New Delhi: Some 2,000-odd residents assembled on a summer day this year for the opening of a tiny local branch of Central Bank of India in the village of Simariya Tanka, near Gwalior in northern Madhya Pradesh. It wasn’t too long before the celebration turned into a protest—not a rarity in the historically poor and troubled region.
The villagers weren’t protesting about land rights or the dacoit menace in the area. Rather, they were angered by a rumour that the manager of Central Bank of India’s Barai branch, which oversees the lender’s so-called ultra small banking operation run out of one room in Simariya Tanka, was to be sent elsewhere on transfer.
The protesters were pacified only after senior bank officials said the rumour was false.
Ordinarily, the transfer—rumoured or real—of a local bank manager would pass without creating any ripples; after all, bank managers don’t exactly have a reputation for disinterested labour in service of the local community. But then Ajay Sharma is no ordinary bank official.
Sharma has managed the Barai branch of Central Bank of India for a little over a year. In this short time, he has become a familiar figure in the area where he oversees the bank’s operations—around 30 remote villages and hamlets to the northeast of Gwalior.
Motorcycling around the countryside on his Yamaha Libero to meet a client base of more than 150,000 people, governed by eight panchayats (village councils), Sharma serves as an ad-hoc money lender and financial adviser. He attends birthdays, marriages and other social events in all village households. He also visits families at times of bereavement.
“This makes them feel that I am one of them and they open up to me,” said Sharma.
Sharma has also registered or is about to complete the registration of at least 50 self-help groups, and given loans to around 500 more, the majority of whom are making punctual repayments, he says. He describes his vocation in lofty language: “I believe that same as soldiers who protect the borders, I am also a soldier of this country and this is my way of serving humanity.”
The rally at which Sharma’s rumoured transfer caused outrage among the villagers was to mark the opening of not only Central Bank of India’s Simariya Tanka outlet, run out of the local panchayat building, but some 80 other ultra small branches across the districts of Datia, Shivpuri, Morena, Bhind and Gwalior. The branch openings were a part of the Madhya Pradesh government’s effort to deliver banking services in each of the state’s nearly 52,000 villages.
If his commitment to the job seems unusual, Sharma’s dedication to the Central Bank of India is more understandable. His grandfather, great uncle, father and uncle were all Central Bank employees—his grandfather joined the bank at the time of its inception in 1911.
“I am the third generation of my family in Central Bank of India,” said the ever-smiling 42-year-old, from Meerut in Uttar Pradesh. Sharma joined Central Bank of India in 1990, at the age of 22; the career choice put paid to his ambitions of being a pro-footballer—he took a sports quota position with Northern Railway at the age of 20. “But when I got a call from the bank, I decided to show my loyalty to the bank, which has fed my family for around 100 years now,” said Sharma.
The kind of proximity and access to the banking system that Sharma provides is almost non-existent in most of rural India; only 39% of the rural population has a bank account, and 73% does not have access to the formal credit system. It is a problem the government has made intermittent efforts to address. In August, the Reserve Bank of India (RBI) asked banks to make financial inclusion —delivering financial services to the poor and the unbanked—more meaningful and urged them to examine the quality of their local managers known as ‘business correspondents.’
In Madhya Pradesh, ultra-small banks have been opened in villages without any existing financial institution.
“The aim is to reach every villager of the state,” said Aruna Sharma, the development commissioner and principal secretary, panchayat and rural development department, in the government of Madhya Pradesh.
“If the villager is unable to come, the correspondent working out of this ultra small bank will go to the villager and dispense the pay received under MGNREGS or other social security benefits such as disabled and old age pension,” Sharma said. MGNREGS is short for Mahatma Gandhi National Rural Employment Guarantee Scheme, the government’s flagship jobs programme.
Account holders can make deposits and withdraw money through this small set-up, cutting down on travel time and middlemen. The model may also facilitate direct transfer of subsidies into the bank accounts of beneficiaries using the unique identity number under the Aadhaar plan.
Still, a lot of ground remains to be covered. On 11 October, RBI formed a committee to promote financial inclusion in its banking services. At the time, the central bank admitted that providing accessible and affordable financial services to all 600,000 villages in India would be a mammoth task. And one that depended on the efficiency and initiative of the intermediaries at ground level—people like Sharma.
On any given Saturday, Sharma heads for one of the villages between a 2km and 22km radius of his branch. Once there, he sets up a meeting in one of the ultra small branches.
“A brick and mortar branch works well because people can see it every day and that makes them believe that it is not a fly-by-night operator,” said Nachiket Mor, a member of RBI’s financial inclusion advisory committee.
Bypassing the middlemen
It hasn’t been an easy task. While trying to establish direct contact with villagers, Sharma has had to get around a league of middlemen who offered access to bank services like loans and self-help group registration for a fee, and who had been criticised for taking advantage of those who were illiterate or unaware of how the system worked.
To bypass these middlemen, as instructed by the state government, one bank official must spend at least two hours in a week in these ultra small banks. “This creates a sense of trust among the villagers that these correspondents represent the bank,” said Irfan Khan, district coordinator of Synapse Solutions Pvt. Ltd, which provides hand-held biometric identification services to Central Bank of India in Gwalior district.
Biometric devices can identify a person through fingerprints, which are then matched with the data on the smartcard issued by the bank, and enable business correspondents to act as walking cash dispensers.
Sharma has gone a step further. Almost every evening, he travels to one of the villages under his supervision and walks around the neighbourhoods with the local banking correspondent, who is often a member of the local community.
“When the villagers see the correspondent with me, they tend to believe that the correspondent is working for us,” said Sharma.
Hakim Singh Dhakad, 24, the banking correspondent for Badagaon Jagir, a village of 3,250 people, 60km north of Gwalior, delivers Jeenedre Adivasi’s pension to her doorstep by hand and Budhiya Dhakad, a blind lady in her 50s, collects her disability pension from Dhakad in person.
However, Sharma is alive to the possibility that his bank correspondents have the potential to become middlemen themselves. To keep an eye on them, he has formed “krishak clubs” (farmers’ clubs) in every village, made up of locals who have a good track record with the bank and can also act as informers. The clubs also disseminate information about the latest farming technologies; in Simariya Tanka they were responsible for the conversion of poorly farmed scrubland into marigold fields.
“I contacted the floriculture department and asked them to help,” said Sharma. “They sent some people and tested the land quality. It was appropriate for marigold farming.”
Today, around 40 acres of land in this village has been turned over to marigold cultivation and neighbouring villages are replicating the model. Sharma’s next targets are herb plantations in the forests and fisheries in the village. “I am in talks with departments concerned. If these can be formalized, a great chunk of population will start earning a living,” Sharma said.
Of course, Sharma’s efforts on a personal and hyper-local level are dwarfed by the sheer magnitude of government schemes like Aadhaar, which has registered more than 200 million people across the country. Moreover, in a country of 1.2 billion, three quarters of whom are without formal credit, Sharma’s efforts can seem like a drop in the ocean.
“As an individual effort, it is a truly inspiring endeavour,” said Mor. “However though such isolated efforts work in pockets; if I am to believe that this is the solution to the problem then we need to look deeper. We have to create an environment across the country through a systematic idea so that every banker and individual can do what Sharma is doing.