by banks alone, Business line, November 8,
2012

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