GB Bhuyan, General Manager (Financial Inclusion), Bank of Baroda, advocates seamless connectivity in far-flung areas to render financial services to people. He also believes that the Pradhan Mantri Jan-Dhan Yojana model in the banking sector will give a fillip to the banking sector. Bhuyan, in a tête-à-tête with Poulami Chakraborty of Elets News Network (ENN), shares his plans to bring the unbanked under the ambit of financial inclusion
What is your view on the stellar success of Pradhan Mantri Jan Dhan Yojana (PMJDY) in such a short span of time?
This is one of the best steps ever taken by the government, because we have started with Financial Inclusion way back in 2005 which was earlier referred as Bank-led and is today referred as Bank-led Financial Program as per the guidelines of the Reserve Bank of India (RBI). Between 2005 and 2013, the RBI revised their program twice; wherein the first guideline was to complete Financial Inclusion by 2012, which the bankers were not able to complete the project. The RBI has introduced a segregated Financial Inclusion plan, for 2013 to 2016, wherein all the six lakh villages have been identified and allocated to the banks; out of which 5.90 lakhs were not included in the banking sector. Most of these villages are in far flung remote areas and cannot be brought under banking sector as bankers have their own limitations. There are around 40,000 bank branches in these villages to handle the odd issue. Thus, it was difficult for banks to address this, unless government authorities are coming forward for the cause. The government authorities have the credibility to open branches from 40,000 to six lakhs— that implies one branch in every village, unlike the bankers, who have limited authority to address the issue. We as bankers, tried to introduce different models to find out whichever works best—of which, Business Correspondent (BC) model is one of the most popular. However, the problem with this model is acceptability by the villagers. Developing that trust and credibility definitely depends on the BC network and its viability. For three years the banks were struggling with the economic viability, for the size of business, which will be sustainable for BC’s. Now, with the government coming forward with the PMJDY, this model in the banking sector will be given a boost and fillip to sustain in a better way. In 2012, the government again introduced DBT (Direct Benefit Transfer) and was expected to help banks in its implementation by identifying the beneficiaries and other aspects, which did not happen. At the ground level, bankers faced a huge challenge of completing financial inclusion with limited resources to their aid. However, with PMJDY, the government has taken the right step to rope in government machinery for the benefit of the citizens.
What Financial Inclusion related initiatives have been undertaken by the Bank of Baroda so far?
There are several initiatives that we have taken towards this cause. Early in 2011, our bank was trailing behind other banks to quite some extent. It could have been referred as a non-starter, even though we tried adopting several business models of proven success. Then, we tried identifying the problems that we are facing in adopting the several methodologies and the reason behind them. The foremost thing that we have done is to introduce the sense of ownership within our organisation, which has helped us in building and boosting confidence within our institution. With that we were also able to create awareness amongst our branch managers that with the financial inclusion there is a business for the banker, as all my branch managers were of the notion that the FI has similar procedure as Business Correspondence model. We brought it to their notice that corporate business correspondents are enablers of FI and it is basically our job through monthly meetings held in the town-halls across the country. The second initiative—BC remuneration is a remarkable one because if these BCs are economically viable then they will not work under this model. So it was important for us to pay them competitively, however there were limitations for us on this as well. So we started to pay them directly from our organisation. With that we started to restructure BC remuneration by giving them added incentives on a stipulated amount of account opening procedures.
The third best initiative that I would like to notify is opening of ultra-smart branches in remote villages, which is a step above the BC model. BCs are not credible for villagers as they might vanish after collecting their money. Moreover, the villagers have very small amount of money to save as their source of income is also low. We started sending all our officers and link branch managers with BC’s in villages once in a week, compulsorily. So, when villagers find managers and officers from banks along with the BC’s they start believing on this people and automatically the number of business increases, with people’s trust and credibility. With back-drops and branding for the BC in association with the bank, people then started trusting their money with us, resulting in record number of bank accounts with us.
What are the hurdles in the technological eco-system that hampers the Financial Inclusion programme?
We Indians are very good at technology and its exploitation. There is a constant competition amongst firms for newer and newer technological advancement. However, what is needed at this juncture of advancement is a technology that will provide seamless connection to me and my network, which will ensure connectivity to all even in far flung areas. We may deploy any technology, but this will not work well if these technologies are not talking to my people on a real-time basis, thus hampering our activities related to Financial Inclusion in remote areas. Seamless connectivity being the issue, today we face problem in our data-center reflecting on these transactions immediately. For banking we use two kinds of technologies- GPRS for remote areas that does not have internet connectivity; and wherever there is internet we have kiosks for reflection of transactions—both of which have their own limitations. We have more than 5,000 kiosks spread across the country, which is the highest number recorded yet. Another area of evolution that has picked up reasonably over the years is Mobile banking, which enables customers to bank at ease at their fingertips. But the problem lies in the fact that people in rural areas needs awareness on this aspect and are totally unaware of the operation.
Access to ATMs and frequency of its distribution is a basic problem of people living in rural parts who have faced such issues over the years. What are your views on the need of spreading network of ATMs?
We are a cash oriented economy and cash transactions in Indian economy are very much here, wherein we have to push everything to cashless transactions somehow. The density of merchant pause machine needs to be augmented in almost all aspects of market transactions. For us in our economy, for one to go out of the state, the first thing that he will have to check is on the currency that he is having in his pocket at that particular point. Problems like, low density of ATMs, ATM machines not having cash can be addressed only with cashless or bank-less transactions. I believe ATMs should be banned from use. On one hand while we are advocating a cashless economy, on the other hand we are keeping ATM boxes across corners, making people to withdraw more and more. It is high time, government needs to address these issues and take necessary actions for this.
Instead of increasing density of ATMs across the country, density of the PoS machines should be increased, rendering every vendor with one of those and connectivity. Even in malls, these machines are not having wireless connectivity, which is one of the most state of the art equipment being used across the world.
How far do you think is our economy from adopting Cashless Economy?
In India, we have adopted cashless transaction to some extent. Shopping malls have PoS machines; online transactions, mobile banking is common these days. However, to ensure entirely cashless transaction, we have to wait for an approximately 5 to 6 years to get better results. Moreover, government too has to take a few measures to ease out on regulations for transaction of heavy amounts. Once the requirement of documentation for heavy transaction amount is cut by certain percentages, the hesitation among people to use digital payment will also subside. Seeding of Aadhaar information of every individual with their bank accounts is thus a very crucial measure that needs to be taken care of.