Jahuran Bibi and Baharjan Bibi have come to the Bangiya Grameen Vikas Bank, a rural bank, to withdraw an amount of Rs 8,000 for the marriage of the daughters of two other members. They are members of a self-help group (SHG) called Alahi Bharsa based in Salboni block of West Medinipur district (West Bengal).

Alahi Bharsa came up in 2005 in Sapkata village under Satpati gram panchayat, and it has 12 members. “The local school required cooks for midday meals. Our pradhan asked women of the village to form a self-help group (SHG) as he did not want SHGs from other villages cooking at our school and that is how Alahi Bharsa came into being,” says Jahuran Bibi, a member of the group. Though not mandatory, mostly SHG cook midday meals.

Bangiya Grameen Vikas Bank gave the SHG a loan of Rs 25,000 for animal husbandry four years ago, and it has since been repaid. The 12 women mainly make a living by making plates from sal leaves. So far the group has managed to save Rs 50,000 in their account by contributing Rs 30 a month.

Jahuran Bibi says most people in her village do not go to banks for loans and turn to local moneylenders instead. “Not everybody has the necessary documents which a bank demands before advancing loans, besides not being able to show security,” Baharjan Bibi adds. It is to that common account they are turning to give out a loan for wedding expenses.

However, such SFGs are more of an exception than the norm around here. People are turning to banks, but only to receive money under welfare initiatives. Once that money is spent on day-to-day needs, in case of emergency, it is to the not-so-friendly neighbourhood moneylender they have to turn to.
In Salboni, the Bangiya Grameen Vikas Bank has only one branch at Pirakata village in Salboni block. Its manager Jahar Singha says that the branch had close to 10,000 accounts. “Besides accounts for MNREGS job-card holders, we have primary and high school teachers’ salary accounts, old-age and widow pension,” he says. “In recent times core banking has been introduced (which means, customers can access services and facilities from other banks and other branches too). In West Bengal 70 new branches have been opened. Only village in Pirakata falls under financial inclusion,” he says.

“SHGs can procure unlimited loans and up to a loan of Rs 5 lakh, no security is required,” he says. Loans are given for animal husbandry, farming, and industry. Loans under a state government scheme called Bangla Swanirvar Karmasansthan Prakalpa (BSKP), to help unemployed youth start small businesses, are also being given.”

But not everyone has benefited from the various loans and schemes made available at the grassroots level. Shyamali Doloi, an agricultural labourer, has an account with United Bank of India, one of the few nationalised banks in Salboni. It was opened to receive money for the Indira Awaas Yojana (IAY). She is unable to save money as most of it gets spent on daily requirements. In case of emergency, she has to borrow from rich farmers who deduct the amount from her daily wages.

Minati Doloi also opened an account with United Bank of India to receive money for MNREGS work. She still uses this account though MNREGS work is not available these days. She too borrows money from rich farmers during the agricultural season to buy seeds or during wedding ceremonies or festive seasons. When a large sum of money is borrowed interest charged at five percent per month and as security she has to deposit gold ornaments or bronze utensils. These can be reclaimed if full repayment is made within a period; otherwise they are forfeited to the moneylender.

State Bank of India has a branch near Sayedpur village which does not have a banking correspondent. This branch caters to two gram panchayats that include 72 villages and has around 12,000 accounts. “Most of the accounts were opened for MNREGS and the bank does not profit from these accounts,” says a bank official. “Most of the agricultural loans under the kisan credit card are not repaid. The branch is not running in losses due to the presence of wealthy account holders,” he says. The bank does not have any immediate plans of expansion. “If JSW (proposed steel plant) comes up the scenario may change,” he adds as an afterthought.

“There have been instances where farmers who have already sold their lands to JSW have taken agricultural loans from us on the basis of old papers. The processing of papers for new land owners takes six months. This is why we are now in touch with the JSW people to clarify before issuing loans,” he adds. Recovery of loans remains a problem as up to a loan of Rs 3 lakh no security is required and government rules prohibit seizing land from farmers.

United Bank of India has three branches in Salboni. In the Satpati branch which caters to four gram panchayats, business facilitators are part of the local farmers’ club. “We are out on the field twice. Once, before the agricultural season we go from village to village informing people about agricultural loans. After the crop is sold we go back to ensure farmers pay back the loan,” says business facilitator Jitesh Mahato.

The regional manager of Bangiya Grameen Vikas Bank, Satyabrata Chakraborty, says that allotment of ‘smart cards’ that could be swiped at ATMs and points-of-sale to withdraw cash and pay for goods and services is expected by March this year in the region. The major hurdle, he says, is the recovery of loans. “People who do not pay back their first loans go to mahajans when they require loan again,” he says. “Once an agricultural loan crosses the two crop periods, that is, the crop becomes a non-performing asset. Once turned into a non-performing asset the bank ceases to earn interest and the loans remain unpaid,” he adds. At present, loan recovery stands at 43% for agricultural loans and 60% overall.

United Bank of India has three branches across Salboni. “60% of the account holders in the district are MNREGS job-card holders,” says lead district manager Samarendra Sannigrahi. “We are waiting for a data on how many families do not have a savings account from the district magistrate’s office. Once we get it, we will hold camps in respective areas,” he informs. “We have plans to expand branches in West Medinipur district. We are looking towards opening three more branches in Chandrakona 1, Jamboni and Sadar blocks. Branches will require infrastructure, electricity, internet connection and computers. Our target is to make these new branches functional by March 31 this year,” he says. “Only one branch in Salboni has banking correspondents till now. More banking correspondents are being recruited,” he adds.