Friday, 12 Sep, 2025
Deposits overall and their growth is still dominated by middle, upper middle class and rich Indians.
Latest data released by the Reserve Bank of India reveals that deposits in banks have displayed a healthy growth rate in the year ending March 2022 at 10%, though it was slower than the growth rate of 11.9% the previous year. Savings and current account deposits that pay very low interest now account for the bulk of incremental deposits, at 56.6% and 60.9% respectively. The data means that the shock of dementia action and its after effects that were felt for years is now finally weaning off. Another interesting data point was that females accounted for almost 36% of the incremental deposits compared to just 16% the previous year. In rural India, females accounted for almost two thirds of the incremental deposits.
What has gone largely unnoticed is the steady and often spectacular growth in deposits under what is called the Jan Dhan Yojana under which poor Indians can open zero balance bank accounts and even get a Rupay debit card along with life insurance in the bargain. When the banking sector was
nationalised in the late 1960s and early 1970s, one of main reasons proffered was that private sector banks did not entertain poor Indians as depositors and customers. Nationalisation was supposed to make banks more “inclusive” and encourage poor Indians to become part of the formal banking system. Unfortunately, nothing of the sort happened for more than four decades as more than 60% of Indians did not have bank accounts before the zero balance Jan Dhan Yojana was launched in 2014. Close to 300 million Indians opened their first bank account in a flurry of activity in the first few months after the scheme was launched, a majority of them with literally zero balance or some nominal amount in their accounts.
This prompted many cynics to write off the scheme as a non starter. Many surveys conducted after the launch found that a majority of the depositors were financially “illiterate” and di not really know how to operate accounts. But the cynics have turned out to be wrong. The ministry of finance recently released state wise details of Jan Dhan accounts that is updated to June 15, 2022.
Overall, 457 million Indians now have Jan Dhan accounts and the total amount in deposits stands at Rs 1,67,825 crores. By any yard stick, that is not a small number and the explosion in digital transactions have put to rest all doubts about financial illiteracy. As the accompanying chart shows, it is states with relatively higher rates of poverty that have more Jan Dhan accounts and more
money deposited in them.
To give just one example, Tamil Nadu with a much higher population had total deposits of Rs 3449 crores while a smaller Odisha had Jan Dhan account deposits of Rs 7488 crores. Leading the pack, naturally is the largest state with relatively high levels of poverty, Uttar Pradesh. It had Rs 33,675 crores in Jan Dhan deposits. Deposits overall and their growth is still dominated by middle, upper middle class and rich Indians. But the Jan Dhan example shows inclusion also helps.
