Banking for all takes a hit as 1 crore Jan Dhan accounts frozen

Mumbai: Nearly 1 crore Jan Dhan Accounts were frozen by banks last year due to a ‘no transaction' activity in these no-frills accounts, a report published in the Statesman claims.

Government started these accounts to include more number of people who had for long been deprived of benefits of country's financial system under a programme called financial inclusion.

Prime Minister Narendra Modi accelerated the scheme so that more number of people are extended benefits of country's vast networks of banks and financial system.

Till last year, there were 28 crore Jan Dhan Account holders of which only a paltry 1.8 crore customers had more than Rs 5,000 balance in them.

Country’s largest public sector lender State Bank of India incurred around Rs 800 crore in maintenance of these accounts. SBI along with other lenders started to slap fines for non-maintenance of minimum balance.

The bank had clarified that it started the penalty as it has had to manage a large number of no-frills accounts.

Around 25 per cent of total Jan Dhan accounts continue to have zero balance in them. According to the Satesman report, zero-balance accounts were 23.27 per cent of total deposits made into these accounts at the start of 50 days demonetisation exercise.

 The number came down to 22.84 per cent by 30 November and at present the zero-balance accounts stand at 24.86 per cent, the report said.

Public Sector Banks have been grappling with large number of stressed assets and bad loans. The non-performing assets of these banks have gone up much higher over the past few years. Presently, banks are staring at total NPAs worth $5.3 billion.

The Reserve Bank of India and government's chief economic advisor Arvind Subramanian have mooted measures to tackle these bad assets which are still at proposal level.