By H H Mohrmen
The new rules from the banks particularly the private banks and the State Bank of India will undo what little that has been achieved from the panIndia financial inclusion campaign in the last few years. The idea that banks will charge customers who do not maintain minimum balance in their accounts defeats the very purpose of financial inclusion, because in the first place, it was the government, the RBI and the banks which lured the rural folks to open accounts with the banks by giving them the benefit of no frills account, life and accident insurance and other benefit.
Now these same banks (with the support of RBI and the government which looks the other way), will also charge customers for depositing beyond the three allotted monthly deposits and also charge customers for more than three withdrawals a month. The question is, if we are to be taxed even for depositing our own money then whose money are we talking about here. This is typical corporate trick that when customers are under their control (in this case the depositors) and are well inside the trap, then the exploitation begin.
Till last year government’s effort was to encourage the poor both in the rural and urban areas to open an account in the bank and the little experience that we have from organising more than fifty FLCs in every nook and corner of Jaintia hills gives us a real picture with regard to state of financial inclusion in the district. Most poor people do not have a bank account and those who have bank accounts did so because they are compelled to do so since their wages from MNREGS, old age pensions, LPG subsidy, scholarships and etc is linked to their bank accounts.
In fact the very reason they opened the account is also to channelise these benefits from the government, hence the account will practically become empty after the MNREGS or other benefits are transferred to their accounts. How do we expect them to maintain a minimum balance in their accounts when the bank account was opened only to facilitate the transfer of what is rightfully due to them? The very reason that they engaged in the activity is because they are poor and they don’t have money. So how can the banks even expect them to keep any balance in the bank account?
From the little experience we have, it is found that people did not open bank accounts because they did not have the capacity to save and even those who have money prefer to keep them in their custody. We have stories of people keeping their money in their chests, in the closet, under the mattress and what have you. If anyone wants to know how difficult it is to get people to open their bank account one should talk to any Secretary of Village Employment Committee (VEC) who is responsible for implementation of MNREGS in the village and one will get the idea because the bank is still not a necessity for them.
The story of an old man who spent the last part of his life living in a small hut (Myndo) far away from the village where his paddy field and garden is located will give us some idea of how people in the villages keep their money. The old man lived all alone with all his possessions in the hut and visited his family only once a week. Few days before he died he came to his daughter’s house and stayed till he breathed his last after a brief illness. A week or so after he was cremated the family start talking about his possessions. Everybody knew that he had a lot of money but did know where he kept it. This was confirmed by a man from the community who told them that he had borrowed money from him to buy a Sumo and he had repaid the loan just before he fell ill.
The family knew he kept his money in earthen pots and buried them underground but did not know where exactly did he hid them. For years together they were searched for the treasure but to no avail. The last time I met his grandson, he told me that they have finally given up and find comfort in the fact that it is not his will that they should inherit the money. This happened in the last few years in a village in West Jaintia hills and I hope you understand why I have not shared the name of the village because i don’t want to invite treasure hunters to the area.
Then there’s another story from East Jaintia hills. I thought it must have been a joke or somebody wanted to create an urban legend. How can a man keep all his money in a syntex (plastic water container)? I was told that it was only when the government declared demonetisation of old currency notes that he went to the bank to exchange the few tanks full of money that he had. The point I wish to make here is that the money belongs to the depositor and he can do whatever he likes with his cash and in this case he chose to keep it with him.
The banks borrow our money and pay us a very small interest and then loan our money and charge huge interest for it. It is as simple as that. So how can it charge us for using our own money? Does the bank have any right to interfere what we do with our own money? We should, in fact, punish the banks for the kind of service they provide.
Is it not time that the public punish the banks when they do not deliver? Why can’t we take them to task when their service is slow and people have to stand in a long queue to withdraw or deposit their own money? Do the banks provide us any mechanism to punish them when their ATMs are not working 24 hours a day and seven days a week? Should we fine the banks when the ATMs are mostly closed? What will people do when ATMs do not have money? Will the banks compensate us for our time, energy and mental agony when on the pretext of network failure or other reason, people are not able to carry out any transaction?
The other vital question is how can the banks charge customers both service tax and penalise them as well? If the banks can levy service charge as well as penalise us for using our own money, then the banks should provide us higher rates of interest for lending our money to borrowers.
As of today the banks are profit oriented and not service oriented and if at all they provide any service, it is only for the rich and the mighty. The big corporate houses can borrow thousands of crores of rupees and declare bankruptcy and nothing will happen to them, while the poor will even have to pay for depositing their own money.
The outcome of this is that people will avoid banks and go back to the old ways of keeping their money handy and in their custody. It will compel people to carry hard cash with them everywhere they go and keep their distance from ATMs. If people will have to pay for withdrawing money then even salaried persons will withdraw their money in one go and keep the money with them rather than unnecessary paying service charge and penalty to the banks.
People will also start looking for other alternatives to keep their money and maybe cooperative banks will be a viable option than nationalised and private banks. As for the SBI and its advertisement which claims that it is a banker to every India, if the banks continue with their move they will some become bankers to few Indians only because people will start closing their accounts with the bank.