Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts are in focus again thanks to the new notification by the Reserve Bank of India (RBI) imposing withdrawal limits on such bank accounts . The ostensible reason for this is concern that such accounts might be being used to convert demonetized currency into legal tender without inviting attention from the tax authorities.

The possible misuse of Jan Dhan accounts has been a common concern in public discourse ever since the prime minister announced the withdrawal of high-denomination notes on 8 November. There has been special concern about the so-called “zero-balance accounts" (Jan Dhan accounts that had never seen transactions), since they are likely to belong to marginalized sections of society.

Data on Jan Dhan accounts released on 23 November shows that zero-balance accounts are unlikely to have been misused. The total number of zero-balance accounts has decreased by less than 1% since demonetization, from 59.4 million accounts on 9 November to 58.9 million on 23 November.

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That the number of zero-balance Jan Dhan accounts hasn’t changed by much is both comforting and worrying—comforting that accounts of people who had never used their accounts earlier haven’t been abused for cleaning up possibly unaccounted money, and worrying that the holders of these accounts aren’t using them even in times when cash transactions are restricted. It also raises the question as to whether these accounts are real, and if the holders are aware of their existence.

It is also intriguing to note that there are significant regional variations in the use of unused Jan Dhan accounts. In Uttarakhand, the number of zero-balance accounts went down by 15% in the three-week period from 2 November to 23 November, while in Jammu and Kashmir the number went down by 12%. In Maharashtra and Assam, though, the number of zero-balance accounts has actually gone up, suggesting that either people have withdrawn whatever money they already had, or the creation of new accounts has trumped the inflow into hitherto dormant accounts.

Interestingly, as the picture shows, despite banks being overwhelmed with cash operations since the demonetization, they continued to open Jan Dhan accounts through the fortnight following 8 November. The number of Jan Dhan accounts went up from 255.1 million on 9 November to 256.7 million on the 23rd, an increase of 0.6%, which is impressive for a two-week period. There is an interesting rural-urban variation here, though, as the graph suggests.

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In rural areas, account opening virtually stopped in the first week after demonetization, as banks seemed to mainly focus on cash operations. In urban areas, however, it seems like banks actively helped open accounts in the first week after demonetization. Account opening continued as usual in both urban and rural areas beyond the first week of demonetization.

Finally, Jan Dhan accounts have seen a large increase in deposits in the first two weeks after demonetization, mostly in the first week. Between 8-23 November, aggregate balance in Jan Dhan accounts went up by 60% (from Rs45,000 crore to Rs72,000 crore).

To put this in context, the total value of all bank balances went up from Rs5.9 trillion on 11 November to Rs9.4 trillion on 18 November—an increase of 58% (data from RBI).

While we are comparing two different time intervals here, it suggests the increase in balance in Jan Dhan accounts is not extraordinary—on aggregate, they are being used to the same extent as non-Jan Dhan bank accounts.

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