KERALA made a new mark for itself recently, making sure that at least one member of every household in the State had a bank account. In December, Union Minister of State for Finance Pavan Kumar Bansal announced the successful completion of a campaign that made Kerala the first major Total Banking State in the country by September 2007.
The new status meant that over 1.2 million of 6.7 million families in the State that did not have bank accounts until then were for the first time offered no-frills savings accounts, without having to undergo procedural hassles such as providing documents to prove identity or place of residence or agreeing to maintain a minimum balance in the account. The account holders were also offered general purpose credit cards, a sort of need-based loan facility.
A preliminary survey done before launching the campaign had shown that 81.36 per cent of the households in Kerala already had bank accounts. The campaign target was to cover the rest. The all-State programme was launched by the State-level Bankers Committee (SLBC) about a year earlier, after a pilot project in Palakkad district achieved the target set by the Reserve Bank of India for total financial inclusion.
As Union Finance Minister P. Chidambaram said in Kochi recently, it was a matter for concern that the benefits of economic growth the country was witnessing were not reaching a large number of people because over 50 per cent of them still remained outside the financial system, with no bank accounts and no way to deposit or borrow money.
Delivery of banking services at an affordable cost to groups of vulnerable people so far excluded from the opportunities provided by the financial sector, including women, small and marginal farmers, artisans and small entrepreneurs, workers in the unorganised sector, the self-employed and pensioners has been an important aim of the government and the banks.
The SLBCs total financial inclusion campaign in Kerala became a success with the active support of various government departments, panchayati raj institutions, the womens self-help groups created as part of the Kerala State Poverty Eradication Mission (Kudumbashree), and non-governmental organisations among other agencies. Now, banks have a new responsibility, if they are to sustain this achievement: to ensure that the benefits of inclusion, such as meaningful credit, reach the needy quickly.R. Krishnakumar