This refers to the article “Banks need partners to reach the last mile” (November 15) in which the head of a microfinance organisation has suggested that more products – apart from no-frills accounts – should be laid before the urban and rural poor to make financial inclusion meaningful. But before we implement this, we need to consider some ground realities.
The said person talks about providing different products to the poor, like insurance, mutual fund products and so on. But most of the rural masses are engaged in farming. They require crop insurance or weather insurance more than anything else, so that in the event of a crop failure, they are adequately protected. However, insurance companies either do not provide cover for all kinds of crops in the first place or charge exorbitant premium, rendering the protection unviable. As for other rural people who live from hand to mouth, taking out insurance policies and paying its premium regularly or investing “surplus” is well nigh-impossible.
It is necessary for the government to sincerely devise schemes to bring the poor up the economic ladder. Once that is achieved, they can certainly start thinking of taking insurance cover or even investing in mutual fund products or start availing home loans, vehicle loans and so on.
The need of the hour is to cut out crafty middlemen and prevent the cornering of various benefits that belong to the needy by corrupt officials. Therefore, a no-frills account through which the rural masses can seamlessly receive government funds under the NREGA scheme is more essential than anything else. There is no point in thrusting products that have no material use to an average rural person.
S Ravindranath, Coimbatore
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