Financial Inclusion: Infra issues dog Odisha banking drive

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Updated: May 5, 2015 8:32:39 AM

Odisha is struggling to meet its targets for opening bank branches in unbanked gram panchayats in the wake of continuing problems.

Odhisha rural banksOdisha is struggling to meet its targets for opening bank branches in unbanked gram panchayats in the wake of continuing problems. (Reuters)

Despite being scalded by chit fund operators who are alleged to have siphoned off an estimated Rs 4,600 crore from the rural poor, Odisha is struggling to meet its targets for opening bank branches in unbanked gram panchayats in the wake of continuing problems in power supply, internet connectivity and the availability of banking correspondents (BCs).

Since last year, the Odisha government has set out on a mission of opening brick-and-mortar bank branches in 4,768 unbanked gram panchayats that would give banking linkage to 45,778 villages. The minutes of a recent meeting on financial inclusion accessed by The Indian Express showed that a year later, Odisha has witnessed opening of only 118 branches as against a target of setting branches in 1,118 unbanked gram panchayats set for 2014-15.

The banks have complained that they could not finalise their branch-opening plans in the absence of clear timelines for providing power supply and connectivity in unbanked gram panchayats. Some banks said that though they had opened branches in Rajiv Gandhi Sewa Kendras of unbanked gram panchayats, there was no provision of drinking water supply. The request for separate power supply connection in Rajiv Gandhi Sewa Kendras was refused by electricity authorities.

Although 4,200 business correspondents — bank agents who help villagers make financial transaction and receive commission from the bank for every new account opened — had been appointed in the state, banks were finding it difficult to find BCs in interior areas. Despite receiving the state government permission to open branch or sub-post offices in Rajiv Gandhi Sewa Kendras or gram panchayat headquarters, the postal department could not reach out to unbanked areas as the cost of electrification of Rs 4 lakh per branch was found to be prohibitive.

Banks were also finding it difficult to reach the target after the Integrated Action Plan (IAP) was discontinued. Under the IAP programme, started by UPA government in Maoist-affected areas, banks were getting Rs 1.4 lakh for opening each new branch in unbanked gram panchayats as incentive.

A senior State Bank of India official said one of the major constraints in opening bank branches was acute shortage of staff. The banks have now asked the chief secretary to write letters to individual CMDs to arrange the manpower for the branches to be opened in unbanked areas.

Despite such teething problems and poor achievement, Odisha chief secretary GC Pati asked banks to open around 2,000 branches in unbanked gram panchayats for 2015-16.

Incidentally, the review revealed that of the 51.88 lakh new accounts opened in the state under Pradhan Mantri Jan-Dhan Yojana, 63 per cent of the accounts had zero balance, meaning there was no transaction in these accounts in last 45 days, which is a pre-requisite for availing insurance and other benefits. Besides, only 16 lakh accounts have been seeded with Aadhaar numbers.

Officials said as an incentive for opening bank branches in unbanked gram panchayats, all government funds of the panchayat may be parked in the newly-opened bank branches. The government has now asked the State Level Bankers’ Committee to start a web-based monitoring system where any difficulties faced by banks can be submitted online for tracking and follow-up. Government has asked the banks to ensure a minimum remuneration for the BCs to make their job seem attractive. BCs can be paid attractive commission for assisting in loan recovery process.

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