Indicus Analytics: Off the Bharat track

Plans to provide around 73,000 villages with bank branches lag targets so badly as to make a mockery of financial inclusion as a social goal.

Financial inclusion has been a priority in recent years. To achieve this goal, the Reserve Bank of India has put in place many measures to push for the delivery of financial services to the unbanked. With a mere five per cent of India’s 600,000 villages having bank branches, the financial inclusion plan (FIP) has first taken up provision of banking services by March 2012 for habitations with a population of 2,000 and above, according to Census 2001. This comes to around 73,000 villages and each of these have been allotted to banks. In addition, all villages with a population of 1,000 or more in Arunachal Pradesh, Himachal Pradesh, Meghalaya, Mizoram, Uttarakhand, Chhattisgarh, Andaman and Nicobar, Daman and Diu, Puducherry and Lakshadweep are slated to be covered by September 2012.

Accordingly, targets have been assigned to all banks — public sector banks have to cover close to 50,000 of these villages, regional rural banks have to cover around 20,000 and the remaining have been given to private sector and cooperative banks. The objective of the FIP is to ensure a bank account for every household, a Kisan Credit Card for every farmer’s family, general credit cards to other households and extensive coverage under micro-insurance and micro-pension schemes. Apart from this, the plan will also look into the critical gap in infrastructure in terms of rural warehousing and so on. It is, therefore, a holistic approach to increase access to financial services using the business correspondent model and branch expansion, while working in unison with other financial service providers.(Click here for table)

Uttar Pradesh is at the top of the table with the maximum number of villages to be covered (14,626), followed by Bihar (9,213) and West Bengal (7,486). Andhra Pradesh with more than 6,000 villages and Tamil Nadu and Maharashtra with more than 4,000 villages each are the next three in the top five with large targets to achieve. Smaller states and Union Territories like Himachal Pradesh, Sikkim, Puducherry, Goa, Meghalaya, Dadra and Nagar Haveli, Mizoram, Arunachal Pradesh, Andaman and Nicobar Islands and Daman and Diu were allotted less than 100 villages to cover by 2012. Of course, despite the smaller target, the topography inhibits fast progress in most of these states, so Mizoram had covered just one of its 14 villages by March 2011. In some states, however, the task is not very difficult. In fact, by March 2011, Puducherry had covered all of its 43 villages and Goa had covered 39 of its 41 allotted villages. Kerala had covered 97 of its 120 allotted villages and Tripura, Haryana, Andaman and Nicobar Islands and Himachal Pradesh had covered more than 50 per cent of their target. States that had not even covered a quarter of their target were Bihar, Assam, Manipur, Nagaland, Mizoram and Jammu and Kashmir. More than 9,000 villages need to be covered in Uttar Pradesh if the given target is to be achieved, while Bihar has more than 7,000 left.

DEBIT CARD
	Target no. of  villages allotted to cover by 2012	No. of villages covered by 31.3.2011	No. of BC agents appointed
Public sector banks	49,653	26,630	23,530
Regional rural banks	21,552	2,792	2,387
Private banks	1,529	143	166
Cooperative banks	216	4	—
Total	72,950	29,569	26,083

Ultimately, providing an access point to villagers is just the beginning of financial inclusion, giving them the services they need through a sustainable model is going to be another task, a challenge that banks will have to step up to meet.

Indian States Development Scorecard, a weekly feature by Indicus Analytics, focuses on the progress in India and across the states across various socio-economic parameters.

sumita@indicus.net