Andhra Pradesh has benefitted the most from the business correspondence model floated by the Centre – as part of its financial inclusion plans – to provide banking solutions to the rural mass. Out of the 7.5 million new accounts opened by BCs countrywide in 2009-10, 75 per cent of those were in the state.
The Reserve Bank of India had allowed banks to appoint intermediaries, called business correspondents (BC), to help people access basic banking services in rural areas without visiting a bank branch. Last year, BCs helped open over 5.6 million accounts in Andhra Pradesh, which is 15 times more than the second best performer – Uttar Pradesh – where 3,86,,445 accounts were opened through BCs.
“The performance of BCs is better in Andhra Pradesh because of the presence of many microfinance lending institutions in the state. Besides two national banks – Andhra Bank and State Bank of Hyderabad – are based in Andhra Pradesh, against only one small bank in several other states,” said SC Sinha, executive director, Oriental Bank of Commerce.
The largest microfinance institution, SKS Microfinance, is also based in Andhra Pradesh, apart from 24 other microfinance organisations. All other states have less than 20 microfinance institutions.
| LEADING THE PACK | |||
| Bank branches | Accounts opened* | No of habitations** | |
| Andhra Pradesh | 7,676 | 5,602,000 | 6,699 |
| Uttar Pradesh | 10,241 | 386,445 | 14,625 |
| West Bengal | 5,512 | 258,182 | 7,489 |
| Orissa | 3,152 | 210,059 | 1,878 |
| Chhattisgarh | 1,600 | 192,865 | 1,129 |
| Madhya Pradesh | 5,347 | 163,408 | 2,515 |
| Karnataka | 5,820 | 153,898 | 3,290 |
| Kerala | 4,310 | 0 | 119 |
| Nagaland | 108 | 0 | 170 |
| Jharkhand | 1,922 | 0 | 1,457 |
| * By business correspondents in 2009-10 ** Population over 2,000 with no banking facility Source: Finance ministry | |||
“In Andhra Pradesh the state government decided to move ahead quickly. Union Bank and Axis Bank decided that they would step forward and once they received the mandate, FINO moved fast to establish the necessary village level points. The missing piece in the other states is largely the fact that the state government has not taken a decision to move ahead,” said Nachiket Mor, president, ICICI Foundation.
In 2008-09 also, when 3.3 million accounts were opened by BCs across the country, over 3 million were opened in Andhra Pradesh itself. States like Kerala, Nagaland, Jharkhand, Uttrakhand and Arunanchal Pradesh, on the other hand, have failed to capitalise on the business correspondent model.
“The chief minister of Andhra Pradesh is very active in the meetings of State Level Bankers Committee, which is not the case with other states. In some states like Jammu & Kashmir there is a kind of parallel government which does not want to assist in the Union government’s financial inclusion programme,” said a senior executive of a public sector bank requesting anonymity.
Only 5 per cent of around 6,00,000 villages in the country have a bank branch today and only about 40 per cent of the population across the country has bank accounts. Despite the fact that the number of bank branches in India has gone up by 18 times in the last 40 years, the average population per bank is around 1,35,00 — the same as in 1991.
