KYC is a mandatory database required while opening a bank account. PAN and Aadhaar are the two most important elements. However, banks have been projecting only ‘number of bank accounts’ in their publicity campaigns.
The increases in these numbers are projected as the banks’ progress in reaching out to the people. It may be noted that these numbers do not represent the number of customers served. Despite the voluminous data periodically published by the banks as well as Reserve Bank of India, no official data is available regarding the number of the adult population having bank accounts.
The rarely used database
There is one well-documented database that provides the actual number of households availing banking services. Details are available for rural and urban households separately. The source is the District Census Hand Book 2011, based on decennial Census 2011 publications.
Under the Lead Bank Scheme, all the Lead Banks are required to formulate District Credit Plans. Sector-wise credit plans are prepared annually. However, none of them makes even a passing reference to the number of households availing banking services. Based on these authentic data, no efforts have been made by the Lead Bank and the other banks operating in these districts. And the number of households still ‘unbanked’ is quite high.
An Example of a few Tamil Nadu districts
Chennai has historically been the birthplace of several banks and it has a fairly good record of the households availing banking services. Out of 11.06 lakh households 7.87 lakh are listed as bank customers; the percentage is 71.1. Incidentally, Mumbai has a higher ratio of 87.8 percent.
Six districts are selected from Tamil Nadu for making a review of the pattern of the households’ access to banks, in rural and urban areas, based on the data available in the District Census Hand Books. Four of them, Coimbatore, Madurai, Thanjavur and Thoothukudi are the districts, which have promoted a few banks in the past. Banking facilities were available in these districts since long. The other two districts are Ramanathapuram and Virudhunagar. They are the only two districts from the state, considered as backward districts in the list of Aspirational Districts. And banking facilities are not adequately developed in these districts.
Review of the Banks’ Reach
In the first four districts, banks have reached to around 60 per cent of the urban households and to around 45 per cent of rural households. Thanjavur district has the highest level of 65.7 percent. In this district, known as the rice-bowl of the state, rural households are the largest group: 3.91 lakh. But the percentage of rural households availing banking services is the lowest: 44.1 per cent. Out of 3.91 lakh of these households, banks could reach out to only 1.72 lakh rural households, leaving out 2.19 lakh households. In the four progressive districts, 5.98 lakh urban households do not have bank accounts and majority of them are in Coimbatore district.
In the two backward districts together, 4.93 lakh households appear to remain beyond the reach of banks. While the authenticity of the Census data cannot be doubted, this aspect needs to be examined in detail by the Lead Banks of the districts concerned. Though the number of branches has increased in many of these districts, banks are slow in reaching the rural households in some of these districts. Gramin banks are present in all these districts. Their performances need to be evaluated by the sponsoring banks and steps may have to be taken jointly to bring in more households into the banking fold, before the Census 2021 enumerations begin.