Post demonetization deposits in Jan Dhan accounts


13 Jan 2017

Have Jan Dhan accounts been used for money laundering?

The government and RBI are yet to declare the final figures of the demonetized banknotes returned to the system after 8 Nov'16.

Estimates show most notes were returned but are less than government's pronouncements.

This suggested black money or undeclared income holders found a way to trick the system.

Some have speculated that they laundered their money using Pradhan Mantri Jan Dhan Yojana accounts.

Total Deposits

Cash deposits in Jan Dhan accounts witness abnormal surge

Cash deposits in Jan Dhan accounts witness abnormal surge

As some experts had predicted, cash deposits immediately after demonetization in the Jan Dhan accounts saw an abnormal surge.

However, as expected, the trend reversed only within five weeks and also the total deposits in such accounts started coming down.

From a peak value of Rs.74,322 crore on 30 Nov'16, total deposits came down to a little over Rs.70,000 crore on 4 Jan'17.

Non-zero balance Jan Dhan accounts

Average balance for non-zero balance Jan Dhan bank accounts showed a similar surge after the currency ban and the trend also reversed weeks later. Holders of such accounts would have deposited the cash in hand first and later withdrawn it as the liquidity conditions eased.

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Total deposits reached a peak on November

The surge in the deposit figures of Jan Dhan accounts is high considering that the total deposits in these accounts are below 1% of the aggregate deposits in scheduled commercial banks.

The total deposits figure increased to 0.45% from 0.05% between Sep'14 and Oct'16.

However, the figure reached a peak of 0.71% in Nov'16 and again fell to 0.68% in Dec'16.

Large scale money laundering

However, the continuing minuscule share of the Pradhan Mantri Jan Dhan Yojna deposits in the overall deposits highlights the fact that these accounts could not have been used for laundering money in a large scale after demonetization.

States & UTs

Earlier trends in Jan Dhan account balances

Earlier trends in Jan Dhan account balances

The earlier trends in the Jan Dhan account balances across Indian states, however, do not suggest any huge foul play.

Between 10 Feb'16 and 10 Nov'16, 28 of the 37 states and union territories witnessed an increase in the average balance of their non-zero Jan Dhan bank accounts.

This suggested that these accounts have been used intensively even before demonetization.

State-wise differences in deposits

Most states showed an increase in the average deposits in non-zero accounts the initial weeks after currency ban. While average balance remains higher in all the states compared to what it was before 9 Nov'16, the values have decreased between 29 Nov and 4 Jan.

18 Apr 2017

Deposits in Jan Dhan accounts up again

Government data revealed that the net balance in Jan Dhan accounts swelled by Rs. 1000 crore to Rs. 63971.38crore on the week ending on 5 April.

Between Dec'16-Mar'17 the accounts recorded a Rs. 12,000crore decline due to large withdrawals. The number of accounts linked to Aadhaar has also increased.

According to the Centre, this is the first time deposits have increased on a weekly-basis.

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Black Money

Cash Transactions


Jan Dhan Yojana

Money Laundering

Reserve Bank Of India (RBI)

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