India is now ahead of China in financial inclusion metrics

Crime rate and consumption of intoxicants such as alcohol and tobacco products have declined in states where more Jan Dhan accounts have been opened, the country’s largest bank State Bank of India has said in a research report.

“This could be because of Jan Dhan-Aadhaar-mobile trinity, which has helped in better channelising of government subsidies and helped in curbing the unproductive expenditure such as alcohol and tobacco expenses in rural areas,” it said. Estimated results indicate that rise in the number of Pradhan Mantri Jan Dhan Yojana accounts and balance in these accounts lead to a significant fall in crime, it said.

Since its launch in 2014, the total number of accounts opened under PMJDY has reached 43.7 crore, with ₹1.46 lakh crore of deposits as on October 20, 2021. Nearly two-thirds of these accounts are operational in rural and semi-urban areas. Of all the Jan Dhan accounts, over 78% are with public sector banks and another 18.2% are with regional rural banks, leaving the share of non-state-owned banks at just about 3%.

“India is now ahead of China in financial inclusion metrics,” the SBI report said. “However, it is important to finetune non-branch BC (business correspondent) models.”

It pointed out that although PSBs have taken the lead in financial inclusion, they are now net payers of interchange fee as there is no level playing field in infrastructure provided by all banks.

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