The Hindu : Opinion / Letters to the Editor : Rural banking

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Monday, Mar 31, 2008
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Opinion - Letters to the Editor

Rural banking

The report on the closure of rural branches of scheduled commercial banks — and the slow but sure decline in rural credit — is yet another stark reminder of the neglect of rural India. It debunks the claim of our politicians that they are extremely concerned about the plight of villagers.

I am not an economist but common sense does tell me that the statistics are significant indicators of economic growth and empowerment. Our love of the capitalist economy with no regard for equitable distribution of resources undermines our socialist Constitution. India, being a country of huge diversities, would be at great peril if imbalances such as these continue to widen the gap between the haves and the have-nots.

Jeevan Kuruvilla,
Vellore

As far as closure of banks is concerned, the managements and trade unions are in collusion. Even in the heyday of public sector banking, the employees and officers were reluctant to work in rural areas. For some time, rural service was made compulsory for officers. But it remained only on paper. Top managements encouraged their own groups and transfers became a weapon in their hands. Rural transfers in many cases became a mockery. It is no wonder then that the managements of commercial banks are closing down their rural branches.

Karavadi Raghava Rao,
Vijayawada

The report should serve as an eye-opener for the powers that be, as it is a true reflection of the urban-rural divide that is extremely disturbing. It is time the authorities took immediate remedial measures to reverse the disturbing trend.

A. Saratchandran Menon,
Chennai

The report comes as no surprise. Rural bank branches whose main portfolio is agriculture credit have had to write off loans repeatedly at the behest of the governments at the Centre and the States. No wonder banks look at rural credit as a bottomless pit. Over the last five decades, successive governments have not only pushed the public sector banks out of rural India by their vote-bank decisions but also destroyed the self-respect of farmers by making them look forward to loan waivers. It is unfair to blame the nationalised banks for the decision taken by the governments.

N.S. Sankaran,
Chennai

The reforms policy is not against setting up of rural bank branches. The spirit of the policy is that all branches must achieve breakeven and earn profits within reasonable time. To ensure that they get adequate business and achieve their objectives, banks should follow T.M.A. Pai’s philosophy of rural banking. Pai opened branches in small villages. He thought of leading growth rather than following it. He encouraged villagers to go in for various services and lent to volunteers willing to provide them. He also made the borrowers contribute to his pigmy deposit scheme and build their own funds. Banks must adopt such strategies in rural branches. They can also use post offices as their units in areas where they cannot open branches.

K.K. Ammannaya,
Udupi

The presence of a bank in a village symbolises much more than providing financial services. It adds to the dimensions of a rural society in unimaginable ways, more so in the backdrop of the caste-polarised set-up. The significance of a bank branch in a village can be understood only by typical villagers.

In 2001, when nearly two dozen rural branches of a bank were closed in a region on a single day, the outcry raised by the local people was heartrending. Some of them even attempted to fall at the feet of the officials with a plea not to close down. Trade union activists who stood by aptly described the act as snatching the child away from the mother.

It is a pity that today, even Grameena banks are inclined to open their branches in an urban or semi-urban area rather than a village. All this is being done on the recommendations of successive financial reform committees at the behest of international bodies.

S.V. Venugopalan,
Chennai

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