Governance
PMJDY: India’s Quiet Banking Revolution That Strengthened Stability
By By Nikhil Srivastava, Praveen Mohanty, and Nidhi Kesari- 06 Aug 2025
707New Delhi (06.08.2025): When the Pradhan Mantri
Jan Dhan Yojana (PMJDY) initiative was rolled out in 2014, it wasn’t just a
policy announcement, it was the beginning of one of the world’s most ambitious
financial inclusion campaigns. Over 400 million[i] bank accounts were opened,
granting millions of underserved Indians access to formal financial services. Over
the decade, deposits in these accounts increased from ₹14.6 thousand crore to
₹260.3 thousand crore. While the private banks opened 179 lakh accounts by 2025
(77 lakh rural and 102 lakh urban accounts), public banks reported a
significantly larger footprint by opening 5,319 lakh accounts, including 3,578
lakh in rural areas and 1,741 lakh in urban areas. Therefore, public banks
(public sector banks and regional rural banks combined) accounted for over 96%
of the beneficiaries and over 97% of the deposits in these accounts. The program was widely
celebrated for its social impact: enabling direct welfare transfers, fostering
digital payment adoption, and empowering economically marginalized communities.
However, there’s a quieter yet equally powerful story that hasn’t been in the
spotlight, the profound influence this initiative has had on stabilizing
India’s banking sector. Our recent study[ii] reveals that financial
inclusion through PMJDY wasn’t just a win for the underserved; it was also a
win for the banking system itself. By analyzing data from 38 Indian banks
between 2015 and 2021, we uncovered a clear connection between financial
inclusion and improved bank stability. The results were striking, with
particular emphasis on the outsized impact of rural financial inclusion on
overall bank stability. One of the most important findings was how expanding
access in rural areas contributed significantly to the resilience of banks. Banks with more PMJDY
accounts, especially in rural areas, were consistently healthier, away from
financial distress, maintained stronger low-cost deposit bases, and faced lower
risks of bad loans. Rural branches often struggled with liquidity; this was a
game-changer under the PMJDY. Rural
India played a transformative role by making the system more resilient during economic fluctuations. A
Quiet Revolution with National and Global Lessons The Government should
strengthen the Public Sector Banks (PSBs) which emerged as leaders in
translating financial inclusion into institutional stability. Despite opening
more Jan Dhan accounts than private banks, PSBs showed improvements in key
stability metrics like CASA ratios. This study challenges us to rethink
financial inclusion, not just as a moral or developmental goal, but as smart
banking strategy. By increasing participation in the formal financial system,
programs like PMJDY reduce risk for banks, build stability, and strengthen the
broader economy. India’s success offers
valuable insights for other nations facing inequality and fragile banking
systems. The message is clear: inclusion isn’t just about empowering
households; it’s about fortifying the institutions that serve them.
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PMJDY: India’s Quiet Banking Revolution That Strengthened Stability
By By Nikhil Srivastava, Praveen Mohanty, and Nidhi Kesari - 2025-08-06 22:53:00
New Delhi (06.08.2025): When the Pradhan Mantri Jan Dhan Yojana (PMJDY) initiative was rolled out in 2014, it wasn’t just a policy announcement, it was the beginning of one of the world’s most ambitious financial inclusion campaigns. Over 400 million[i] bank accounts were opened, granting millions of underserved Indians access to formal financial services. Over the decade, deposits in these accounts increased from ₹14.6 thousand crore to ₹260.3 thousand crore. While the private banks opened 179 lakh accounts by 2025 (77 lakh rural and 102 lakh urban accounts), public banks reported a significantly larger footprint by opening 5,319 lakh accounts, including 3,578 lakh in rural areas and 1,741 lakh in urban areas. Therefore, public banks (public sector banks and regional rural banks combined) accounted for over 96% of the beneficiaries and over 97% of the deposits in these accounts.
The program was widely celebrated for its social impact: enabling direct welfare transfers, fostering digital payment adoption, and empowering economically marginalized communities. However, there’s a quieter yet equally powerful story that hasn’t been in the spotlight, the profound influence this initiative has had on stabilizing India’s banking sector.
Our recent study[ii] reveals that financial inclusion through PMJDY wasn’t just a win for the underserved; it was also a win for the banking system itself. By analyzing data from 38 Indian banks between 2015 and 2021, we uncovered a clear connection between financial inclusion and improved bank stability. The results were striking, with particular emphasis on the outsized impact of rural financial inclusion on overall bank stability. One of the most important findings was how expanding access in rural areas contributed significantly to the resilience of banks.
Banks with more PMJDY accounts, especially in rural areas, were consistently healthier, away from financial distress, maintained stronger low-cost deposit bases, and faced lower risks of bad loans. Rural branches often struggled with liquidity; this was a game-changer under the PMJDY. Rural India played a transformative role by making the system more resilient during economic fluctuations.
A Quiet Revolution with National and Global Lessons
The Government should strengthen the Public Sector Banks (PSBs) which emerged as leaders in translating financial inclusion into institutional stability. Despite opening more Jan Dhan accounts than private banks, PSBs showed improvements in key stability metrics like CASA ratios. This study challenges us to rethink financial inclusion, not just as a moral or developmental goal, but as smart banking strategy. By increasing participation in the formal financial system, programs like PMJDY reduce risk for banks, build stability, and strengthen the broader economy.
India’s success offers valuable insights for other nations facing inequality and fragile banking systems. The message is clear: inclusion isn’t just about empowering households; it’s about fortifying the institutions that serve them.
