MP sets example, makes direct benefit transfer a hit
MP government realised that people would not benefit from a threefold increase in direct public spending ---- Centre and State --- unless it formulated its own financial inclusion model, different from the one prescribed by the Reserve Bank of India.bhopal Updated: Aug 05, 2013 11:47 IST
A finger print was enough for 80-year-old Roorki Bai to withdraw a couple of hundred rupees from the newly opened ultra small bank (USB) in her village Bhakhera Hassan, about 60 kms from Bhopal, Madhya Pradesh.
Before this branch opened in August 2012, Bai had to travel about 10 kms to Ahmedpur to withdraw her monthly pension of Rs 500.
It is not an unusual sight in rural India, where just 5% of six lakh rural habitations have a commercial bank.
“Kharab sehat ki vajah sa wahan jana bahut mushkil hota tha aur time bhi bahut lagta tha (Because of bad health going there was difficult and it used to take a lot of time),” she said, as banking correspondent Gobind Bihari Sharma took her finger print on a small machine.
The state government realised that someone like Bai would not benefit from a threefold increase in direct public spending ---- Centre and State --- unless it formulated its own financial inclusion model, different from the one prescribed by the Reserve Bank of India.
The RBI allows a small bank branch for a population of 2,000 but in bigger states like MP it would translate into villagers having to travel 10 to 20 kms to visit a branch.
Banks in states like Orissa and Bihar appointed banking correspondent for villages for last mile banking service but the model failed because of inadequate business and inconsistency.
The MP government moved away from the population criteria to distance — maximum of 5 kms travel to avail a banking service six days in a week at panchayat office.
It identified 14,767 villages for opening USB branches of which about 3,000 have been opened.