Pradhan Mantri Jan-Dhan Yojana (PMJDY) is necessary for bringing unbanked to the institutional finance fold. Do you agree with this for financial inclusion of the poorer section of the Indian society? Give arguments to justify your opinion.
Approach · directive: “do you agree / give arguments”
What it asks · Take a position on whether PMJDY is necessary for including the poor in formal finance, backed by arguments for and against its effectiveness.
The question has 2 parts — answer each
- Take a clear position: is PMJDY necessary for bringing the unbanked poor into institutional finance
- Give arguments to justify the opinion, weighing PMJDY's strengths against its limits
Open with · Financial inclusion means timely, affordable access to basic financial services; PMJDY, launched in August 2014, aimed at a bank account for every unbanked household.
Cover
- Agree, access: zero-balance accounts, a RuPay debit card with accident cover and later an overdraft facility brought hundreds of millions of poor people into banking.
- Agree, delivery: with Aadhaar and mobile numbers (the JAM trinity), accounts carry direct benefit transfers of subsidies and wages and cut leakages and middlemen.
- Agree, security: savings, remittances and linked insurance and pension products reduce dependence on moneylenders and give protection against shocks.
- Limits: many accounts are dormant, zero-balance or duplicate, and account ownership has not always meant active use of credit, insurance or pensions.
- Limits: poor connectivity, few business correspondents in remote areas, low financial and digital literacy, and small overdraft uptake weaken last-mile impact.
- Alternatives: the poor also need credit and insurance; microfinance, self-help groups and small-loan schemes are complements, not substitutes, for basic accounts.
- Way forward: link accounts to credit and insurance, expand banking outlets and digital payments, run financial literacy drives, and track active use, not only openings.
Close with · PMJDY is necessary as the base of inclusion, but it becomes sufficient only when accounts are used for savings, credit and protection.
Add value (verified)
- Official PMJDY scheme page: RuPay-card accident cover of Rs 1 lakh, enhanced to Rs 2 lakh for accounts opened after 28 August 2018; overdraft facility now up to Rs 10,000. ↗“Insurance Cover of Rs.1 lakh (enhanced to Rs. 2 lakh to new PMJDY accounts opened after 28.8.2018) is available with RuPay card issued to the PMJDY account holders. An overdraft (OD) facility up to Rs. 10,000 to eligible account holders is available.”
Question: UPSC's CS (Main) 2016, GS Paper III — paper ↗. Approach: Minimalist IAS, checked 30 Sept 2026 (how we verify) — UPSC publishes no model answers. ·
Model answer · 277 words (UPSC limit 200) · Minimalist IAS
Financial inclusion means timely, affordable access to basic financial services. PMJDY, launched in August 2014, aimed at a bank account for every unbanked household, and it is necessary, though not sufficient, for bringing the poor into institutional finance.
Why PMJDY is necessary
- Access: zero-balance accounts, a RuPay debit card with accident cover of Rs 1 lakh and an overdraft facility after satisfactory operation brought hundreds of millions of poor people into banking for the first time (since then, the cover is Rs 2 lakh for accounts opened after August 2018 and the overdraft limit is Rs 10,000).
- Delivery: with Aadhaar and mobile numbers, the JAM trinity, accounts carry direct benefit transfers of subsidies, pensions and MGNREGA wages, cutting leakages and middlemen.
- Security: savings, remittances and linked micro-insurance and pension products (PMJJBY, PMSBY, Atal Pension Yojana) reduce dependence on moneylenders and protect against shocks.
- Entry point: an account is the first step to a credit history, digital payments and formal saving.
Limits: necessary, not sufficient
- Many accounts are dormant, zero-balance or duplicate; ownership has not always meant active use of credit, insurance or pensions.
- Poor connectivity, thin business-correspondent networks in remote areas, low financial and digital literacy and small overdraft uptake weaken last-mile impact.
- The poor also need affordable credit and insurance; self-help groups, microfinance and MUDRA loans complement basic accounts rather than replace them.
Making it work
- Link accounts to credit and insurance, expand banking outlets and digital payments, run financial literacy drives, and track active use rather than the number of openings.
PMJDY is the necessary base of financial inclusion for the poor; it becomes sufficient only when accounts are used for saving, credit and protection.
Written by Minimalist IAS from facts checked at source (how we verify) — a little fuller than exam length, so every part of the question is covered; in the hall, keep the structure and trim the detail. UPSC publishes no model answers: compare your structure and coverage with this, then write your own.