Land-locked Arunachal caught in catch 22
By Pradeep Kumar
ITANAGAR | Apr 23 | Customer service point (CSP) could serve as a panacea for financial inclusion, still a mirage in land-locked Arunachal Pradesh, if advise of NE circle State Bank of India CGM PVSLM Murty is considered.
When told that a large section of state population still remain unbanked even after 70 years of independence and 30 years of statehood with only 180 bank branches, including 57 of SBI, the lead bank, Murty, in an exclusive interview to this daily on Saturday, spelt out the mantra to remove the malaise that has led to financial instability and pauperism among lower income groups without access to financial products and services.
Financial inclusion is delivery of financial services at affordable costs to vast sections of disadvantaged and low income groups, like ‘no frill’ accounts. The RBI had set up Khan Commission in 2004, incorporated its recommendations into policy and stressed on allowing ‘no frill’ account either with ‘NIL’ or very minimum balances and charges to make it accessible to vast sections of population.
Responding to question – Could you imagine conditions of poor tribal people used to cash transaction including in remote and far-flung areas? -, he said the CSP, a V-set linked service point capable of providing bank services, could be set up mostly in non-banking higher hilly regions of this land-locked state.
He cited the example of a CSP set up along Aalo-Mechuka road to benefit the tourists heading for Mechuka, which he described much alluring than Paris. A CSP could be set up in a tea stall, any small shop or a bus stop along the road. However, as tourist season is limited in Arunachal the CSP was not profitable for the operator for low local population. The GoI is offering capital cost while the SBI is bearing recurring cost of the CSP, like paying Rs 5 for each transaction. But very less transactions discourages the operators, he said.
“Thus, I have written a letter to state CM recently to offer some incentives to such operators like Assam Govt for more CSPs to spring up toeing financial inclusion policy for the masses to avail banking services”, he said.
It may be mentioned that Assam Govt had taken initiative to force tea industry to stop disbursing wages to 10-12 lakh workers in cash and take bank transfer route. If successful, it might be a game changer for the region, as reported by Business Line on 13.12.16.
Murty had assured to open residual bank accounts and help start transacting wages through CSP network in a fortnight without salary disbursal limit on CSPs.
Assam, largest NE state despite poor tele-connectivity, then had a CSP network of nearly 5,000 serving a crore customers including additional 10-12 lakh accounts with Dhekiajuli Tea Estate of Murugappa group in Sonitpur having broadband connectivity, Arun Tea of Gillanders Arbuthnot with BSNL’s wi-fi services.
Assam Govt was pushing all telcos to pool services of RailTel that offers connectivity to rail stations as 40% estates on its roll, at least 1/5th of the gardens suffer from connectivity issues, according to Indian Tea Association (ITA), the report added.
On 11.05.16, Arunachal Governor JP Rajkhowa and CM Kalikho Pul reflecting their commitment for greater welfare of the masses had sought the help of SBI to improve its services when Murty had called on them here.
When told that Arunachal is still crippled between demonetization (announced by PM Narendra Modi on 8-9.11.16) & remonitisation and facing acute crisis of small (5,10, 20, 50 & 100) notes even in state capital though Itanagar & Naharlagun SBI ATMs need Rs 5 crore daily, he said, “about 85% of notes were out of circulation due to demonetization. But the NE region did exceedingly well in remonitisation. Transportation from the mint and printing of Rs 500 notes possibly late in comparison to Rs 2,000 notes and hoarding by unscrupulous people had posed temporary problem but our coordination with the RBI authorities made the difference,” he claimed.
As to why SBI branches were not improving services and many branches go defunct to hang “No service due to link failure”, he clarified that multiple links have been permitted with higher V-set band besides availing RailTel service but in case of huge salary transfer the postings get delayed.
When told that non-availability of small currency note and mobile operation remaining a distant Digidham and the poor cannot be expected to use Rs 500 or Rs 2,000 notes, the highly experienced banker reasoned that the need of the hour is to bring mass awareness to go cashless to avoid unnecessary works at various levels whose benefit would accrue to those join the process and come out of the catch 22 situation, he said with confidence.
Interestingly, the cost of withdrawing high-denomination currency notes to wipe out black money from the country will be about Rs 1.28 lakh crore during the 50-day window till 30.12.16, the Centre for Monitoring Indian Economy (CMIE) ET Bureau had reported on 25.11.16. The overall cost could be much higher, the private economy watcher estimated. The demonitisation had invalidated 86% of Rs 17.8 lakh crore of currency that was in circulation on 28.10.16 due to sudden withdrawal of liquidity from markets,” CMIE said in a report on 24.11.16.