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PM’s Jan Dhan Yojana faces access deficit -Rukmini S
-The Hindu

Providing access to credit likely to be a hard step

For Prime Minister Narendra Modi's newly launched Jan Dhan Yojana to be successful, India needs to provide over 100 million households access to banks, data show. An even harder step, however, is likely to be access to credit.

As of March 2012, the most recent year for which relevant Reserve Bank of India (RBI) statistics are available, India had over 900 million deposit accounts. Of these, over 770 million were in the names of individuals.

However, the census data for 2011 show that only 144 million households, which means about 300 million individuals, have access to banking services, indicating that many have multiple accounts. Prosperous States, including Tamil Nadu and Gujarat, reported fewer households accessing banking services than the national average, while Kerala, Delhi, Uttarkhand and Himachal Pradesh were the better performing States.

Big cities take lion's share of credit

Despite progress on the opening of bank accounts, access to credit still lags. Officially, India has over 130 million credit accounts, which deal with loans, with an average of Rs. 3.7 lakh outstanding in each account, an analysis by The Hindu of the Reserve Bank of India data shows.

However, credit is highly skewed towards big cities. Personal loan accounts (55 million), the single largest category of credit accounts, outnumber agricultural loan accounts and the vast majority of these accounts are in metropolitan cities, the data show.

Delhi alone accounts for 13 per cent of all of India's outstanding credit.

Meanwhile, the 2008 report of the C. Rangarajan Committee on Financial Inclusion showed that in 256 districts of India, over 95 per cent of adults did not have bank loans. "There are two aspects to financial inclusion: one is bank accounts and the second is access to credit. The scheme announced by the Prime Minister addresses the first problem. The issue of making credit available to small borrowers remains," said Mr. Rangarajan, the former Chairman of the Economic Advisory Council to the Prime Minister.

It was not concerns over the creditworthiness of the poor which were holding banks back from extending credit, Mr. Rangarajan said. "Currently, our banks are meant to be equipped to disburse loans of millions of rupees and also a few thousand rupees. What is needed is a reorganisation of the structure of banks," he said.

Gender gap

There is also a significant gender gap in banking; by 2012, for every 1,000 deposit accounts opened in the name of men, just 394 were opened in the name of women. Chhattisgarh, West Bengal, Madhya Pradesh, Maharashtra and Gujarat were even worse than the national banking sex ratio, while Delhi and the four southern States were better.

In March 2012, the average savings account had just under Rs. 23,000 in it with Chandigarh and Delhi having the most money (over Rs. 50,000) on average and Andhra Pradesh having the least (just over Rs. 14,000).