Jan Dhan Failures in Vidarbha: Farmers Left Without Aid

thenewsdirt
Aug 22
8 min read

The government’s push to bring rural India into the banking fold has hit unexpected snags in Vidarbha.

Under the Pradhan Mantri Jan Dhan Yojana (PMJDY), tens of millions of new bank accounts were opened nationwide for low-income families. In Vidarbha, a cotton-growing region in Maharashtra, officials once hoped this would speed up payments and social benefits to farmers. Instead, audits and news reports find many accounts inactive or misused, and aid money slipping through the cracks.

Local data and expert accounts reveal that despite millions of Jan Dhan accounts on record, a significant share remained unused.

The result is that farmers are denied relief, and millions of rupees are sitting idle. This article examines how the scheme’s promise has fallen short in Vidarbha.

Jan Dhan Yojana in Vidarbha

When Prime Minister Narendra Modi launched the Jan Dhan Yojana in 2014, the goal was to provide a zero-balance bank account to every unbanked adult.

In Vidarbha’s rural districts, the plan was to link Aadhaar IDs and mobiles to these new accounts, enabling direct subsidy payments for things like kerosene, fertiliser, and welfare schemes. State leaders pushed the programme hard after a major drought in 2015.

Maharashtra’s relief minister even urged district officials to enrol farmers immediately. “District officials have been asked to encourage the Jan Dhan Yojana. Once their accounts are opened, farmers will receive the aid,” he said. In other words, government compensation cheques would only flow if recipients had Jan Dhan accounts.

On the ground, account opening did surge. In the aftermath of demonetisation in late 2016, banks in Vidarbha saw a flood of deposits into these new accounts.

Financial regulators noted that 1,500 Jan Dhan accounts in Vidarbha received about ₹220 crore in cash between mid-November and mid-December 2016. That averages over ₹1.4 lakh per account, far above what low-income holders normally keep.

In most cases, depositors did not provide PAN details, instead submitting declarations of low income. This unexpected cash windfall, including individual deposits of up to ₹7 lakh, showed that the accounts were being widely opened and used.

The authorities assumed such accounts belonged to poor families, since official rules assume Jan Dhan users have incomes below the taxable threshold.

In that sense, at least on paper, the Jan Dhan drive had expanded access: many people had accounts that could receive payments.

At the same time, the state went digital with its aid. By 2015, Maharashtra had shifted its drought relief to direct transfers into bank accounts to cut corruption. Officials bragged that under the new “DBT” system, compensation would “go to the affected farmer or remain with the government.”

The plan was that Jan Dhan accounts would ensure timely payments, and indeed, officials hoped “the NDA government’s Jan Dhan Yojana” would resolve past problems. But as we shall see, having an account on record did not guarantee it worked as intended.

Challenges and Inactive Accounts

Despite the initial fanfare, many Jan Dhan accounts in Vidarbha proved underutilised. A steady stream of reports and audits found large numbers of inactive or dormant accounts, even as banks struggled to serve remote villages.

By late 2023, the Union finance ministry admitted that around 20% of the 51.11 crore Jan Dhan accounts opened nationwide had become inoperative.

These “inoperative” accounts, defined by the RBI as having no transactions for two years, included millions more in Maharashtra. In fact, a 2025 update showed roughly 23% of India’s 56 crore accounts were inactive.

Within Vidarbha, banking insiders say the situation was worse than the headline figures. In a May 2023 meeting, Finance Minister Bhagwat Karad noted that many bank branches in Vidarbha met only a fraction of their targets. At some rural banks, only 12%–26% of the eligible population’s accounts were functional. In plain terms, even when accounts had been opened, most holders did not use them. Lack of connectivity, illiteracy about banking, and distant branches all contributed.

Economists pointed out deeper issues. TISS researcher R. Ramakumar warned that local bankers were often “reluctant to open accounts” under Jan Dhan, and that a “large number of accounts opened are non-functional or duplicate.” In other words, many accounts existed only on paper.

He argued that if aid disbursement depended strictly on active bank accounts, “this would cut off many in need of immediate relief.” Indeed, in the chaos of disasters, farmers could not wait for paperwork: without active accounts, the system failed its beneficiaries.

Compounding matters, regulatory scrutiny found some accounts were being misused rather than serving poor households.

After demonetisation, agencies flagged Jan Dhan accounts in Vidarbha for unusual transactions. In more than 750 accounts, a total of ₹70 crore had been deposited above the normal threshold without PAN disclosure.

Banks later reported seeing ₹45,000–₹48,000 deposited and withdrawn repeatedly from these accounts, a pattern typical of money-laundering. In short, substantial cash flows passed through Jan Dhan accounts without ever reaching the intended farmer. Instead, the accounts sometimes became conduits for others’ funds.

Aware of the scale of inactivity, both state and central authorities have tried to reverse it. In mid-2025, Maharashtra launched a Saturation Campaign at the gram panchayat level, specifically targeting inactive Jan Dhan accounts. Officials held camps to update KYC details and encourage savers to transact. The Centre similarly said banks were warning Jan Dhan account holders by letter or SMS before dormancy.

These moves admit the reality that opening an account is only the first step, and many Vidarbha accounts remain essentially shut.

Missed Relief and Drought Aid

The failure of many accounts to get used to had tangible costs for Vidarbha’s farmers. In 2015, when drought compensation switched to direct transfers, the shortfall was stark.

Of roughly 90 lakh affected farmers in Maharashtra, about 65 lakh received aid, while 26 lakh went unpaid. Officials later calculated that ₹201 crore in compensation earmarked for Vidarbha alone had been returned to the government.

These funds were undelivered because claimants either had no bank account or their accounts were not Aadhaar-linked. Relief Minister Eknath Khadse admitted that “in many cases, the aid was returned because the farmers did not have bank accounts.”

Farmers bitterly noted that qualifying for aid now required being in the banking system, a tall order for those in remote villages. One farmer said in 2015 that residents of far-flung hamlets often lacked even the basic paperwork to open an account.

Critics at the time said the direct-transfer policy, though intended to prevent corruption, ended up excluding needy farmers who lived beyond the easy reach of banks. As Ramakumar had warned, “limiting aid to bank accounts will cut off many in need.”

To add to the indignity, local people watched big businesses withdraw from rural banking services even as schemes multiplied.

Between 2006 and 2019, a large share of rural branches closed nationwide, and Vidarbha saw branch density fall alongside the banking expansion. Even newly opened Jan Dhan accounts often meant little if the branch closed or the only teller was miles away.

For example, some settlements in the Gadchiroli district still lack an ATM or any bank office. Thus, farmers who did sign up found little use for their accounts when they needed to withdraw subsidies or sell produce.

By contrast, the sum of benefits flowing into Jan Dhan accounts across India underscores the lost potential. Nationwide, about 23% of Jan Dhan accounts were dormant by 2025, and yet even inactive accounts continued to receive payouts. The government noted that even dormant Jan Dhan accounts could receive direct benefits transfers.

In practice, however, if a farmer never learns of such a credit or cannot access the bank, the money sits idle. Vidarbha’s missed ₹201 crore in drought aid illustrates the consequences. Needed funds lingered in government coffers rather than reaching tillers in the fields.

Government and Bank Actions

Faced with these problems, policymakers have taken notice, even if solutions remain elusive. On the positive side, reports indicate that banks and authorities are making efforts to activate accounts.

In Nagpur in 2023, the banking community was urged to ensure every Jan Dhan account holder could use the account.

Public sector lenders were told to convince customers to keep up regular transactions, even offering insurance credit, and to conduct regular KYC updates on inactive accounts. At the same time, the Reserve Bank and Finance Ministry issued regular reminders that every Jan Dhan account must be treated as a full savings account once valid ID proof is furnished.

The state and central governments have also promoted additional incentives. Charitable schemes and government pensions are now routed through Jan Dhan accounts by default, raising the stakes of having the account active. Maharashtra’s government recently announced that any farmer without a bank account would be helped to get one under Jan Dhan, especially when distributing large support packages.

Nationally, new campaigns in 2025 instructed banks to use existing festivals or local events to drive mass enrolment and re-KYC camps. An official reply to Parliament even noted the large campaigns held: “99,753 camps were held in July, where around 6.65 lakh accounts were opened under PMJDY.”

On metrics, small improvements are visible. The percentage of Jan Dhan accounts classified as dormant has fallen from about 40% in 2017 to around 20–23% by 2023. Rural banking outlets have proliferated to some extent. Maharashtra now has thousands of banking correspondents (Bank Mitras) in villages.

In Vidarbha’s Aspirational Districts like Gadchiroli and Washim, targeted efforts under a NITI Aayog scheme helped open thousands more accounts between 2019 and 2021.

Nonetheless, those gains have only partially closed the gap.

Experts stress the importance of sustaining momentum. The Wire noted that about ₹12,779 crore remains locked in dormant Jan Dhan accounts nationwide as of late 2023.

In Vidarbha, local media have reported that many newly opened accounts still lack basic KYC, preventing full use. To tackle this, officials have recently pushed banks to personally reach out to no-frills account holders.

For example, a public health campaign in 2022 even included updates on bank account activation among tribal communities in Gadchiroli. These efforts underline a shared acknowledgement: without active participation, the Jan Dhan accounts cannot deliver on their promise.

Ultimately, the central and state governments continue to calibrate the scheme. Major reforms of Jan Dhan would likely involve both increased financial literacy and improved rural banking infrastructure.

For now, official statistics show that while a vast number of accounts have been opened in Vidarbha, significant shortfalls remain.

High-level officials have quietly conceded that more work is needed to get money into villagers’ hands. Yet some local activists remain sceptical. A Nagpur banker noted in 2023 that banks had received no extra staff or incentives for Jan Dhan, and often found it hard to service far-flung villages cheaply. “Private banks chase big depositors, not small accounts,” one branch manager told The Times of India. In sum, the measures taken so far have not fully overcome the structural gaps on the ground.

Despite all the effort, the facts remain: thousands of Vidarbha families still have inactive accounts, and old grievances linger. The state’s ambition of financial inclusion has expanded formally recorded coverage, but practical inclusion, regular transactions, and confidence in banking are still lacking for many.

Moving forward, the key question is whether authorities can bridge the last mile. Some villagers remain uneasy about banks and remain outside the system.

Others who have an account often do not understand how to operate it or are deterred by the distance to the nearest branch. The government has launched drives to update KYC and educate users, but the results are still uncertain.

For Vidarbha’s farmers, Jan Dhan accounts offered hope of easier access to loans and subsidies. That promise has been only partially fulfilled. The coming years will test whether renewed campaigns and incentives can finally make these accounts a lifeline rather than a dead letter.

For now, Vidarbha’s Jan Dhan story remains a caution that policy without follow-through on the ground leaves many of the intended beneficiaries still waiting at the bank.