Rural India sets a world record for bank accounts

To ensure timely payments and avoid the involvement of middlemen in wage payment to workers under the National Rural Employment Guarantee Act (Nrega), more than two crore saving bank accounts have been opened in banks and post offices across the country. This is the largest number of bank accounts linked to a development programme across the globe.

Of these, more than 1.1 lakh accounts have been opened with post offices and the rest, with public sector or cooperative banks across the rural belt. Now the rural development ministry, the nodal ministry for implementation of NREGA, is working on a new proposal to pay wages through an electronic payment system.

Rural development ministry officials said that in order to facilitate the electronic transfer of money, the department of posts, in collaboration with state-owned National Informatic Centre and Bharat Sanchar Nigam Limited (BSNL), is working out the modalities.

To prevent delay and ensure transparency in wage payment, the rural development ministry had asked the state governments to launch a special drive to open saving accounts of the NREGA workers in banks and post offices last year.

During 2007-8, Rs 10,738.47 crore, out of the total expenditure of Rs 15,856.89 crore was paid as wages under NREGA, to more than 3.3 crore households .

However, the number of saving accounts would go up even further, if states, which lag in opening accounts, speed up efforts in this regard. The rural development ministry officials said that despite the spread of rural bank branches, more than 50% of rural households have been deprived of banking services for many years. ?This has resulted in the inclusion of a large number of people under the poverty line, with the formal banking system,? a rural development ministry official said. This has added close to a crore savings bank account holders to the already-existing 14 crore account holders with the post office.

During the review of the implementation process with the state nodal officers of sixteen states on Wednesday, it was found out that there are a large number of states where 50% of NREGA job seekers don?t have any saving accounts.

According to officials, in 17 states, including Bihar, Chhattisgarh, Uttar Pradesh, Orissa, Madhya Pradesh and Rajasthan, less than 50% of the households, provided employment under NREGA, have any kind of savings account. Even states like Assam, Bihar, Chhattisgarh and West Bengal, 20% Nrega job holders have savings account.

However, Andhra Pradesh leads all other states in opening accounts for wage payments, with more than 80 lakh accounts, of which more than 78 lakh accounts are opened with the post offices. Other leading states in opening savings accounts are Jharkhand (21 lakh accounts), Madhya Pradesh (13 lakhs), Karnataka (13 lakhs), Orissa (5 lakhs), Bihar (4.6 lakhs) and Uttar Pradesh (5 lakhs).

Interestingly, due to the inefficient postal network in Uttar Pradesh, out of the 5 lakh accounts for NREGA wage payment, not a single savings account has been opened with post offices. Other states which have not utilised the postal services are Gujarat, Tamil Nadu, Jammu & Kashmir and Himachal Pradesh.

The minister for rural development, Raghuvansh Prasad Singh, has already written to the chief ministers of states where the opening of savings accounts is lagging behind.

Under the memorandum of understanding signed between the department of post and the ministry of rural development, the payment of wages to the workers under NREGA must be done within the statutory time of 15 days after the work is done. The rural development ministry would pay an advance of Rs 50 per account, prior to the opening of account.

Every person under the NREGA is entitled to wages at the minimum wage-rate fixed by the state government. The payments are made on a weekly basis on a pre-specified day of the week in a gram panchayat.