It’s no mystery why banks have little appeal to the urban poor: they serve no purpose  

Rahul Satija

As the cornerstone of its national mission for financial inclusion, the union government launched the Pradhan Mantri Jan Dhan Yojana on 28 August 2014. The scheme would extend banking services to the hitherto unbanked and contribute the first letter to the acronym JAM (Jan Dhan, Aadhaar, mobile), the holy trinity that presides over the prime minister’s dream of a cashless India.

Jan Dhan, like many a government scheme that preceded it, floundered. Until November 2016 that is, when the prime minister’s second assault on cash (this time black money) sent a tidal wave of unaccounted money flooding into hastily opened Jan Dhan accounts. ‘J’ had unwittingly become the preferred conduit for money laundering!     

Jan Dhan has since slipped back into somnolence. As Shiv Kumar, 38, from Garinda village in Bihar who works as a daily-wage labourer in Begampur, Delhi, recollects, “I got to know about the scheme in a panchayat meeting held in December 2014 in my village. The sarpanch told all the villagers that the government had brought a scheme for bank accounts with zero balance to be opened. He said he faced no difficulty in opening an account. He just submitted his Aadhaar card and electricity bill and the bank staff helped him with the paperwork.”

So, Kumar also opened a Jan Dhan account that month. “I have an ATM card but I don’t use it because I fear my money will get stolen. Once I received a call saying I have won Rs. 30,000 in the lottery. The company wanted to transfer the money to my bank account and was asking for my ATM pin. I immediately cut the call as I knew they were frauds.”

The problem is the banking system is incomprehensible and quite inaccessible for many of the urban poor. The most important financial service they need is a money- transfer service, which the banks consider a waste of time.

Sachit Kumar, from Madhubani, Bihar who works as a labourer in Wazirpur, Delhi says, “Banks are not for the poor and illiterate, the process is very complicated. I once went to the bank to transfer money and asked the bank staff for help. He gave me a form to fill. When I told him I am illiterate, he asked me, ‘Then why are you coming to the bank? We don’t have time to help you.’ I felt ashamed and left and after that incident, I never visited the bank.”

Sanjay Kumar (36) is a daily-wage worker from Bhagalpur, Bihar. He opened an account in 2016 with the help of a friend who works as a security guard at the bank in his village, by submitting his Aadhaar card as residential proof. But he hasn’t been inside a bank since. He transfers money to his relative’s bank account back home through a cyber cafe, which charges him Rs. 60 for every transaction.

Jogeshwar Yadav, 37, from Hardoi in Uttar Pradesh couldn’t open a bank account in Delhi after the bank staff told him his Aadhaar card, with a Hardoi address, wasn’t valid address proof. So, started using a cyber cafe to transfer money. “We work from 8 am to 5 pm and earn Rs.300 each day. We’ll lose half a day’s wage if we go to the bank. We save about Rs. 3,000 a month and send half of the savings back home through friends travelling there or through cyber cafes.”

Says Khushnoda, 28, who works at the Society for Labour and Development, an NGO in Delhi, “Migrant labourers are not able to open a bank account because they don’t have residential proof. Those who have bank accounts face problems using them. For a small job they have to travel to the bank two or three times.”

Many labourers give their money to labour contractors who transfers the money to their families back in the village. Arvind Rai, 33, who works as a contractor, says he transfers at least Rs.1 lakh every month. Rohit, who owns a cyber cafe in Begampur, says he transfers money using websites such as eko.co.in and myoxigen.com for 15-20 customers daily. He says many ration shops and mobile stores also transfer money on request. Manoj Kumar, who owns a mobile repairing shop in Mangolpuri, Delhi says he helps 10-12 customers do transactions of Rs. 40,000-50,000 every day. 

Amit Kumar, 49, a daily labourer from Faridpur, U.P. says he once went to the bank to transfer money but the bank staff told him to use a machine. He walked out as he was unfamiliar with the machine and feared he would lose his money. His colleague, Satish Jain, says “I do not have a bank account as I could not get the Aadhaar card made. I filled a form for that 4 months ago but have not got any reply.”

Dheeraj Kumar, 49, senior manager at Bank of Baroda, insists that bank staff help uninformed customers and that big branches have a dedicated customer-care counter. J.K Bansal, bank manager at Syndicate Bank, is more candid: “Jan Dhan isn’t working for ignorant workers as they are not educated and fear using an ATM card. Government should provide chequebooks to Jan Dhan account owners and should make provisions to validate the Aadhaar card (across) the whole country.” He doesn’t explain how they would write cheques though.

Says Bharati S, bank manager at Punjab and Sind Bank, “Many workers opened accounts in three or four banks hoping to get the Rs. 10,000 in at least one of the account as promised by the prime minister. But when the money didn’t materialise, they lost hope of getting any other benefit and started using other means.”

Raj Chauhan, who owns a mobile-recharge shop in Wazirpur, Delhi and also runs a money-transfer business, says, “Most of the labourers come to us after 6 pm when they get free from their work. Banks close by 4 pm so we are the only option left for them.”