Madhya Pradesh Govt pulls up bankers

Payment against labour under various social schemes like the National Rural Employment Guarantee Scheme is a big issue to deal with in Madhya Pradesh. Irate over the snail’s pace of bankers, the state government today told bankers: “If the snail’s pace of the financial inclusion (FI) programme continues, nothing is going to happen even after eight years.”

The state government today came down heavily on bankers for their tardiness towards financial inclusion programme which was launched three years back to ensure corruption-free system of payment to labourers. Chief Minister Shivraj Singh Chouhan and top executives of the state rural development department pulled up bankers in the State Level Bankers Committee meet on the issue.

Bankers must think about those poor labourers who toil several kilometres in rural areas just to fetch few rupees and most of the time they are turned down by bankers, Chouhan told bankers. “You need to open more and more rural branches and give pace to this programme,” he said.

“Each day local leaders from rural areas come to me and demand to retain the earlier cash payment system. Social schemes like the National Rural Employment Guarantee Scheme (NREGS) are suffering as labourers are reluctant to join them in remote rural areas,” he said.

Of the total 55,393 villages, according to a data available with Business Standard, 16,170 villages are covered under the FI programme. However, it is not clear if opening of savings account is serving the purpose.

To do away with corruption in age-old cash payment system and ensure timely payment against labour or any other funds meant for government sponsored social schemes through banks, financial inclusion programme was launched across India three years ago.

“Bankers have yet to understand that FI accounts of the poor labourers are consumption accounts and not the savings account. In far flung districts like Dindori it takes months for a labourer to withdraw money from his FI account,” R S Parsuram, principal secretary department of rural development told Business Standard, “If bankers maintain this snail pace the financial inclusion programme is not going to take off even after eight years. We have been discussing the matter in SLBC meetings to avail nothing for the last three years.”

Last year, state government had pulled up bankers for slow progress in FI programme and threatened to hand it over to state owned district cooperative banks. The FI programme involves opening of account in various branches. But most of the branches located in sub-urban areas. Bankers sat they have tried to appoint business correspondents on commission basis but received lukewarm response. They have also opened accounts through hand-held device and mobile phones but in absence of power, connectivity the technology-driven solutions is a failure in rural areas.

“Technology is the biggest issues, and state government must understand that it is a tough task,” S Shridhar, Chairman of Central Bank of India said. Shridhar who is also chairman of SLBC further said, “It will take some time to reach each village, we cannot open accounts overnight.”

State government has also come forward to offer support to bankers by offering common service points (state owned IT kiosks), but in absence of Reserve Bank of India guidelines, bankers are reluctant to use them.

Shridhar pointed out, “RBI is likely to allow us to rope in profit making bodies to become our business correspondents for the FI programme as of now we can rope in only non-profit making organisations.”

The state IT department has urged the government to include those non-government organisations, which are working with it for its ambitious information technology project to provide better governance, while on the other bankers want those NGOs to be registered under section 25 under companies Act.

The state bank has tie up with some NGOs to provide facility in rural areas. A village level entrepreneur can also be a business correspondent to any bank on commission basis to deliver banking product at his enterprise. A grocery shop, small restaurant or similar business set up owner can operate the bank account with a hand-held devices that can provide access to rural people.