ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Pradhan Mantri Jan Dhan YojanaSubscribe to Pradhan Mantri Jan Dhan Yojana

Determinants of Digital Technology Adoption and Financial Inclusion in India

The status of digital technology adoption after the launch of Pradhan Mantri Jan Dhan Yojana in 2014 is examined. Using microdata from two rounds (2013 and 2015) of a pan-India survey, the uptake of digital technology platforms among Indian adults for making financial transactions is examined and its determinants are investigated. The results suggest that being male and having a higher education, salaried job, smartphone, and access to mobile internet are positively associated with higher uptake of digital technology platforms. These results are fairly robust across empirical specifications.

Can Jan Dhan Yojana Achieve Financial Inclusion?

While there has been a tremendous increase in the number of bank accounts opened, the data show that the average balance in these accounts is low and a significant proportion of the accounts are inoperative. Although there was a rise in the average deposits during demonetisation, they later settled at a lower level. Further, financial inclusion means not just the opening of bank accounts but, more importantly, access to credit from formal sources. The limited data available in this regard show that after the Pradhan Mantri Jan Dhan Yojana was launched there has not been any increase in the credit–deposit ratio and the share of small loans has continued to decline. Very few people have benefited from the overdraft facility that is supposed to be provided by the accounts under the scheme. Issues of access to banking in rural areas remain.
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