Many years ago, I was traveling to Bangalore to attend a meeting convened by the State Government at Vidhana Soudha. I had drawn up a long list of things that I needed to do on that day and was feeling rushed. En route, at the wayside hotel that we had stopped to get a cup of coffee, I reached out to my pocket for my purse only to realize that nothing was there in it. It took me a few minutes to gather my wits and sheepishly approach the cashier and explain the situation. He seemed to understand my predicament and having recognized me, agreed to my paying him the next time I went there. I felt distracted and sombre the rest of the journey to Bangalore. I was still unsure if I had left my purse behind at home or had lost it somewhere else. My purse not only had money, but also my credit and debit cards and my driving license. I suddenly realized how empty and insecure I felt without it. In a strange way, it was my purse which seemed to give me not only a sense of identity but also the security that I needed to function effectively on a daily basis. It was then that I realized that what was a one-off isolated feeling for me is something that millions of our fellow men experience as a way of life itself. Only then could I understand how the women members of the many Self-Help Groups that we had started in H D Kote felt when they learnt that the local bank had closed its operations. This was a rural bank sponsored by one of the larger nationalized banks and had been in operation for a few decades and was located around 5 km from the tribal colonies. The banks were now being pushed by the Government of India to become profitable and hence were trimming down their operations. This meant that all the branches not making profits were being closed down systematically and most of them turned out to be rural branches. The women had come to me seeking my assistance in ensuring that the local branch was not closed. They explained how difficult it would be to travel the additional 30 km to the next nearest branch in order to continue get the required banking services. It looked ironical that they had to now spend Rs 40 each time they traveled to deposit their collective weekly savings of Rs 100. I went to the Chairman of this Gramin Bank and requested that he reconsider closing down the branch. He expressed his inability and explained how their priorities had now shifted from social responsibilities to becoming financially viable.
While this may sound true of a rural area, things are no better in the city of Mysore too. Last year, a poor widow met me seeking help in opening a Savings Bank account in a major bank. Wondering why she needed my ‘influence’ for something so simple, I suggested that she approach the bank directly. It was then she recounted her harrowing tale. She had been to a couple of banks located in her area and had similar experiences in both the places. Apart from making her feel unwelcome, she was discouraged from opening an account with them, as she was not a ‘viable’ consumer. In other words, she was poor and would not have enough money with her to maintain the account with them. Being poor meant that she was not someone the mainstream financial system would waste its time on. Infuriated, I had asked one of my colleagues to accompany her and threaten the manager of approaching the banking ombudsman before an account was opened for her.
We need to see the recently launched Pradhan Manthri Jan Dhan Yojana against this backdrop. Speaking at the launch, the PM mentioned how this scheme was not just about having a bank account but also about helping eradicate financial untouchability. For all those who are born financially included, a bank account may seem to be just another everyday convenience. Exclusion from the mainstream financial system is not just about having a bank account or a debit card. It is something much deeper.
Traditionally Financial inclusion is understood as the delivery of financial services at affordable costs to all sections of society, especially the disadvantaged and low-income segments. An estimated 2.5 billion working-age adults globally, who are the unbanked or under-banked have no access to the types of formal financial services delivered by regulated financial institutions. The political will has generated pressure on the system and nearly 2 crore accounts have been opened in the last few days. The PM’s promise of providing financial inclusion to 40% of the Indian population in the next 7-8 months will not be about just new bank accounts. The system needs strengthening with opening newer branches in remote and inaccessible areas, novel initiatives like mobile banking solutions including mobile ATM vehicles and mobile banking agents and using post offices as banking institutions. More importantly, in needs a mind shift amongst the banking personnel to consider the poor as not mere beneficiaries of a Government led scheme, but as partners in the progress of the nation.
One needs to realize that a bank account for many goes beyond the financial to the social too. It is a great leveler and makes the poor feel important and part of the larger economic framework. Inclusion also brings along with it dignity and self-esteem. Handling a debit card is not just cash being made available at all times and at one’s convenience. It is also about financial independence and the feeling of empowerment and social status. All this calls for a major shift in the thinking of not just the banking sector, but also of entire society. The haves need to accommodate and accept that it is as much their responsibility to include the have-nots in the economic scheme of things. The have-nots need to shed their apprehensions and suspicions of the fortunate many and appreciate the significance and benefits of integration. They need to use financial inclusion to climb up the social and economic ladder and not become dependent on a patronizing system. They need to develop the entrepreneurial skills to maximize the gains of this process and use the ladder of financial inclusion for social and economic mobility. Only when all this happens, will the country start seeing social gains of a growing economy.