Opening branches

Opening branches in rural India is a loss making business for banks-Business News, Firstpost

With the RBI ordering banks to open more brick-and-mortar branches at the village level, the Haryana government has fallen far short of its target

Haryana: With the Reserve Bank of India directing banks to open more physical branches at the village level to facilitate village-level banking services, the Haryana government has fallen far short of its target.

According to the standards, the state government decided to open brick and mortar branches in 194 villages in Haryana in its first phase, but only 44 of them could be opened.

The above data was released by the State Level Banker’s Committee in September 2017.

A senior bank official working in Karnal district in Haryana said 101journalists that the banks were not keenly interested in the rural population for economic reasons. He observed that a fully functioning branch of a bank needs a lot of activities to maintain itself, but transactions in rural banks remain limited to a few activities, including bad debts, which are another big deal. head for them.

Representative image. Reuters

However, Haryana’s finance minister, Captain Abhimanyu Sindhu, at a press conference in Chandigarh recently said the government is committed to extending the bank’s benefits to the last man.

The Minister of Finance also added that several government programs such as direct benefit programs, Pradhan Mantri Fasal Bima Yojana, loans to entrepreneurs and self-help groups were not possible with the inclusion of the rural population.

GNP could reach less than 1/5 of its target

Haryana’s finance ministry ordered banks to open more physical branches in villages, but most banks fell short of their targets.

The Punjab National Bank, one of the largest nationalized banks in the country, aimed to open 47 branches in villages of over 5,000 people, but could only open nine by the end of September 2017.

Likewise, Bank of Baroda had a goal of opening five brick and mortar branches, but they couldn’t even get started.

The Central Bank of India was due to open nine branches, but was unable to progress further after opening a branch. Corporation Bank and IDBI aimed to open a branch that did not start. Oriental Bank of Commerce was supposed to open 18 branches but only opened four. The largest national bank, the State Bank of India, also fell short of its target; of 21 branches, it only opened one until September 2017.

Banks have met the target

However, some of the banks that have achieved their goal of opening physical branches in rural areas are Andhra Bank, Canara Bank, ICICI Bank, and Syndicate Bank.

Neighborhoods where these branches were to be opened

Haryana’s hinterland Jind district was set to get 25 new brick-and-mortar bank branches in its villages, but not even a single branch saw the light of day in the first nine months of 2017 Union Minister Birender Singh is also from Jind District.

Bhiwani District, which was the largest district in the state by land area before Charkhi Dadri was established, was to have 14 branches but only five could be materialized. Likewise, out of eight branches planned for Jhajjar, only two were able to see the light of day. Of the 15 branches targeted, only three reached Kaithal. In the home constituency of the incumbent chief minister, Manohar Lal Khattar — Karnal, out of 11 branches, only two arrived. In Mewat, out of 16, only two came. The district of Palwal had obtained two branches out of the five targeted. Rohtak got five of the 12.

The point of view of the villagers

Satpal Kumar, 55, a resident of Palewal village in Yammunagar district, said he had to travel to benefit from banking services located in Raudaur or Alhahar in the same district. Kumar, who is a two-acre farmer, said that due to the bank’s unavailability at his home location, he had to find a special time to visit the bank and is still unaware farmer-related projects.

Krishan Singh, 72, a resident of Sambalkha in Ambala district said he bought a tractor through a loan facility.

“Now, to pay the loan amounts and benefit from a subsidy of Rs 70,000, I have to go to the bank in the neighboring village because there was no bank in my village,” he said. . He said that the grant amount has not been credited to his account and to check if he has come or not he has to visit every week to find out his status.

Gyan Singh, 85, resident of Dukhedi in Karnal district, regretted that their village did not have a bank and in order to benefit from their old age pension they had to wait for the head of the bank from another village to come. distribute it to them. “If the bank is open in the village itself, then we don’t have to wait for an official from another village to come and distribute it, we can have it in the village without any delay,” he said. .

Haryana Chief Secretary speaks

“We are seriously considering expanding bank branches at the village level to bring the benefits of banking inclusion to people living in rural areas,” said Haryana Chief Secretary DS Dhesi. Regarding the missed targets by banks in opening physical branches, Dhesi said the government is reviewing their performance and also deliberating on the reasons for the delay. He said 10 of the banks said they were not getting the construction they needed in the villages. He said they sent a request to the panchayats in the villages to help the banks get them buildings to open branches.

“We even asked the Panchayats to construct a building themselves that met the parameters of the bank if there was no building available,” Dhesi said. Talk to 101journalists The correspondent, Haryana Finance Minister Capt Abhimanyu, said the government was trying to attract the rural population with ambitious programs such as digitization, a loan facility for young people for their start-ups and loan facilities for farmers for the purchase of their equipment or connection with PMFBY.

He said some banks are not cooperating with them and the government is monitoring them closely. “A deadline to achieve the set targets has been given to these banks by March 2018, otherwise strict measures would be taken against them,” said Abhimanyu, MP for Narnaund constituency. He said their goal was to include more and more people with banking facilities and this can only be possible by taking the banks to their doorstep.

A loss-making company

A senior official working for a national bank in Haryana said 101journalists that opening a branch in a village means adding an expense of 1.50 lakh each month. He said running a bank branch in the village would require a one-scale officer, employee, peon, caretaker, building monthly rent, generator set and other additional recurring expenses. The bank agent said that to meet this expense they needed at least 8,000 accounts with them and that finding that number of accounts in a population of over 5,000 was a difficult task. Bankers said most banks are reluctant to open branches or delay in reaching their goal for this reason alone.

(Manoj Kumar is a Haryana-based freelance writer and member of 101Reporters.com, a pan-Indian network of local journalists..)


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