Mumbai: State-run Punjab National Bank (PNB) plans to offer some 5 million accounts to poor families in Rajasthan, in line with the Union government’s aim to include the poor in the financial system.
The bank has opened 1,05,000 accounts on Saturday, the first day of a Rajasthan government-sponsored project called the Bhamasha Financial Empowerment Scheme.
“We have taken up the challenge of opening about 5 million accounts of BPL (below poverty line) families and small and marginal farmers in 10-12 days with the help of business correspondence and a technology-based financial-inclusion model,” said S.K. Roy, PNB’s general manager for financial inclusion.
Seeking customers: K.C. Chakrabarty, chairman and MD of PNB. Photograph: Ramesh Pathania / Mint
The World Bank, in a measure released last week, defined people living under $1.25 (about Rs55) a day as extremely poor. Small and marginal farmers, according to the nation’s 2008 Budget, are those who have land holdings of five acres or less.
A World Bank study also said in India, although the number of the poor increased to 455 million in 2005 from 420 million in 1981, their proportion fell to 42% of the population from 60% earlier.
The Bhamasha project envisages opening bank accounts for only women, who will be issued biometric smart cards through which they will be able to avail of facilities including health insurance, pension, scholarship and other schemes of the Central and state governments.
The Rajasthan government is also in talks with Bank of Baroda and Bank of Rajasthan for the project, said a person close to the development who declined to be named.
Once the accounts are opened, the state government will contribute Rs1,500 for each no-frills account, for which it has earmarked Rs750 crore. The no-frills account, introduced in 2006, is targeted at people with no bank accounts. It has no average balance requirement and provides ATM facility for free.
Only about 31% of the country’s population has access to banks. In rural areas, the coverage among adults is 39%, against 60% in cities.
The Rajasthan government has signed a memorandum of understanding with PNB and Infrastructure Leasing and Financial Services Ltd, which will be the technology provider for the scheme.
To open and maintain these accounts, PNB is in the process of hiring 13,000 business correspondents across the state. A business correspondent is an agent of a bank authorized to undertake transactions on behalf of it, including collection of small-value deposits, disbursal of small-value credit, sale of micro-insurance and other financial products, and undertake financial transactions on behalf of the government and other third parties.
PNB’s business correspondents will carry a hand-held point-of-sale equipment fitted with a printer and a biometric identification device. PNB is targeting one business correspondent for three-five villages, Roy said. PNB will also set up a microfinance branch in the state capital, Jaipur, to supervise the project.
Almost all the banks in India have financial inclusion and microfinance cells.
However, according to a recent study by the Indian Council for Research on International Economic Relations, India ranks even below African countries such as Kenya and Morocco in provides financial services to citizens. The New Delhi-based economic research firm ranked India 50 out of 100 countries, above Russia, but below China.