Banks go rural as govt seeks banking for Bharat

Working out of a tiny rented room furnished with a wooden table, small biometric authentication machine and shelf stacked with passbooks, Ganesh Dangi is a one-man bank for a village of 650 people in northwestern Rajasthan.

A business correspondent, or local representative, for State Bank of Bikaner and Jaipur (SBBJ) in Ranchhodpura village, 40 km east of Udaipur, Dangi is racing to sign up villagers to new 'no frills' plans to meet a government target that every family in the district should have a bank account.

The central government plans to directly transfer cash payments for subsidies into these accounts, a move aimed at tackling graft in the country's creaky, corruption-ridden public distribution system.

If successful, the initiative could also bring modern banking to the doorstep of rural India, a goal towards which progress has so far been fitful despite mandatory targets set by the government and Reserve Bank of India.

"Nearly 80 farmers in the village have taken crop loans. They have more confidence in banks now," says Dangi, who earns R1,500 a month plus commissions. "They now know banks are not cheats to swallow up their money."

The target is a tough one in a country where only 35% of people had formal bank accounts, versus the global average of 50%, according to a financial inclusion survey by World Bank in 2011. Nearly two-thirds of India's 1.2 billion population still live in rural areas.

Currently being piloted in 20 districts, including three in Rajasthan, the programme is expected to go nationwide in phases over the next year. The government plans to transfer R3.2 lakh crore to beneficiaries of its subsidy schemes and welfare programmes, according to reports.

It will pay the wages for more than 50 million workers in a rural job scheme, pensions for 20 million senior citizens and about 5 million education scholarships directly to bank accounts linked to a unique identification number.

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