Dinakaran (44) runs a small printing press in Dharavi. He earns about Rs 10,000 a month selling labels to chikki manufacturers, and stickers and certificates to school stationery shops in the area.
Like many of Dharavi’s residents, this native of Tamil Nadu’s Tirunelveli district came to Mumbai penniless and started a business with savings he had painstakingly put together.
But he has not been able to expand his business as no bank was willing to lend him money.
Today, however, he is brimming with plans. He is one of the first people to get an overdraft facility at Indian Bank’s branch in Dharavi, which became the first commercial bank to open a branch in Asia’s largest slum on Monday.
With a credit line of up to Rs 50,000, Dinakaran no longer has to wait for his customers to pay him to buy raw materials such as paper and ink. “I can take more orders. I can purchase things on the spot and can double my income,” he said excitedly in Tamil.
Some Dharavi residents use the services of two cooperative banks but activists say most residents depend on moneylenders, who charge exorbitant rates of interest.
Dinakaran himself has burnt his fingers with cooperative banks, losing Rs 7,000 when two of them went belly up a few years ago. But he has faith in a big state-run bank like Indian Bank. “This is not a fly-by-night operation,” said the Commerce graduate.
Indian Bank has been working in Dharavi since September last year to get people to open accounts. It has already built up deposits of more than Rs 50 lakh from nearly 6,500 “no-frill” accounts, requiring no minimum balance and one photo identification. It has also issued more than 3,000 ATM cards, and won a few takers for its credit card and insurance products.
“To get the urban poor into the banking net, one cannot use the normal criteria for creditworthiness,” explained PK Chopra, a deputy general manager who helped set up the Dharavi branch.
Instead, officials went door to door and interviewed people to get a rough idea of their income.
In fact, NGO Nirman had been talking to central bank officials about the urgent need for a bank branch in Dharavi. “A lot of migrants are young, and don’t know what to do with their money,” said Radhika Sarkar, a programme manager at Nirman. “If they can save, then they can slowly think of developing themselves.”
Chennai-based Indian Bank is no stranger to micro-finance: it accounts for about 15 per cent of its assets, said Chopra.