Business Today

Mushrooming bank accounts: 100% Account Ability

     Print Edition: Jan 6, 2013

The knock on the door startled Anitha Martin. Her husband, a construction worker, was out earning his wages. Her two daughters were in school. She was hoping for a few uninterrupted hours on her sewing machine.

Martin opened the door to find K.S. Bhat, a manager with Union Bank of India, who wanted Martin to open an account with his bank. The thought had never crossed Martin's mind. A resident of Tripunithura, a tiny speck a few kilometres from the city of Kochi in Kerala, she works two sewing machines at home to supplement her husband's wages. There never was enough to put in a bank account. Or, so she thought.

Bhat was carrying a list of people in the area who did not have a bank account. It had been painstakingly put together by officials of the municipality and volunteers of self-help group Kudumbashree. Martin did not need any money to open the account - it was to be a zero-balance facility. And if she opened the account, her below-the-poverty-line card would help her get direct cash transfers, the UPA government's big largesse this year, and other government benefits like different types of pension, subsidies and scholarship for her daughters.

Tempted, Martin embraced the world of banking. And how. "I now transact regularly and save Rs 500 every week. This will help me fund the higher education of my daughters," she says. Once she got into the saving habit, her account grew quickly and now has more than Rs 10,000.

A commercial area in Edappally
A commercial area in Edappally, on Kochi's outskirts Photo: A.S. Satheesh
She is one among a lakh of people in Tripunithura, distributed over 28,000 households, to have a bank account, and one of 3.3 million people in Ernakulam. Together they made Reserve Bank of India Governor Duvvuri Subbarao, on November 22, declare Ernakulum the first district in the country to achieve total, meaningful financial inclusion. That nicely rounds off the district's earlier milestones of 100 per cent literacy and 100 per cent coverage under family planning.

40 percentage of Indians with a bank account

Ernakulam shines in comparison with the rest of the country. Only about 40 per cent of Indians have a bank account. Of those only 13 per cent have debit cards, and just two per cent credit cards, according to RBI data. In the urban areas a bank branch caters to an average 13,000 people. In rural areas the clientele goes up to 17,000. In Ernakulam, it comes down to 4,400. It was Subbarao who started it all. Now perched mostly at Mumbai's Mint Road and confined to meeting rooms, conference halls and other forbidding venues, Subbarao, who comes from the West Godavari district of Andhra Pradesh and topped the 1972 civil services examination, does not miss an opportunity to speak directly with people.

And so it was in March last year, when he went to Vengoor, an obscure village, as part of the RBI's outreach programme, which seeks to spread financial literacy. On a hunch, he asked how many in the gathering had bank accounts. Everyone's hand went up. This planted a thought in Subbarao's mind. If Vengoor, as remote as they come, could have near total banking penetration, why not the entire Ernakulam district?

The thought morphed into resolve. And Kerala's local bank officials set the ball rolling. "With Ernakulam we have made a beginning. The RBI's goal is to do this in the entire country," says C.V. Geroge, General Manager at RBI's Kochi office. As many as 45 banks from public, private and cooperative sectors have spread their presence in the district with 850 branches and about 1,000 ATMs. In fact, just two banks - State Bank of Travancore and Federal Bank - account for close to 200 branches. The regional heads of all banks, insurance companies and other financial institutions met frequently, exchanged notes and went about the task in a concerted manner.

They have made Ernakulam the first district in the country where every village has a physical branch, all of them equipped to handle electronic transfer of money, including mobile banking. "What we have achieved in the district is not merely financial inclusion - one savings bank account per family would have met that criterion - but meaningful financial inclusion by which we have integrated micro-credit, micro-insurance and remittance facilities into these accounts," says S. Jayamohan Nayar, Deputy General Manager at Union Bank of India, Ernakulam Regional Office, which was the lead bank in the programme.

Even migrant workers, who otherwise find it difficult to open accounts, were included. "On November 17, we received reports that 99.9 percent of the goal had been achieved," says Nayar.

K.R. Balasubramanyam

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