The central government plans to convert all welfare schemes into direct cash transfer format, but limited access to banking is a severe limitation, pilot studies have proved.
Targets of these welfare schemes, mostly poor, find it difficult to access banks. The Ultra Small Branch (USB) model of banking expansion—being run in Gwalior by Madhya Pradesh government and Central Bank of India — provides a possible way forward.
Suman Yadav (in her 40s), a widow, receives a pension of Rs 150 per month.To get this meagre amount, she had to spend Rs 30 and go to a bank situated 15 km from her home. "I had to wait at the bank for hours. If the pension was not delivered that day, I was forced to return the next day," she says. Yadav used to lose R300 to 400 that she earned in two days as a construction worker.
Her woes ended in July. Now, the pension amount is credited to her bank account by fifth of each month. Yadav walks to the one-room USB located in the Panchayat building of her village Girwai. She inserts the smart card, punches fingerprints into a GPRS enabled hand held device and gets her money. This takes her less than two minutes.
Thus, the model has brought the banks closer to the beneficiaries.“The modification is setting geographical distance from the banks as criteria for coverage, instead of the population norm,” says Aruna Sharma, additional chief secretary, MP government.
A mapping exercise in 2011 identified 14,767 villages as lacking any financial institution within a five km radius. Four thousand places were then spotted as suitable to open a financial institution covering the shadow villages. A year later, 7,580 of the 14,767 villages are availing banking services within walking distance.
In Badagaon Jagir, Hakim Singh Dhakad (22), working as a business correspondent (a resource person delivering bank services), visits house of Budhia Dhakad (50) to deliver her R150 disabled person pension. The hand held device vocally confirms the withdrawal of the money from the illiterate, blind woman.
The village of 300 households boasts of total financial coverage with over 1,200 accounts. More importantly, “The financial inclusion model has put a full stop to corruption,” says V Kishan, Lead District Manager, Central Bank of India, which opened 18 USBs in the district.
The villagers can over draw up to Rs 500 and are eligible for a loan of
Rs 10,000. "The accounts encourage the villagers to save money. Remittances were also received from places like Surat," says Irfan Khan of Synapse Solutions providing technical support to Central Bank in the project.
Madhya Pradesh has set the ball rolling by transferring all monetary entitlements — over 30 such as NREGA, pensions etc — of Rs 200 crore monthly, through individual accounts. The state says every village would be covered by December end.