Fincial Literacy & Inclusion: A few facts

By Arindam Gautam

After coming to power with a massive mandate, the Prime Minister of India rendra Modi has introduced a slew of social security schemes as well as renewed interest in bringing all sections of the people to the fold of the banking process. While the process of fincial inclusion was started by the Reserve Bank of India long back, realizing the importance, the Prime Minister of India for deepening Fincial Inclusion launched the Pradhan Mantri Jan Dhan Yoja (PMJDY). The PMJDY is different in the sense that it changed from the earlier mode of covering villages to covering households under the Sub Service Area (SSA) concept. In fact, the PMJDY has been quite historic in its endeavour by achieving remarkable targets within a very short time frame.  Union Fince Minister Arun Jaitley while lauding the progress said that India has almost become a fully banked country. He has expressed optimism by saying that the success of this mission has paved the way for direct transfer of benefits through bank accounts thus weeding out the scope of siphoning of funds. For a country like India, Fincial Inclusion is indeed very important. And, therefore, this initiative as well as the hitherto-achieved success of PMJDY is laudable and might be considered as a game changer for the Indian economy. Having said this, certain apprehensions cannot be glossed over. First, such accounts being opened with relaxed KYC norms, their vulnerability of being subjected to use for hawala transactions or for funding terrorism by some unscrupulous elements cannot be ruled out. Secondly, the fact that such enthusiastic response towards opening of accounts is owing to some misconception like getting Rs 1 lakh (disregarding the accidental insurance clause) immediately credited into his newly-opened PMJDY account or an overdraft from every account opened by an individual in every bank branch in the vicinity too is a matter of concern. Or is it an exercise that is overburdening the bank people and is not a cost-benefit propositions for the banks in terms of profitability vis-a vis the cost of labour involved? But is it really making all the citizens fincially literate and willing to avail of the banking services, the question remains. The following few indicative questions back this assumption: (1) the forms and other documents of most banks are printed in English making it difficult for a person to comprehend. Apart from it, the filling up of the forms is too cumbersome. (2) Banks are located far away from some places (villages) and it very costly to commute there to deposit and withdraw money.

As a part of awareness programme and to combat banking illiteracy, banks have been asked to conduct fincial literacy programmes every Saturday.  But unfortutely, albeit a few, most of the Fincial Literacy Camps (FLCs) organized by banks on Saturdays are not beyond mere rituals. A routine one-size-fits-all session is undertaken without much thought on the content as well as the output. There is a need to chart out a well-charted out content plan customized to the various target groups. Branch officials can be given adequate training along with audio visual aids to conduct successful FLCs. The role and importance of the FLCs conducted by banks are significant in this process as they have a greater outreach as compared to other modes of communication like TV radio etc where the message is usually unidirectiol. FLCs conducted by banks, unlike TV, Radio and newspapers advertisements, leave ample scope for interaction as well as bringing the people closer to the banking personnel. RBI, on the other hand, can act as a facilitator by uploading such contents that might come handy for bankers for conducting FLCs as well as for designing the content plan for the FLCs and as a monitoring body by observing the output of the FLCs conducted by the banks as well as making necessary correction and rectification, as and when necessary.  For FLCs conducted for school children, some small quizzes and role plays can be held and students can be given some small prizes in a bid to boost their inquisitiveness. The basic premise behind holding FLCs should be to ingrain the idea and benefits of being fincially included and this should be worked upon meticulously by the implementing agencies so that the process become spontaneous and people develop a liking for it.

There is no gainsaying the fact that fincial inclusion is aided with sufficient fincial literacy but the second must complement the first. That is to say, people must be benefitted after opening an account. Otherwise organizing fincial awareness and literacy will not serve the desired purpose if the end product is not customized to the needs of the targeted people. There is a need to identify the needs of the people and then devise products and services to fill that gap.  True and agreed that people can receive subsidies and remittances by opening a savings account but is it the only requirement of the people especially those who are still fincially excluded? The product should be designed in such a way that by merely opening a saving account, a person is entitled to a life insurance, accidental insurance, debit card and a pension scheme, if applicable. One should be able to get a sort of integrated product at one go and with just one set of documents. There ought to be simplicity in the application forms which should contain only utmost important fields printed both in English as well as the tive language of the region. At present even in the RRBs and co-operative banks most of the forms are in English. This is where the other social sector schemes like PMSBY, PMJBY, or Atal Pension Yoja comes to the picture. A person is required to fill up several application forms to enroll in the newly-launched social sector schemes— a fact which is deterring many to enroll in these social security schemes. Secondly, people opening accounts in the ultra-small branches are deprived of the scope totally.

There is also need for banks to move beyond business correspondents and involve some alterte delivery channels. Today every individual has access to a mobile phone and in majority of the cases it is the prepaid phone that has the most subscribers. The outlets where mobile top-ups and recharges can be done are frequented mostly by the people. They can be made a great stakeholder in this process of fincial inclusion. Most of the branches, even Regiol Rural Bank (RRB) branches, are located far away from the villages. There remains the problem for people from far off places visiting the branch for depositing money in the limited time frame of the banking hours. Just like a prepaid mobile subscriber visits the mobile recharging outlet and recharges the mobile, this facility can be extended by the banks where one can deposit money in the account with the help of the mobile recharging point.  This process is already in vogue to some extent with some mobile service providers—like Airtel Money and Vodafone M-pesa— and may be suitably customized and modified to work on a large scale. For withdrawal purposes some ATMs like low-cost simplified devices— of course, customized to the needs like operating in vercular language, or directly from ones mobile phone if placed in the vicinity of such device— can be located at some strategic places for the people residing in the far-flung areas. This can be even more cost-effective than opening customer service points.

It is quite apparent that spreading fincial literacy requires some holistic approach. But at the same time it needs no reiteration that fincial literacy will be a successful endeavour if the fil product will find takers. This is where the banks need to work upon. There is an urgent need to identify the need and to evolve—customized and integrated and useful products leveraging technology to the fullest. A cue can be taken from the E-choupal initiative of ITC. The task of bringing the womenfolk (Self-Help Groups) to the ambit of banking services can also be undertaken if modalities like the Shakti-amma project of Hindustan Unilever is worked upon. This class of hitherto fincially excluded people is an immense business opportunity. As highlighted by eminent magement guru CK Prahalad in his enlighteningly book titled: “Fortune at the Bottom of the Pyramid: Eradicating poverty through profits”, this class of hitherto fincially excluded people is an immense business opportunity. Owing to their locations and branch network, this assumes special importance for the RRBs as well as cooperative banks provided the fact that they are able to reap it in the right way.

(The writer works with the Assam Gramin Vikash Bank. Views expressed are persol)