Shashi Rajagopalan Memorial Awards on Financial Inclusion & Rural Development

2015(2nd to 8th November 2015)

Chandeni Village, Mewat, Haryana

Submitted by:

Rakesh Kumar

Tarique Ansari 

Table of ContentsExecutive Summary.................................................................................................................3

1. Village Profile.......................................................................................................................5

2. The Journey - Those seven days!........................................................................................7

3. The Survey..........................................................................................................................11

4. Probing Deeper...................................................................................................................13

Conclusion...............................................................................................................................16

Annexure: Two Interactions from our Diary:.....................................................................17

List of abbreviations

Executive Summary

It is often said “India lives in her villages”. It is thus pertinent to know the quality of life of

the people in the villages, which in turn largely depends historical, cultural, social, attitudinal,

economical, political and lately technological spheres. Any policy intervention aimed at

improving the quality of life in the villages’ demands information on various indices of

development.

The Village Immersion Project, an unstructured training program of ‘experiential’ learning

that put RBI officers in the shoes of their clients, namely the poor of the country, by spending

days and nights with them in their village provides a unique perspective to understanding of

village life, financial inclusion and rural development.

In our approach to study Chandeni village was to carry our three dimensional study to study

Chandeni village and recommend some changes which can be made from RBI’s perspective, we

felt that looking at this village from ‘Financial eyes’ would mean like suggesting cure only for

fever to a patient suffering from Typhoid. It would rather be prudent to study this village from

‘different eyes’ and not just ‘financial eyes’. We came to believe from our field work and

analyzing the village geography – both physical and human, that we need to understand the social

fabric and its role in making financial decisions.

We, therefore tried to increase the depth of our understanding of the village dynamics by

interacting with Panchayat Sarpanch Shri. Rattan lal and other panchayat members, SHGs,

Aanganwadi people, NGOs working in village, State Government officials, Shri. V. S. Bhatnagar,

DDM, NABARD, Shri. S. Piplaya, branch manager of Syndicate Bank, Business correspondent

of Chandeni village, local school teachers/children and local people.

1. Village Profile

Chandeni Village is located four kilometers away from Sub- District Nuh, Mewat that is

around 100 kilometers away from National Capital of India. Chandeni village is one among

51 villages under Sub- District Nuh of Mewat. Mewat is an insulated and backward district of

Haryana not connected by rail, and barely connected by buses. The area is mostly inhabited

by an ethnic group called Meo who follow Islam. 

1.1 Demographics and Social Profile

There are 639 households in the village with total population of 4222. The general Sex Ratio

of the village is 868 and Child Sex Ratio (0-6 years age group) stands at 917. The proportion

of Child Population (0-6 years) is 22.92%.  More than 90% of the population is Muslim. The

proportion of Schedules Caste Population to Total Population in the village is 3.1%. 

1.2 Major Crops

The agriculture in village is mostly rain-fed. The village covers an area of 908

hectares. Bajra, jowar, wheat, rice, mustard, guar and vegetables are major crops grown in the

region. 

1.3 Occupational Distribution of the Households

Out of the 639 households in the village, following is the distribution of the occupational

distribution.

Cultivators

Agricultural Labourers

Retired Armed Personal

Teachers

Daily Labourers

Others

0 50 100 150 200 250 300

1.4 EducationThe area has two Government High Schools - one each for boys and girls. The details of

literacy in the village are depicted in the following bar chart.

Male Female Total0

500

1000

1500

2000

2500

3000

LiteratesIliterates

1.5 HealthThere is a government run Swasthya Kendra, however there is dearth of both medicines as

well as doctors, it functions more as a first aid centre.

1.6 Banking Infrastructure There is no bank branch at Chandeni. The nearest bank branch of Syndicate Bank is located

in the Ferozpur Namak, Nuh which is four kilometres  from Chandeni. There is also an SBI

branch at Ferozpur Namak area.  One business correspondent of Syndicate Bank is active in

the village. 

2. The Journey - Those seven days!

Day 1Our journey to Chandeni Village from Gurgaon began on  November 2, 2015 at 8:30 AM.

After having our breakfast at Gurgaon Bus Stand, we started our journey by a private bus to

Nuh , which is 4 kms away from Chandeni Village. We reached Nuh at 11.00 AM. Lead

District Officer of the Syndicate received us at Nuh, and took us to Ferozpur Namak branch

of Syndicate Bank. 

We interacted with the Branch Manger who briefed us about the financial position of

the branch and level of financial awareness among locals. There we met

the Banking Correspondent of the Chandeni Village who became our constant companion for

the next seven days. 

After having our lunch at a Dhaba near bank we headed straight to Panchayat Office in order

to know the basic contours of the village life and seek vital information which would help

make our immersion a successful one. Sarpanch was kind enough to serve us tea. He gave a

general overview of the village, after collecting the information we had a walk through the

village and interacted with elderly people who shared their experience about various aspects

of the village life. 

Day 2 We began the second day with a planned strategy based on the information collected on Day

One. We had prepared a small questionnaire, which was presented to village households for

better understanding the village people. The questions were designed specifically to know

their financial awareness, what they feel about banks, what they feel about other institutional

and non-institutional forms of credit. This gave us some understanding of financial literacy of

the people of Chandeni

Day 3On day three we started our day by visiting a NGO, which was hosting a meeting with

NABARD officials to discuss the financial needs of Chandeni and other villages. This NGO

gave us the understanding of what NGOs think of people of Chandeni village and how they

are contributing to make in change in the lives of people of Chandeni. This NGO was

working to provide skills to unskilled people to make handmade baskets and other such items

to earn their living. 

We got an opportunity to meet the BDO (Block Development Officer) and discussed with her

how the Government of Haryana is planning to develop the block and improve upon various

indicators like health, education, literacy and financial inclusion. She while emphasising on

co-operation and co-ordinantion among the different stakeholders of development, made vital

suggestions about the role the banks can play in effective implementation of social sector

schemes. The fruitful discussion with BDO brought us to believe that banks have a greater

role to play rather than what we had thought by sitting at our respective desks in our

Departments at Mumbai. 

Day 4

On fourth day we decided to visit the local school and meet nearby residents.  The village has

two Government High Schools - one each for boys and girls. We visited boy’s high

school. The visit was refreshing and we interacted with the children, gave them some

information about banking. Head Master Shri. Maan Singh showed us various facilities

available to the students viz a well built school building, a big playground, availability of

electricity, drinking water, toilet facility and kitchen for preparing mid day meal. However,

there was dearth of teachers for important subjects like Maths and Science. Upon discussion

with the teachers, locals and students we observed that the quality of education is very poor

due to lack of motivated staff and parents.  After completing the high school education,

student generally goes to Sr. Secondary School located in Ferozpur Namak. The female

dropout rate is high for three reasons- (i) due to household chores, (ii) early marriage and

(iii) parents' reluctance to send them to nearby town for further studies after completing Class

VIII from the Village School. 

Day 5On the fifth day we decided to meet vulnerable sections of society - senior citizens, women

and Schedules Caste to have a view of the village from their perspective. We met a group of

senior citizens and understood their opinion about finance. We were surprised to see that they

were not interested in placing their pension money in banks as according to them while banks

can pay a maximum interest of somewhere around 10% interest while they could earn  20%

interest by way of money lending. An interaction between business correspondent and elderly

revealed that few of them who seemed from powerful communities were only interested in

taking loans, however their intension of repaying the same was not doubtful. They also knew

about various schemes, which help them get easy loans. This brought us to conclusion that

although they had knowledge of bank financial products, they are financially aware but not

financially prudent. We explained them the demerits of money lending and various

repercussions non-payments of loan amounts. 

Next, we met a group of women including elderly women. They all had opened the accounts

with the bank and were regularly keeping their savings in the bank via business

correspondent. Few of them had formed SHG and taking advantage of bank linkages, they

also told us about the various radio programs, which help them understand banking products.

On a corner of village, we could see few new homes constructed under Priyadarshini Awas

Yojana (PAY). There we met people from Scheduled Caste community of the village. Most

of them were either agricultural labourer or daily wagers. Although they were having bank

accounts, they were not regularly doing the savings due to lack of regular income. 

Day 6We dedicated our sixth day to the farmers of the village. Most of farmers were indulged in

thrashing of the rice. Nearly all of them were having bank accounts, mostly because of

various subsidies flowing in their accounts. They were keen in taking loans but not in

savings. Loans were considered more of a subsidy of government, which   need not be repaid.

We explained them about working of a loan and how it is different from subsidy. It was a

great experience talking to them and they were kind enough to offer us to have lunch with

them. 

In evening, we asked our BC to take us to young minds of the village, he took us to a small

playground where a game of cricket was going on, which reminded us of our college days.

We interacted with some young lads, they were either dropout from school/college or doing

some kind of vocational trainings. One of them revealed that few years back, he took a loan

to open mobile repair shop but business didn’t take off and he couldn’t repay the amount.

Their knowledge of financial products was fairly good.

Day 7Finally, the last day of our journey had come and we decided to visit the Panchayat office

again and tell the members of panchayat about what we have done so far, so that, they who

are working at ground level may also get some new inputs to already myriad problems of

people living in Chandeni. Lastly met branch manager of Syndicate Bank and thanked him of

his constant support throughout our stay. In a small discussion he had given us some crucial

inputs from what bankers feel should be done for providing better services to the people.

Our BC was kind enough to drop us to the Bus Stand. On our way back to New Delhi, we

were filled with so many thoughts and emotions, we were touched by the hopes of people, the

simplicity of their living and hardships they were facing. This visit from India to Bharat was

overwhelming, giving a completely different prespective which we could have never

imagined while sitting in our desks in Mumbai. In our report we try to present some solution

to problems from our knowledge and journey in RBI so far, so that it may help to bring some

change in the lives of people of Chandeni and the people of my Bharat. 

3. The Survey

We used method of field survey to collect the data about the different aspects of financial

inclusion as well as financial awareness. A questionnaire, which was presented to people,

consisted of three parts.

1. Financial Products 

2. Earning and Saving Habits

3. Credit needs and credit facilities 

A sample of 261 respondents was considered for this study, which varied from elderly to

young and most vulnerable to most powerful in the village. The profile of the respondents is

depicted in the following table.

Particulars Respondent

s

Male Female

Cultivators 68 38 30

Agricultural Labourers 31 24 7

Retired Armed Personal 16 16 0

Teachers 8 4 4

Daily Labourers 75 48 27

Others 63 34 29

Total 261 164 97

The following bar chart explains the knowledge of financial products and willingness of the

villagers to invest in them.

100.00% 79.00% 82.00%45.00% 62.00%

28.00%58.00%

Financial awareness and investment in fi-nancial products

Next we focused on 3As of financial inclusion and asked the respondents of the survey about

following three dimensions of financial inclusion.

I. Availability: Are the banks and other financial institutions available in the nearby

region? If yes, are are products and services offered by them are relevant?

II. Affordability: Is cost of opening an account in the bank high? How costly are the

transactions in such accounts?

III. Accessibility: How accessible are bank officials/ banking correspondent? Are there

bank employees who speak local?  How accessible are the ATM, mobile banking etc.

We asked respondents to rate a question on scale of 1 to 10, 10 being the best representation

of the situation. Shown below is the pictorial representation of the response

4. Probing Deeper

Having spent seven days in Chandeni gave us an insight to varied problems being faced by

the villagers and the opportunities that are present in front of them. After analyzing their

profiles and their knowledge, understanding of financial products, their expectations and

problems, we present in this chapter some recommendations to mitigate their problems. The

stay in the village gave us three unique perspectives- what a villager thinks? What the banker

has in mind? and how we as regulator view the whole situation? We therefore shall try to

recommend solutions from these three perspectives.

4.1 Villager’s Perspective

4.1.1 Our transact walk in the village gave us opportunity to meet persons from different

sections of the society and  view life from their eyes. Although people are financially literate

(in which people have knowledge about various financial products), they are not making

financially wise decisions.

Example

People were willing to moneylender their pension money to marginal daily wagers rather

than keeping in FD/RD thereby exposing them to higher credit risk. 

Recommendation

The need is to make an investment in building the knowledge base of the community. The

bank can play a proactive role in this by interacting with people, understanding their

problems and requirements, clarifying various misconceptions and doubts they are carrying

and designing the new products based on such interactions, therefore Bank needs to become

people’s friend first, after all these people are going to trust with their money with banks.

This can done by bank employees and business correspondent by participating in certain

activities like attending social/ religious functions in the village, distributing notebooks at

schools etc. 

As a tool to empower people, a feedback mechanism may be designed in which people may

be encouraged to interact with bank employees to communicate their feeling about bank.

Based on such perception, necessary changes in the bank’s approach may be made. This

would also help the bank staff becoming more proactive and reflective in understanding

customers and their needs

4.1.2 Loans and Subsidies are two different things, however many people take loan and

assume the same as subsidy, this happens partly due to unclear communication from bankers

and partly due to overt emphasis in the bank to meet various targets at branch level. A

villager doesn’t mind taking such loan and other imitate her.

Example

In a discussion with SHG group of 10 elderly persons, we found that they were contributing

to repay the existing loan so that they can take a loan of large amount with no intention to pay

back.

Recommendation

Strengthening the financial literacy efforts with minute details on part of all the stakeholders

and refraining from pushing financial inclusion beyond a certain absorptive capacity of locals

on part of bankers can go a long way to make locals responsible towards loans repayment. 

4.2 Banker’s Perspective

4.2.1 KYC - A Barrier? 

According to the bank staff there are certain people who have ability to repay small

token loans(if provided) however they are being given such loans because they do not meet

KYC documents which are essential for such loans to ascertain their repaying capacity. These

people, then have to look for other sources of financing and money lending happens to be

easily available one. 

 Recommendation

Bank may have a monthly meeting with Sarpanch, BC and persons willing to take loan in

order to facilitate the KYC process. Technology may be used to take photo of the customer,

their documents, letter from Sarpanch etc to upload in the bank’s server.  Bank analyzing the

repaying capacity, bank on experimental basis, may begin with distributing five small loans a

month to eldest female member of a household who are in need even if their KYC is not

complete. On-going monitoring of such loans is an essential for further learning and design of

these products. we believe that five such loans or Rs 5000 will not put much burden on a

banks’ balance sheet. 

4.2.2 Possibilities for Innovation

At many instances it was observed that branch manager or the banks are bound too tightly

with RBI guidelines that it leaves very little or no room for their innovation. This acts as a

barrier for many committed employees who want to go out of the way to serve the needs of

the people. 

Recommendation

The answer lies in collaborative and considerate banking with necessary regulation and

supervision.

A committee at branch level headed by Branch Manger may be formed which would discuss

the problems faced by the people coming to that branch, which could range from people

finding it difficult to comprehend certain forms, having problem with dynamics of certain

bank-related schemes etc. These problems can be discussed at branch level and depending

upon the nature of problem, branches can be provided with room for designing certain

financial products suitable for the local people. In the midst of innovation we must not forget

the to maintain a prudent banking system, hence some kind of regulatory instructions can be

spelt out by RBI wherein core aspects of instructions should be adhered to in all situations

and peripheral aspect which can give enough room for innovation to banks.  This would help

bank staff even the junior most employee of the branch to feel responsible towards people

and would encourage him to take interest in understanding people’s problem. We understand

that this would mean walking an extra mile for the bank, but even if an inch is done,

would go a long way in building a healthy bank-customer relationship. 

4.2.3 Employees 

During the discussion with bank employee we could decipher that few employees who are

posted from other states lack necessary connect with the people. 

Recommendation

Region- focused recruitment which will put the local person in the branch will go long way in

connecting with people, understanding their problems and convincing them to assimilate into

the banking purview.

4.3 RBI Perspective

RBI may encourage the bank to put in systems of reward and recognition for personnel

initiating, ideating, innovating and successfully executing new products and services in the

rural areas.  Some kind of Inclusion Innovation fund may be created by RBI to reward/

incentivize Branch Manager/ employees of the bank who these new products and services.

Simplification of branch authorization, encouraging banks to open branches in unbanked

rural centers, facilitating the effective use of ICT solutions and creating environment of

collaboration between banks, government schemes and people shall go a long way to enhance

effective banking.

Conclusion

In the middle of the night, lying awake on Charpai, looking up the skies through holes of the

roof made me think, “ Is there a better way for these people? Well, there must be.” 

Chandeni Village has all the ingredients to become a truly inclusive village where villagers

shall have confidence and faith in the financial system, courage to use such system to their

advantage thereby making the financial inclusion a win-win situation for the poor, for the

banks and for the nation. The road from un-bankable to bankable requires a varied, at the

same time coordinated response from the all the stakeholders. When the regulations will be

clear and progressive, when banking will be prudent and imaginative and when people will

be aware and aspirational, then we shall hit the sweet spot of accelerated financial inclusion.

Annexure: Two Interactions from our Diary:

A visible change at the bottom of the Pyramid

We observed a small, newly whitewashed house; neatly written on it that it was built under

Priyadarshini Awas Yojana(PAY), a demand  based 100% state funded scheme of Haryana

Government, aims to provide Pacca houses. We asked our Banking Correspondent that whose

house this was? He shouted from outside of an adjacent house “ Raghuveer”. A

feeble looking person a bit frightened by our presence came out of the door and asked, “ Kya

hua sahab!”, What happened sir. I said,”Don’t worry Raghuveer! we have come here to know

about your village. Your house looks beautiful, can you tell us a bit about it?” He was more

confident now and replied that since he was poor and fall under BPL, he approached

Assistant DC office and availed PAY and built this house for which he got a financial grant

of ` 90100/- (81000/- for house and 9100/- for construction of Sanitary Latrine). As and when

he got his money, which was disbursed in  three installments of 25000/- (In advance along

with sanction letter), 35000/- (after construction of house upto lintel level) and 21000/- (On

putting doors and windows in house) he completed the construction of the house. He was

planning to move to his new home in a week’s time after Ghar parvesh with his wife and 2

sons (both of them were enrolled in the village school). 

A discussion with wise man of the village

Our banking Correspondent had told us that we must meet Shri. Prahlad Singh who was a

retired schoolteacher. We couldn’t reach him for the first two days of our stay in the village

as he had gone to Gurgaon, however on the third day we caught hold of him. He had a big

house with 3-4 rooms, we also saw 2 motorcycles and 1 car which reflected that the family

was financially quite sound. In our discussion with Shri. Prahlad Singh we came to know that

all his 4 children were educated and were working as teachers in the Nearby villages/districts.

He shared his experience on varied subjects of village affairs. According to him, the emphasis

on the education was not great in the village, few well off families had send their children to

study in Gurgaon or even New Delhi, however most of the kids went to nearby High School

which had acute problem of lack of teachers particularly for class 6 to 8 because recruitment

of teachers by the government was not regular and adequate. Agriculture as explained by

the Shri. Prahlad was rain-fed and was not sufficient to employ all, many of the villagers

were doing odd job as daily wagers; few were doing the truck driving whereas some went to

nearby cities for employment.  Health facilities were lacking within the village, mostly the

child deliveries happen at Hospital in Nuh, Mewat which is around 3-4 kms from the

village, Ambulance facility was available.