Debit card and Jan-Dhan: The decline should be explained

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Of all the flagship schemes of the Narendra Modi government, Pradhan Mantri Jan-Dhan Yojana which is a part of the financial inclusion programme is perhaps the most successful. Since August 2014 when the programme was unveiled, as many as 42.42 crore people – well over the combined population of the US and UK – have got bank accounts. Apart from the sheer expanse of the number, the programme has also enabled them to leapfrog into the world of digital transactions through the issuance of debit-cum-ATM cards which also offer them insurance benefits free of cost.

However, the data available in the public domain include a slow but steady decline in the share of Jan-Dhan beneficiaries who have been issued debit cards. While 73.22% of the beneficiaries had debit cards at the end of March 2021, the share declined to 73.17% at the end of April which again crept down to 73.07% at the end of May.

Though the rate of decline is slow, it certainly points to an area that needs both explanation and improvement. The 73% odd share is itself low since an avowed objective is a push for digital transactions. Moreover, the decline is a move just in the opposite direction.

In fact, if one goes a level deeper into the data, it reveals wide disparities between states in the issuance of debit cards. In end-March, about 90% of Jan-Dhan account holders in Ladakh had debit cards while only 35.14% had them in Manipur. All the states and union territories ranked somewhere in between. The disparity in debit card coverage is worrisome. Apart from encouraging a culture of digital transaction, the regular use of these cards also makes an individual eligible for certain facilities including accident insurance cover of Rs 2 lakh.

The pandemic cannot be an excuse for the decline. In April and May, the number of Jan-Dhan beneficiaries went up by 22 lakh – or about 36,000 every day.