Concerned over the sharp increase in deposits of around 60 per cent in Jan Dhan Accounts since the demonetisation move, the RBI has now capped withdrawals from these accounts at Rs 10, 000 per month. The cap has been set even lower at Rs 5,000 for limited or non-KYC compliant account holders. The locking-in of money of customers who are mostly new to the banking system, may evoke some discontent in the short term. But purely based on data, the RBI’s limit does not appear out of place.
The concern
The Jan Dhan Scheme launched in August 2014 was credited for opening 8 crore accounts within 100 days; the current tally is over 25 crore. Routing subsidies through these accounts helped address the issue of dormancy --- the share of zero-balance accounts fell sharply from over 60 per cent levels in the initial phases of the implementation of the scheme to about 23 per cent at the beginning of November this year. But it took more than two years for the scheme to garner deposits of about Rs 45,636 crore (as of Nov 9, 2016). In just two weeks after the demonetisation scheme, deposits in these accounts have swelled by half this amount to around Rs 72,800 crore (as of Nov 23, 2016). The sharp jump has raised concerns on the possible misuse of these accounts.
In some states, the increase has been much sharper. For instance, deposits in Andhra Pradesh, Daman & Diu, Gujarat, Jammu & Kashmir, Karnataka, Manipur, Meghalaya, Rajasthan and Tamil Nadu, have gone up by over 70 per cent.
Low balances
With the increase in deposits, the average balance held in these accounts, has swelled too. But it still remains well below the cap set by the RBI for withdrawal. As per data put out on the PMJDY website, the average balance per account, which stood at about Rs 1,780 as on Nov 9, has gone up to around Rs 2,836. The RBI’s withdrawal limit of Rs 10,000 a month is way above the average balance held in these accounts even after the sharp spike in deposits over the past two weeks.
States such as Andaman & Nicobar, Daman & Diu, Goa, Haryana, Himachal Pradesh, Punjab, Lakshadweep and Tripura report over Rs 5,000 per account as balances. While some of these states did have a higher-than-average balance even earlier (before the demonetisation move), in some states such as Daman & Diu, Goa, Haryana, Himachal Pradesh and Punjab, the increase has been sharp.
Interestingly, Lakshadweep ,which has the lowest number of accounts (5,244), sports the highest amount of average balance in each account at around Rs 10,100.