6 problems with the restrictions placed on the Jan Dhan accounts

The government/RBI (it is hard to tell the difference these days) has placed restrictions on the withdrawal of deposits of 500 rupee and 1000 rupee notes made into bank accounts under the Jan Dhan scheme. This apparently has some good points, which are currently not visible (like good points of many decisions so far related with demonetisation).

Holders Jan Dhan accounts without KYC documents will not be able to withdraw more than Rs. 5,000 per month from the account. Holders of Jan Dhan accounts with KYC documents submitted will not be able to withdraw more than Rs. 10,000 per month. Then in apparent magnanimity, the generous government has permitted the unrestricted withdrawal of deposits made with the legal notes.

Here are five problems with these absurd restrictions:

The Prime Minister is officially shown to be a liar

In his speech, he assured people that they could freely deposit their money in their accounts and it still remained theirs. Clearly, with this feezing and imposed restrictions, the government is preventing people from accessing their own money. This, coupled with the abrupt stopping of exchange of notes when the promise was to remove limits on exchange, removes any credibility the Prime Minister has when he announces policy or instructs people. There is no telling when he may change his mind and word, leaving people who trusted him destitute.

Protecting accounts from misuse is a fig leaf

Like the photos of a snake eating fish being captioned as a brave snake saving a fish from drowning, preventing citizens from accessing their own money in the name of protecting their interests is an absurd cover up for abject truncation of their right over their money. It is unclear what Indian law allows the money of the poor to be confiscated in this manner and released conditionally.

There is no difference significant to security between a Jan Dhan account with KYC and a normal bank account

Jan Dhan accounts are allowed to operate with zero balance without any fines. Other than that, a Jan Dhan account with KYC documents submitted is no more or less insecure, and thus likely to be misused, as any other account in the bank. Thus, the limits on use of these accounts, while normal bank accounts are allowed to operate normally are a demonstration of stigmatization of the the poor (who are overwhelmingly the holders of Jan Dhan accounts) as potentially illegal and guilty unless proved otherwise and exempted. There is no laundering of funds that can be done with a Jan Dhan account that is not possible with a normal account.The only difference appears to be that the Prime Minister is treating the poor as criminals by default and owners of regular accounts as trustworthy by default.

22.94 crore Jan Dhan accounts and 31 crore savings bank accounts in India. While Rs 64,252.15 crore out of 8.5 lakh crore deposited are into Jan Dhan accounts, it is unclear why the deposits in Jan Dhan accounts are seen as “alarming”. Is the government saying that a number that averages to 2,800 Rs per account unreasonable for people being forced to deposit all the 500 rs and 1000 rs notes they possess? Does the average income of India suggest that the deposits in savings accounts are “normal”? Additionally, it is important to note here that there is often one Jan Dhan account in a family of several earning members who don’t bank their money – mostly used for the gas subsidy for the household. So the seemingly large deposits too can be legitimate incomes of several members in the family and not necessarily a proof of corruption.

The Prime Minister’s assurance of no scrutiny for deposits under 2.5 lakh is broken

The limits on withdrawal are for all accounts not just accounts with deposits over a specific amount. A certain category of account used by a certain class of people – the poor has been identified for withdrawal limits regardless of amounts deposited in the accounts. Further withdrawals beyond the 5,000 and 10,000 a month that they are allowed will be allowed based on scrutiny of the “genuineness” of the need. This is a deliberately vague term. Why does anyone need to answer to the “genuineness” of their need? Who decides genuineness? Are people withdrawing cash from ATMs being investigated as to whether their “need” for their own money is “genuine”? Why does there have to be any need beyond wanting own money safely in hand in hard cash when banks seem inclined to steal it? Is the need for a new bicycle “genuine”? Is the need to have cash at home for emergencies “genuine”? Who decides this claptrap?

The Prime Minister’s words ain’t worth shit. He has shown himself capable of lying to the whole country on record on national television to get people to deposit money into accounts instead of exchanging it without depositing and then he is trapping their money for agendas best known to him. This basically amounts to fraud. The allegedly noble agenda can’t be black money, because there are no restrictions on accounts belonging to classes more likely to have large quantities of undisclosed income. Nor are there exemptions for accounts with reasonable deposits – which, if the Prime Minister were a man of his word, would have been all accounts with deposits under 2.5 lakh rupees, regardless of whether they were Jan Dhan or otherwise. And accounts with deposits over the 2.5 lakh stated should be treated in an equal manner.

Who will be funding all the accountants needed?

How are poor and often illiterate people supposed to answer to formal bank enquiries? Will the income tax department provide them with pro bono accountants, like a court of law offers free legal assistance for those who can’t afford a lawyer? What right does the government have to put people through this harassment? In the case of Jan Dhan accounts where clubbing the incomes of several citizens is required, who will be sorting out the mess? If Jan Dhan accounts are selectively targeted, will the government be providing all free manpower needed for the citizens to regain rightful access to their own money? Or is this supposed to be another minor sacrifice by the poor to Modi’s empire? Either afford a lawyer or abandon your cash for the well being of the country? And oh, we’ll enter your name in the lottery for getting a home your money will fund *if* you qualify and *if* you apply?

Answer again: Do all citizens of India have access to a bank account?

The propaganda answer is yes, at least one per family. This is false, but for a moment, let us go with this. How would a Jan Dhan account in a family of four earning members depositing one lakh each of their life’s savings still be eligible for tax if it is the income of the family, forced by the Prime Minister to be clubbed into one person’s account? If there is tax fraud it would be perpetrated by the Prime Minister. Who basically reduced people’s money to scrap paper unless they somehow got it into banks – whether they had individual accounts or not and is now using the result of this con he pulled on people to look at deposits and treat all holders as criminals. What is the government’s right to force 25% of these funds to be frozen with the bank?

This is an extremely prejudiced decision by the government that specifically aims at the money belonging to the poor.

  • Vidyut
  • Vidyut has a keen interest in mass psychology and using it as a lens to understand contemporary politics, social inequality and other dynamics of power within the country. She is also into Linux and internet applications and servers and has sees technology as an important area India lacks security in.


  • Absolutely valid issues raised in the article. But, the government won’t answer, as they feel that they have all rights over citizen’s life.

  • Hi pl read my blog too and let me know what you think about this..


  • Each citizen including political supporters of modi can find hundreds of flaws with the demonetization but having plunged into it (I am sure no one can dispute the intent and purpose) as individuals what are our responsibilities and how we can contribute to do away with an evil which is one of the main cause for discrimination among people! Without having one way to do it without inconveniencing any one all pundits’ comments criticisms are only for the sake of criticism and possibly triggered by the personal inconvenience of individual, which again is a product of the system existed and existing!

  • Dint somebody famously say the PMs knowledge of economics can be summed up on the back of a postage stamp?

    • That would be P. Chidambaram 😀

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