Bridging the Gap: Understanding and Addressing the Disparity in RuPay Debit Card Issuance under PMJDY

As of November 20, 2024, the Pradhan Mantri Jan Dhan Yojana (PMJDY) has facilitated the opening of 54.03 crore accounts, making it the world's largest financial inclusion initiative.

However, only 36.92 crore RuPay debit cards have been issued, leaving a significant gap of 17.11 crore cards, according to the Department of Financial Services (DFS) Report.

This disparity highlights systemic, operational, and behavioral challenges that need to be addressed to achieve the program's broader financial inclusion objectives.

Analyzing the Data

• Inactive Accounts: Over 20% of PMJDY accounts remain inactive, as per the RBI’s Financial Inclusion Index Report, indicating low engagement among a significant segment of beneficiaries. Dormant accounts often do not receive debit cards due to cost considerations by banks.
• Usage Metrics: Only 28% of issued RuPay debit cards are reportedly used regularly for transactions, as per NPCI data (2024), showcasing the limited adoption of digital payments among PMJDY account holders.
• Demographics: The majority of PMJDY accounts are concentrated in rural India, where financial literacy levels are significantly lower. According to a survey by the Centre for Digital Financial Inclusion (CDFI), nearly 50% of rural respondents were unaware of the benefits of RuPay debit cards.
• Geographical Constraints: States like Uttar Pradesh, Bihar, and Madhya Pradesh account for over 35% of PMJDY accounts but also lead in the gap between accounts and RuPay card issuance, as highlighted in the latest DFS review.

Probable Reasons for the Gap

1. Low Demand for Debit Cards:Lack of awareness regarding RuPay card benefits, such as accidental insurance coverage (₹2 lakh) and cashback programs.Preference for cash transactions among rural account holders, where digital payments infrastructure is minimal.
2. Bank Operational Constraints:Rapid account openings often outpace the issuance of RuPay debit cards due to limited resources and logistics bottlenecks.Challenges in card activation and delivery in remote areas due to infrastructure deficits.
3. Financial and Behavioral Factors:Fear of incurring hidden charges or losing money due to card usage, as revealed by a NITI Aayog survey on rural financial behaviors.Dormant accounts, which banks may deprioritize for card issuance to save costs.
4. Supply Chain and Vendor Limitations:Limited production capacity of RuPay cards and challenges in distributing cards to far-flung rural areas.

Steps to Address the Issue

1. Enhance Financial Literacy:

Targeted Awareness Campaigns: Conduct large-scale campaigns using local languages and digital mediums to educate beneficiaries on the benefits of RuPay debit cards.

Grassroots Engagement: Partner with self-help groups, NGOs, and financial literacy centers to improve awareness and usage among rural population.

School and College Drives: Introduce financial literacy modules focusing on digital payments and RuPay benefits.

2. Strengthen Operational Efficiency:

Automated Issuance: Link debit card issuance directly with account opening, using Aadhaar-based e-KYC to streamline the process.

Virtual Debit Cards: Offer virtual RuPay cards for instant access, reducing logistical delays.

Improved Infrastructure: Deploy mobile banking vans or camps in remote areas to deliver cards and activate accounts on-site.

3. Incentivize Activation and Usage:

Usage Rewards: Provide cashback offers or discounts for initial RuPay card transactions.

G2P Integration: Mandate the use of RuPay cards for government-to-person (G2P) payments, such as subsidies and scholarships.

Tiered Incentives: Offer tiered benefits like enhanced insurance coverage for frequent card users.

4. Address Dormant Accounts:

Periodic Reviews: Banks should regularly monitor and activate dormant accounts with targeted outreach programs.

Account Merging: Merge multiple accounts under one holder to simplify management and ensure active participation.

5. Resolve Supply Chain Constraints:

Expand Partnerships: Increase partnerships with vendors for card production and distribution.

Public-Private Collaborations: Leverage fintech companies to enhance logistics and delivery capabilities.

6. Strengthen Monitoring and Reporting:

Establish a PMJDY Card Gap Dashboard to track real-time data on account openings, card issuance, and activation at the state and district levels.

Conduct third-party audits to identify operational bottlenecks and recommend corrective measures.

Call to Action:

The gap of 17.11 crore debit cards under the PMJDY scheme reflects both structural challenges and behavioral gaps. Addressing this requires a holistic strategy involving operational improvements, awareness drives, and policy interventions.

By ensuring that every PMJDY account holder receives and actively uses a RuPay debit card, India can take a decisive step toward a fully inclusive digital economy. Stakeholders, including banks, regulators, and fintech companies, must collaborate to achieve this critical goal, reinforcing PMJDY's success as a cornerstone of India's financial inclusion story.