Rakesh Magotra
It can be said with unequivocal conviction that financial inclusion has been among the top priorities for the current government at the Centre. From Pradhan Mantri Jan Dhan Yojana (PMJDY) to Kisan Credit Card (KCC) scheme, PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi)and from Pradhan Mantri Mudra Yojana (PMMY) to Credit Guarantee Scheme for MSMEs – the government has taken various initiatives to achieve the goal of financial inclusion. For the last several years, the focus of the government has been on opening bank accounts for all and helping the marginalized sections of the society to get easy access to credit.
There have been frequent voices among the government claiming credit for such initiatives at various fora and rightly so. As per the available data, over 45.5 crore Jan Dhan Accounts had been opened across the country till May 25 this year. Collectively, which hold over Rs 1.66 lakh crore as account balance. Meanwhile, over 31.8 crore RuPay cards have been issued for the said bank accounts. These are impressive figures. But what about the Union Territory of Jammu and Kashmir? The data looks promising here as well with over 25.8 lakh Jan Dhan Accounts already been opened in Jammu and Kashmir till May 25 and over 18 lakh RuPay cards have been issued. The credit for the same should not only be given to the initiatives of the government but also to the efforts and focus of the premier financial institution of the UT in this direction.
However, opening bank accounts may not be exactly enough to achieve financial inclusion for all. There is a lot more to it. According to the World Bank’s definition, financial inclusion means that individuals and businesses “have access to useful and affordable financial products and services that meet their needs delivered in a responsible and sustainable way”. The financial products mean not only having bank accounts, but also having access to affordable credit.
If we look at the data for the number of active Kisan Credit Cards in the Union Territory, we find that out of 12 lac farm operating families over 8 lakh Kisan Credit Cards (crops) have been issued so far out of which over 35,000 were issued only in 2021-22. These collectively account for an amount of over Rs 5784 crore or around Rs 70,000 per credit card. Similarly, when it comes to active Kisan Credit Cards (Animal Husbandry), a total of 1.38 lakh such cards have been issued accounting for a total amount of Rs 722 crore. This corresponds to around Rs 52,000 per credit card.Overall there are around 28.98 lacs borrower accounts with banks as per the UTSLBC; who have availed one or two credit facilities from the Banking System in JKUT.As per the Aadhar Statistics the Jammu and Kashmir population in 2021/2022 is 13,635,010.
Looking at the numbers, it gives an impression that the goal of financial inclusion is progressing well and is close to being achieved. However, this would only be a partial representation of the actual ground situation, which becomes clearer when we look at the district-wise data for the number of bank branches and the amount of credit disbursed by the banks in the Union Territory.
For instance, sample this: Out of a total of 2014 bank branches in the Union Territory, over 32 per cent – that is 646 branches – are located in just two out of the 20 districts, that is district Jammu and district Srinagar, as per the data from Jammu and Kashmir Union Territory Level Bankers’ Committee. Moreover, if we take the top five districts of the Union Territory in terms of bank branch density – Jammu, Srinagar, Baramulla, Anantnag and Kathua – they collectively account for over 52 per cent of all bank branches. Meanwhile, Jammu & Srinagar alone has bank branches which are more than the total number of branches in the following 11 districts taken together – Kishtwar (31), Shopian (37), Ramban (38), Ganderbal (44), Bandipora (46), Poonch (49), Kulgam (55), Reasi (55) Doda (56),Kupwara(87) and Udhampur(87) taken together.
Now looking at the distribution of credit, similar trends crop up. In fact, the disparity in the distribution of credit is much worse than the distribution of bank branches. Out of the total outstanding advances of around Rs 84,000 crore given out by banks in the entire Union Territory, around 45 percent or around Rs 37,816 crorecorresponds to only the two districts of Srinagar and Jammu. With advances outstanding amounting to Rs 20821 crore issued in Srinagar alone and Rs 16996 crore in Jammu alone, the huge disparity seems apparent with respect to other districts. In fact, the top three districts, viz Srinagar, Jammu and Baramulla, account for more amount of outstanding advances compared to all other 17 districts taken together. Meanwhile banks disbursed only Rs 934 crore worth of advances in Kishtwar, around Rs 1252 crore in district Reasi, and around Rs 1296 crore in Bandipora.
This disparity between the availability of credit and access to banking services is directly linked with the development of the region and the socioeconomic profile of its people. Hence this is where there is a lot of scope for work to be done in the Union Territory of Jammu and Kashmir. This is the reason that when we correlate this data related to advances disbursed by the banks and juxtapose it with the NITI Aayog’s data on multidimensional poverty in the Union Territory, pieces do fall nearly together. For instance, Ramban, Doda and Rajouri, Udhampur, and Kishtwar are the five districts with the largest percentage of population who are multidimensional poor. These are followed by Poonch, Reasi, Kupwara, Kathua and Bandipore. These are all districts where significantly lower amount of credit is disbursed by the banks. Meanwhile, Srinagar has the lowest percentage of multidimensional poor population. It is also the district where the population and businesses receive the highest amount of credit from banks. Jammu also figures among districts where poverty is relatively lower amongst all districts. In Jammu district though pockets of poor diffusion of bank branches and credit availability is visible in some Kandi Belt Areas where one or two bank branches are catering to a large geographic area depriving its population of benefits of credit because a higher bank density is often seen as a precursor to effective diffusion of credit.
If look at closely, one would find that regions where people get better access to financial services, especially credit, they develop faster than others which are marginalized with respect to financial services. Hence it is crucial to geographically democratize credit in the Union Territory to ensure equitable deployment of resources as well as equitable development across regions. Else, we may find ourselves in a position where the divide between urban and rural regions in the Union Territory which is already quite wide expand to unmanageable proportions.
(The author is an Assistant General Manager in JK Bank and an EMBA student @ IIM Amritsar.)
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