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Financial Inclusion in Rajasthan:
A Case Study of Rajsamand District
Subah Singh Yadav*
Financial
Inclusion which
flashed on the horizon
of banking industry in the
wake of inclusive growth
policies, has after crossing the
crucial tides of time, come to stay
to some extent in a comparatively less
developed State of Rajasthan. The state
has been a frontier, if not pioneer, in
searching for an alternate credit delivery
mechanism through Self Help Groups. Its Ajmer
model has been one of the most popular and
illustrative device of reaching out to the poor. Financial
inclusion is not an end in itself as most of the people having
a bank account or an insurance coverage, ipso facto, does
not mean an enhancement in their economic position, but it
should help, in some way, the process of economic development in
the distribution of existing income pattern.
This is exactly in this context a pilot project on financial inclusion was
triggered in Rajsamand district of Rajasthan. This is an average size district,
with strong presence of Women & Child Development Department’s a initiatives
on SHG linkage program.
Methodology
The sub committee of the SLBC identified Rajsamand district for the purpose and the project was
launched on August 25,2006. It was decided to conduct house hold survey and identity families
who are not within banking reach. The role of Panchayati Raj institutions was also stressed upon in
view of easy access of these units operating at the grassroots level. It was also resolved that household
survey must be completed by December 2006 and then the district should be fully covered for inclusion by
March 2007.
*Chief Manager, Bank of Baroda, Zonal Office, Lucknow
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Fifty nine branches were to cover 1004 villages and 90 wards in their service area targeting 185721 [Link] work was co-
ordinate by the Lead Bank Managers of SBBJ at Rajsamand. Branches were advised to open no frill accounts as per the
Reserve Bank of India guidelines with a minimum of one account per household as per the voter list. A record of families who
have migrated to other places or refused to open the account was prepared and duly authenticated by sarpanch/ government
authorities.
Progress of the Project
Note: During the aforesaid household survey and identification of families, number of families increased by 11335 from the
figure obtained in the 2001 census level due to increase in population and sub-division of families.
The survey and opening of deposit/loan accounts in the entire district was completed in the first week of January 2007. The
district administration had undertaken a sample check through its field staff to ensure that the needful had been done. The work
of data punching was done to update the various information and future requirements.
Analysis
SBBJ and Mewar Gramin Bank had the maximum branch network with 19 branches each (32 %) followed by Bank of Rajasthan
with 12 (20%). The remaining banks have one to three 3 branches.
The district is characterized by migratory population. As many as 7101 families were not available and 5540 families refused to
open bank account. Rest of the population was brought in the fold of banking system. It appears that old persons and
pensioners prefer even late delivery of money order at their doorstep rather than going to bank premises.
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An analysis of the data reveals that
47.68 percent families were already
linked with banking system and for the
remaining 52.32 percent, new accounts
were opened during the financial
inclusion project.
Migratory nature of population is equally
evident with some variation in semi
urban area also. As many as 645
Status of existing and new accounts families who went in the nearby Gujarat
state in search of wage employment were not
available for account opening with banks.
However 1176 families were found reluctant for
opening bank account.
People in the semi urban area are better aware
of the advantages to be associated with
banking system. Therefore, banks had to put
less efforts and by opening only 17.37 of new
account, all the ward were financially included.
Evaluation Study
The evaluation of the project in the district conducted by an external agency found that 92.27 per cent households in the villages
have a bank account but 52.39 per cent of the households had no transactions in their accounts due to various reasons like,
distance of the branch (79.64%), illiteracy(6.60%) and not being interested (10.04%). In towns, 98 per cent households had a
bank account and 86.94 per cent not carrying out transactions. Non-availability of passbook (75.47%) was cited as the major
reason. Majority of the people contacted were not familiar with the process of opening the account and could not get their
passbooks. However, despite these deterrents and disconnects, the accounts opened under financial inclusion project were
gainfully utilized by the NREGA beneficiaries for effecting transactions. As per the evaluation study, these accounts would have
been largely inoperative otherwise.
Conclusion
The experience of Rajsamand district brought out the following issues to the forefront :
l Efficient delivery of services with low cost of intermediation
l Substantial upscale of micro credit activities.
l Change attitude and aptitude of staff posted in rural branches; rejuvenation of rural branches and making the rural posting
more attractive
l Exploring collaborative support from hybrid channels like NGO’s / NFI’s / post offices / RUDSETI’s / Educational Institutes.
l Fostering real sector linkage amongst farm activities and leveraging technology to the maximum extent possible
This pilot project seems to have played a refreshing and reassuring role in leading the way for creating supply of financial
services and facilitate their distribution. However the men, machinery and methodology have to be geared up for upgrading
quality of services and access. Simultaneously, there is a felt need of extending the customers financial literacy and counseling.
Banks might develop clients and demand through financial literacy, education community development, business development
services for clients and increasing publicity as well as developing brand recognition. Banks and local administration have to
perform distinctly, but mutually reinforcing roles in achieving social transformation through financial inclusion.
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