Gaps in Financial Inclusion of Rural Communities

Shabna Kausar
End of every month, 70-year-old Khadim Hussain travels two hours to collect his pension under Indira Gandhi National Old Age Pension Scheme (IGNOAPS) of Rs 1000 from the bank situated 16 kilometers from his village in Mendhar tehsil in Poonch – a border district in Jammu and Kashmir. He has to walk for 30 minutes from his village to reach a motorable road to get a shared cab. The round-trip to bank costs him Rs 160. At times, due to infrequent transportation services in the region, he reaches the bank after it gets shut only to return empty handed. Disappointed, he prepares himself to travel the same distance the next day. “I invest a lot of money and time in travelling to collect my pension from banks located far away from my residence. It takes a significant amount of efforts which is quite unfair for me at this age,” says Khadim.
Khadim is a resident of Uchhad village in Mankote Block of Mendhar. Just as Khadim, the other residents of the block, have to travel long distances and wait for several hours to access banking facilities. Besides Grameen Bank, there are no other branches in Mankote which has a population of over 50,000 people.
In the year 2014, Prime Minister Narendra Modi had come up with the initiative of Pradhan Mantri Jan Dhan Yojana (PMJDY) – a National Mission on Financial inclusion with an integrated approach for comprehensive financial inclusion of all the households in the country. While there is no doubt about the significant role of PMJDY in empowering communities in rural areas, without proper access to bank branches and ATMs, they are not able to avail the benefits that the scheme sought to provide. The nearest ATM to Mankote is situated 16 kms away in Mendhar Tehsil. As there are no banking outlets and ATMs in Mankote, how are people expected to benefit from the well-intentioned schemes government has introduced?
Jammu and Kashmir Bank Ltd, incorporated on October 1, 1938, by Maharaja Hari Singh, the last ruling maharaja of the then princely state of Jammu and Kashmir, is now considered to be the largest bank in Jammu and Kashmir, serving beneficiaries from nearly every region of the Union Territory. J&K Bank started operating on July 4, 1939, as the country’s first state-owned bank. The bank issued a Global Access Card in 2003 in association with MasterCard International. In 2004, it agreed to share the ATM network with ICICI Bank. In 2016-2017, J&K Bank launched 90 ATMs, as it promised to introduce more outlets in future. The reach of J&K Bank is so far and wide that almost all the blocks have a branch except Mankote. Considering that most of the residents in this block have account in J&K bank, its absence has made people’s lives difficult instead.
The residents of Kasbalari village in the same block are caught in the same unpleasant situation as Uchhad. In fact, they have to pay extra to visit the same bank in Mendhar. The average cost is Rs 200 for a round trip. While expressing the difficulties they face, Kaneez, a local resident, requested the administration to open branches of the bank in their region. “By the time I finish my chores at home, it gets too late to visit the bank. It has become a task for me as I have to travel long distances to obtain banking services. With no proper transport facility, people like us have to suffer great deal,” expressed Kaneez. At present, there are three branches of J&K bank in Mendhar – a highly populated area with tough geographic and weather conditions.
Financial inclusion of rural areas is a key driver of economic growth. About 65 % of India’s population lives in rural regions, of which a large proportion is still deprived of accessing banking services easily. As per a 2020 report titled ‘Financial inclusion in rural India’, one of the factors affecting rural India’s access to financial services is poor infrastructure. The report explains that “Distance or access to a formal banking outlet is a major roadblock to both consumers and financial institutions. On the one hand, financial institutions face challenges such as access to proper internet, electricity and other facilities. On the other, they also find standalone bank branches as a non-viable option due to high costs and other factors. The consumers, as a result, do not have access to proper bank branch and financial services at their nearest location.”
“My journey to the bank begins with a trek of an hour to the location from where I get a shared cab or a bus for which I have to pay Rs. 100 to reach the bank. As an asthmatic patient, I frequently experience shortness of breath and nausea after returning home. The pension money that I collect from the bank after undertaking such a long tour, is spent on my checkup. I save nothing,” narrates Sain Mir, who lives in the same village as Kaneez.
As per Choudhary Imran Zaffar, District Development Council (DDC)Member, Mankot, “I have raised the issue of opening a bank branch in Mankot with higher authorities several times. It is one of the genuine demands of the local population especially the physically disabled persons, elderly and widows.”
Financial inclusion, clearly, is one of the critical indicators of development. India, in the last few years, has taken crucial steps to ensure that every citizen has a bank account. PMJDY is a significant leap in this direction but unless the infrastructure is properly developed in rural and semi-urban areas, it will not allow us to achieve our dream of ‘Digital India’.
Charkha Features