The changing face of rural banking in India

How are thousands of tribal inhabitants in rural Jharkhand accessing the bank every day? Debroop Sengupta talks of a grassroots initiative that’s helping rural banking evolve.


We reached Donki at around 12 noon, going triples on a 125 cc motor bike through the rocky terrain of Jharkand’s Latehar district. It was not less than 40-42 degree Celsius outside, with naked trees standing upright in large barren lands on both sides of the road, with a few small mud huts fenced with bamboos.

The small courtyards of each house had piles of yellow mahua flowers that are collected from the nearby forest. You could also see some children here and there, some carrying pitchers of water on their head and balancing themselves on the uneven road, some just playing under a tree or collecting mahua.

Donki is a small village situated 162 km from Ranchi. Once you get down at the village Bandwa, you need a bike or a cycle to travel the 12 odd kilometres to Donki; there is no motorable road to the place. For the tribal inhabitants, living in extreme poverty is not a choice but compulsion. With no cultivable land or cattle in possession, the villagers depend only upon the forest.

With the introduction of the job guarantee scheme, the villagers have found a new hope to live. But the nearest bank to Donki is 15 km away. Villagers need to walk this distance in the scorching heat, only to find that the counter is over-crowded.

“Bankwale hamesha bolte hain, ‘Kal aao, parso aao – aaj bohot kaam hai, aapka kaam nehi ho payega,’ (The officers in the bank always tell us to come tomorrow or the day after, we are too busy to do your work),” laments Usha Devi, now in her forties.

If you believed that advanced IT is only limited to billion dollar MNCs then come to Donki, once. People of Donki have never heard of terms like ‘internet’ or ‘bio-metrics’ but they know that their Panchayat Bank is there to hand over their payments right at their door step. There is no need to go to the brick and mortar branch in the nearest town any more. Most importantly, things have become more transparent and simpler now. So how does this all happen?

An NGO, called AID – Alternative for India Development, is running e-governance service in 600 Panchayats in Jharkhand under a program called- Common Service Centres (CSC). CSC is a rural electronic hub with a computer connected to the internet that provides e-governance or business services to citizens at the panchayat level. All these are not on paper but in actual practice. If you want to make an ID card or open a bank account, just come to your Panchayat Bank and services will be delivered in minutes.

The Reserve Bank’s policies for inclusive banking are helping AID’s effort. They are now a registered Business Correspondent (BC) of the State Bank of India. For every transaction, the bank gives them a small percentage – their source of revenue. Out of 600 CSCs, AID has established this BC facility in 98 branches.

We met Ramesh Prasad in Donki who operates the CSC in Donki. Ramesh was earlier involved in activist movements, but now he is back in the mainstream industry with a stable income from his small business. All help related to training and awareness building in community was provided by AID, who has created a model where young individuals from local communities can emerge as entrepreneurs with very small investments. These banks, who also provide loans to buy computers with internet connections, are provided with space by the panchayat, without any extra cost. At the end of the day, it is the local community which reaps the benefits of this ‘inclusive banking’.

Not just banking services, but government is finding this model useful to disburse the NREGA payments too. CSCs are using Biometrics to help the villagers log in to their account securely. Villagers can then decide how much to withdraw from their accounts and how much to save. The CSC operator hands over the money and updates the changes online, through VSAT and WiMax technologies that help them stay online even in such remote village locations.

But one of the major challenges is electricity. During the service hour, the electricity is provided by a diesel powered gen-set, for which the gram panchayat bears the costs. AID told us that they are also equipped to be a part of Aadhar programme, to distribute a unique identity to each tribal villager who has never had any form of identification even a few years ago.

AID now proposes to initiate an exclusive kiosk-based banking facility for rural women, as a pilot in 5 centres in 5 blocks in Jharkhand. The organization plans to engage women from around 1,200 local self help groups (SHGs) with this project and provide a financial inclusiveness to the rural women.

In India’s patriarchal system, properties of the family are inherited by men; women have none or very less assets. They have little income too. These rural women have difficulty in accessing funds. “A girl is always taken as a transient member of the family,” says Shasi Bharat, a field manager for AID. In this scenario AID’s rural banking model for women would be an ideal for many others to follow. While our national budget is paving a way for ‘women banks’, this model might just serve as a pioneer to connect rural women with the banking system.


  ABOUT THE AUTHOR
Debroop Sengupta is a Strategy and Transformation Consultant with a keen interest in frugal innovation, digital technologies, social entrepreneurship and understanding their impact on economy and inclusive growth. Debroop is a Mechanical Engineer from Indian Institute of Engineering, Science and Technology Shibpur and Masters in Business Administration (MBA) from XLRI Jamshedpur. more

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  ABOUT THE AUTHOR
Debroop Sengupta is a Strategy and Transformation Consultant with a keen interest in frugal innovation, digital technologies, social entrepreneurship and understanding their impact on economy and inclusive growth. Debroop is a Mechanical Engineer from Indian Institute of Engineering, Science and Technology Shibpur and Masters in Business Administration (MBA) from XLRI Jamshedpur. more

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