Pradhan Mantri JanDhan Yojana (PMJDY)

Launched in 2014, the Pradhan Mantri JanDhan Yojana (PMJDY) has been recognized for transforming financial inclusion in India. Among its notable features is the overdraft facility, which provides account holders with access to credit without any collateral fees. This article covers the PMJDY overdraft, its benefits, eligibility, and limitations.

An account with a zero balance requirement can be opened at any authorized bank. However, if a cheque book is desired, a minimum balance must be maintained by the account holder.

The Jan Dhan overdraft scheme is a game-changer for many people in semi-urban and rural areas who can avail credit from the government in their time of need rather than depending on informal moneylenders. 

Understanding Pradhan Mantri JanDhan Yojana Overdraft:

PMJDY overdraft allows eligible account holders to withdraw additional funds beyond their account balance, up to Rs 10,000. This overdraft facility is available for people with low income and who are underprivileged. Only one member of the family can apply for the overdraft facility after 6 months of opening the account under this scheme.  

This acts as a safety net for unexpected expenses or temporary cash flow shortages. The purpose of this scheme is to provide free credit to those who are in need to meet their expenses without compromising on security.  

Benefits of PMJDY Overdraft: 

Through the PMJDY customers get the facility of an ATM card or ATM-cum-debit card without any extra charge which will help them in doing cashless transactions in future. Below are the additional benefits provided to the account holders for availing this facility:

  • Financial security: This overdraft buffer provides immediate access to funds for emergencies, such as medical needs or urgent repairs, thus preventing individuals from turning to banks for assistance or resorting to large loans.
  • Furthermore, it promotes responsible borrowing. Since the overdraft amount is limited, it encourages individuals to use credit wisely, thereby building a positive credit history for future loan applications.
  • Additionally, the feature reduces cash dependence. By promoting cashless transactions through debit cards, the overdraft option discourages reliance on physical cash, ultimately enhancing both financial security and transparency.
  • Moreover, the scheme boosts financial inclusion. By offering easy credit access to those who previously lacked bank accounts, the PMJDY scheme enables them to participate in the formal Indian economy.

Eligibility and Limits of Pradhan Mantri JanDhan Yojana:

  • The age limit for availing the PMJDY overdraft facility is 18 – 65 years.
  • The account holder must have a good transaction and credit history to avail this facility.
  • KYC verification like linking the Aadhaar number, mobile number and other biometrics with the bank account is mandatory. 

Important Points to Remember:

  • The repayment period and process for the overdraft are quite flexible, ranging from 6 months to 1 year depending on the policy of the bank.
  • Overdraft won’t break the Aadhaar link: the overdraft status, whether active or inactive, does not directly affect the Aadhaar link with the PMJDY account.
  • A nominal interest rate is applied, calculated based on the amount borrowed from the bank. The interest rate ranges from @1 Year MCLR + 3%, which is set by the bank itself. 
  • On-time repayment of borrowed overdraft amounts is important to maintain a good credit history and continue availing the facility.
  • Account holders need to calculate their financial needs and capacity before applying for the overdraft to avoid any unseen circumstances.