Chart of the week: Jan-Dhan accounts - many a little makes a mickle

28 Mar 2024 , 11:26 AM

Analysts at IIFL Capital Services took a deep-dive into the Pradhan Mantri Jan-Dhan Yojana (PMJDY). They believe that the primitive perception of Jan-Dhan deposit accounts being low-balance, largely inoperative, focused only on financial inclusion and immaterial to banking system needs to change. Since its launch in 2014, the scheme has made significant strides, particularly in the recent years, with 520 million beneficiaries (35% of India’s population) holding US$27 billion of deposits (3% of system savings deposit). PMJDY deposits have grown at an 18% CAGR in the last five years versus 10% for the system; balance per account is also growing at a 3x faster clip than that for the system. While the banking system has been grappling with a sharp slowdown in CASA, PMJDY has contributed 10% to incremental system savings deposits in the last two years. This underscores its stickiness, lower rate sensitivity and benefit of low-cost funds for the banks. PSU banks are the key beneficiaries with PSU+RRBs having a 97% market share, and no competition from the private banks.

Deposits under the scheme have grown ~15x since March 2015

Beneficiaries under the scheme have grown at 15% CAGR over the past 9 years