Banking for the unbanked: an evaluation of the Pradhan Mantri Jan Dhan Yojana

Abstract

Financial inclusion schemes have a crucial role to play in India considering that a very section of the population does not have access to the formal banking sector. Financial inclusion programs can directly benefit the lower income households at the micro level through savings, spending, and reduction in transaction costs. First, access to a bank account allows consumers to earn interest on their savings and provides incentives to save more. Second, savings in the bank account could help circumvent behavioural biases that would otherwise have caused them to spend this money (Benartzi & Richard, 2004).