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Financial Inclusion in Rajasthan:A Case Study of Rajsamand
District
Subah Singh Yadav*
*Chief Manager, Bank of Baroda, Zonal Office, Lucknow
Financial
Inclusion which
flashed on the horizon
of banking industry in the
wake of inclusive growth
policies, has after crossing the
crucial tides of time, come to stay
to some extent in a comparatively less
developed State of Rajasthan. The state
has been a frontier, if not pioneer, in
searching for an alternate credit delivery
mechanism through Self Help Groups. Its Ajmermodel has been one
of the most popular and
illustrative device of reaching out to the poor. Financial
inclusion is not an end in itself as most of the people
having
a bank account or an insurance coverage, ipso facto, does
not mean an enhancement in their economic position, but it
should help, in some way, the process of economic development
in
the distribution of existing income pattern.
This is exactly in this context a pilot project on financial
inclusion was
triggered in Rajsamand district of Rajasthan. This is an average
size district,
with strong presence of Women & Child Development
Departments a initiatives
on SHG linkage program.
The sub committee of the SLBC identified Rajsamand district for
the purpose and the project was
launched on August 25,2006. It was decided to conduct house hold
survey and identity families
who are not within banking reach. The role of Panchayati Raj
institutions was also stressed upon in
view of easy access of these units operating at the grassroots
level. It was also resolved that household
survey must be completed by December 2006 and then the district
should be fully covered for inclusion by
March 2007.
Methodology
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Fifty nine branches were to cover 1004 villages and 90 wards in
their service area targeting 185721 families.The work was co-
ordinate by the Lead Bank Managers of SBBJ at Rajsamand.
Branches were advised to open no frill accounts as per the
Reserve Bank of India guidelines with a minimum of one account
per household as per the voter list. A record of families who
have migrated to other places or refused to open the account was
prepared and duly authenticated by sarpanch/ government
authorities.
Note: During the aforesaid household survey and identification
of families, number of families increased by 11335 from the
figure obtained in the 2001 census level due to increase in
population and sub-division of families.
The survey and opening of deposit/loan accounts in the entire
district was completed in the first week of January 2007. The
district administration had undertaken a sample check through
its field staff to ensure that the needful had been done. The
work
of data punching was done to update the various information and
future requirements.
SBBJ and Mewar Gramin Bank had the maximum branch network with
19 branches each (32 %) followed by Bank of Rajasthan
with 12 (20%). The remaining banks have one to three 3
branches.
The district is characterized by migratory population. As many
as 7101 families were not available and 5540 families refused
to
open bank account. Rest of the population was brought in the
fold of banking system. It appears that old persons and
pensioners prefer even late delivery of money order at their
doorstep rather than going to bank premises.
Progress of the Project
Analysis
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An analysis of the data reveals that
47.68 percent families were already
linked with banking system and for the
remaining 52.32 percent, new accounts
were opened during the financial
inclusion project.
Migratory nature of population is equally
evident with some variation in semi
urban area also. As many as 645
families who went in the nearby Gujarat
state in search of wage employment were not
available for account opening with banks.
However 1176 families were found reluctant for
opening bank account.
People in the semi urban area are better aware
of the advantages to be associated withbanking system.
Therefore, banks had to put
less efforts and by opening only 17.37 of new
account, all the ward were financially included.
The evaluation of the project in the district conducted by an
external agency found that 92.27 per cent households in the
villages
have a bank account but 52.39 per cent of the households had no
transactions in their accounts due to various reasons like,
distance of the branch (79.64%), illiteracy(6.60%) and not being
interested (10.04%). In towns, 98 per cent households had a
bank account and 86.94 per cent not carrying out transactions.
Non-availability of passbook (75.47%) was cited as the major
reason. Majority of the people contacted were not familiar with
the process of opening the account and could not get their
passbooks. However, despite these deterrents and disconnects,
the accounts opened under financial inclusion project weregainfully
utilized by the NREGA beneficiaries for effecting transactions. As
per the evaluation study, these accounts would have
been largely inoperative otherwise.
The experience of Rajsamand district brought out the following
issues to the forefront :
l Efficient delivery of services with low cost of
intermediation
l Substantial upscale of micro credit activities.
l Change attitude and aptitude of staff posted in rural
branches; rejuvenation of rural branches and making the rural
posting
more attractive
l Exploring collaborative support from hybrid channels like NGOs
/ NFIs / post offices / RUDSETIs / Educational Institutes.
l Fostering real sector linkage amongst farm activities and
leveraging technology to the maximum extent possible
This pilot project seems to have played a refreshing and
reassuring role in leading the way for creating supply of
financial
services and facilitate their distribution. However the men,
machinery and methodology have to be geared up for upgrading
quality of services and access. Simultaneously, there is a felt
need of extending the customers financial literacy and
counseling.
Banks might develop clients and demand through financial
literacy, education community development, business development
services for clients and increasing publicity as well as
developing brand recognition. Banks and local administration have
to
perform distinctly, but mutually reinforcing roles in achieving
social transformation through financial inclusion.
Evaluation Study
Conclusion
Status of existing and new accounts
