Intro: Under Universal Financial Inclusion Program, a total number of 5, 64, 000 unbanked villages will get a banking outlet each by 2016.
Reserve Bank of India has advised all the Public Sector Banks to achieve universal financial inclusion. Banks have been mandated to open at least 25% of their new branches in un-banked villages. So far around 3, 28, 679 villages have been connected with banking outlets. The total number of Basic Savings Banks Deposit Accounts has swelled to 229 million. Under Universal Financial Inclusion Program, a total number of 5, 64, 000 unbanked villages will get a banking outlet each by 2016. Banks are also encouraged to open ICT-BC outlets, Kiosks, off site Rural ATMs and mobile vans etc to distribute banking products.
Financial inclusion does not mean transferring government subsidy to beneficiaries' accounts only. The banking products should aim to tick banks' credit cycle so that people could earn surplus from their entrepreneurship after repaying banks loans and after meeting daily consumption need. If banking products do not generate surplus, the universal financial inclusion may become a burden on banks as banks have to service a large
number of accounts and monitor
those accounts to prevent fraudulent activities.
Financial Inclusion Programme will be effective if good governance improves the human development index of people which is still at par with the sub Saharan countries. Quality health facility, education, safe atmosphere, transparent supply chains, availability of pure food, portable water and a region specific development plan will increase productivity hours of people.
Nearly 40 crore people in India earn their living in the unorganised sector. They are vegetable vendors, cobblers, small vendors, masons, carpenters, electricians and local delicacy makers etc who can be benefited from the banking facilities. Those self-employed people can have a healthy economic and socio cultural life if banks and insurance companies provide them quality products at an affordable rate. The export of Indian handicraft still grows at 16% per annum in spite of global slowdown. Banks should devise different products to finance individual artisan to big exporter. Marketing information should be provided to individual artisans as a part of banks' credit plus approach.
For an effective financial inclusion, there is a need to stop big companies from mass producing small items like achar, papad, pani puri, pan masala, snacks, sauce and marketing those items at Rs 2 sachet. It certainly affects self employed people in the unorganised sector. Today shopping malls are flooded with Chinese items: candles, hair pins, tiffin boxes, water bottles and a wide range of cheap plastic items. Those items can be produced by people at the bottom of the pyramid which should not be viewed as a marketing destination only. People at the bottom of the pyramid must earn surplus from their enterprises. People’s surplus only can help market economy to flourish.
The extension departments must perform to activate entrepreneurship. In the year 2006-07, some banks in Bhadrak district of Orissa sanctioned jersy cows to villagers who knew nothing about the maintenance of jersy cows. The bankers had not collected information about the borrowers' experience before lending. As a result the bank loans not only turned bad but it set a bad example for other borrowers.
As per NSSO report, Agriculture employment on which two third population depends has practically not grown in these 13 years. The rising input cost is the dampener. The cost of fodder has increased by 19.5%, agriculture labor cost by 17.3 % and food article by 11.4% in the last five year.
Implementing financial inclusion program without improving the governance and monitoring mechanism is like putting the cart before the horses. Political inclusion is key to good governance. The Global Competitiveness Index 2013–2014 shows the public trust in politicians has been eroding in India since 2009 and has now reached an all-time low at 115th among 147 nations. The onus of political inclusion is now with the Media and the conscious citizens who have to reverse the trend.
-Sudhansu R Das (The writer is Hyderabad based freelance journalist)