Gap between PMJDY scheme beneficiaries and RuPay cards issued widens

More than 38.2 million beneficiaries were added under the Pradhan Mantri Jan Dhan Yojna (PMJDY) in a year (December 2019 to December 20­20), according to the website of the scheme. However, only 8.9 million additional RuPay cards were issued to beneficiaries during this period.

This comes at a time when the government has been pushing banks to focus more on RuPay cards and provide it as the first option to customers. 

According to the PMJDY website, benefits under PMJDY include one basic savings account for an unbanked person, where there is no need to maintain a minimum balance. Also, RuPay debit card is provided to these account holders.

The card can be used to make transactions at all ATMs, point of sale (PoS) terminals, and e-commerce websites. It also comes with a personal accidental death and total disability coverage of up to Rs 2 lakh. 

RuPay, operated by the National Payments Corporation of India (NPCI), is India’s homegrown card network. It competes against glo­bal peers such as Visa and Mastercard in the Indian market. Gov­ernment data on the PMJDY website shows that as of December 30, 2020, there are 415.8 million beneficiaries under the central government’s ambitious financial inclusion programme (PMJDY). Deposits in these accounts are a little over Rs 1.35 trillion.

However, for the 415.8 million beneficiaries under the scheme, only 306.2 million RuPay cards have been issued. A year ago, as of December 25, 2019, the number of beneficiaries under PMJDY were 377.6 million while the number of Rupay debit cards issued to beneficiaries was 297.3 million. Similarly, a year prior to that (as of December 26, 2018), the total number of beneficiaries were 336.56 million and the number of RuPay cards issued were 268.71 million. So, clearly, the gap has been increasing every year.  

According to Anand Kumar Bajaj, founder of Pay­Nearby, in November 2019, around 150 million RuPay cards were moved out of the acceptance system as they were not chip and pin compliant. So, this could be one of the explanations for the gap. Bajaj also argued that income to banks from RuPay debit cards has reduced because of the government’s decision to do away with MDR (merchant discount rate). So, the banks are in a dilemma when it comes to issuing RuPay debit cards. 

“More importantly, the ru­ral population is able to get access to money through thumb impressions. Hence, there is no requirement of a debit card and a PoS machine. Also, there are not enough PoS ma­chines in rural areas. So, with UPI coming up, what is the point of giving cards?” he said. 

Explaining the gap, a senior banker said it is always not technically possible to issue a card even when the rule says otherwise. “PMJDY accounts have to be issued RuPay cards. But it is not possible to do 100 per cent coverage. I do not thi­nk banks are avoiding issuing RuPay cards to PMJDY acco­unts. At least for public sector banks, no MDR on Ru­Pay cards is not really an issue,” the public sector banker added. 

To make RuPay cards attractive to banks, a request has been made to the government to re-introduce MDR on RuPay, the banker said. 

In its annual progress report on banking, the Reserve Bank of India (RBI) had said that in six years of its implementation, the total nu­mber of accounts opened un­der PMJDY reached 414 milli­on, with Rs 1.30 trillion of de­­p­osits as of December 2, 2020. 

Of these accounts, nearly two-thirds are operational in rural and semi-urban areas. As on September 2020, more than 60 per cent of PMJDY accounts were with public sector banks. However, usage of these ac­counts remains a concern, with lacklustre growth in the average balance in these accounts.