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Passbooks for Every Family

A ground-breaking campaign has made Palakkad India’s first district where each home has a bank account, reports KA Shaji

Palakkad in Kerala made history two years ago when it became India’s first fully-computerised district administration. In 2006, the district is in the record books yet again, with a unique banking initiative that has made it possible for every household here to have its own savings account.

Having successfully reached out to a large number of poor families that previously were out of banking purview, Palakkad now has the distinction, conferred by the Reserve Bank of India (RBI), of being the country’s ‘first total banking district’.‘Banking will now no longer be the exclusive right of the privileged’, says the Kerala revenue ministerAccording to B. Sathyanathan, a manager with Canara Bank, the district’s lead banking institution, Palakkad’s five lakh families now enjoy the benefits of a bank account through the combined efforts of as many as 391 branches of 35 banks and 1,200 units of the state government’s Kudumbasree Poverty Eradication Mission.

Also involved were the education department, top district-level officials and several local bodies. Though the campaign had a special focus on SC/STs, minorities and women, some tribal and other poor families refused at first to open the accounts, says KA Gopalakrishnan, member of the Anakkara village panchayat. “They would ask what the point was of having bank accounts without any money,’’ Gopalakrishnan said.

“We convinced them that a bank account would help them get loans and agricultural credit and would also help them save”.According to KP Rajendran, the Kerala revenue minister, “Banking will now no longer be the exclusive right of a privileged few.’’ Commending the drive for the help it has extended to the less privileged, Rajendran said the State Level Bankers’ Committee (SLBC) took the initiative in the wake of an RBI policy statement for 2005-06.

The statement had asked SLBC conveners across the country to identify at least one district in their area where 100 percent financial inclusion could be achieved by providing ‘no frills’ accounts and a general-purpose credit card for extending need-based loan facilities.Early this year, the Kerala SLBC launched its action plan to implement total banking solutions in Palakkad district with a deadline of September 30.

Enrolling households to open bank accounts took around six months. The campaign was carried forward by commercial and cooperative banks in collaboration with local panchayat bodies to encourage families to develop banking habits. The State Bank of Travancore (SBT) left all others far behind, opening 23,097 new accounts during the campaign period.

“Even though a majority of the accounts were opened with a zero balance, we are sure that most of them will manage to save in future with the help of the Kudumbasree Poverty Eradication Mission,’’ said VG Rajeev, chief manager of the SBT.Revenue Minister Rajendran now says he plans to repeat the drive across the other 13 districts of the state. If his plans work out, all families in Kerala will have bank accounts by March 2008.(Tehelka, Dec 09 , 2006)