Building a house has drained Tuna Patra off – he says as much. Patra, a migrant construction worker in Surat seven months a year and a farmhand in his village for the rest five, is painting his two-room, concrete house in Takarada village of Sheragada block of Odisha’s Ganjam district to save costs. After sinking Rs 35,000 of a Rs 48,500 (for Maoist-affected areas) grant under the Indira Awaas Yojana (IAY), received in a bank account he holds with the Sheragada branch of Andhra Bank, and another Rs 1 lakh he raised as a loan from the village moneylender, he is unsure if it was a good investment at all.

“I have three daughters to marry off. Besides, my son is still in school. I should have saved something for them. But instead, we have a house now,” he says. His neighbours console him saying that a pucca house would leave a favourable impression on the prospective in-laws of his daughters. One of them points at the ornate light-vents Patra has put up and there is soon a loud debate on the merits of having it at all. The soft-spoken new house-owner looks more beaten than proud. He looks at the vents and seems lost in a silent listing of all the “extravagance” that has gone into the less-than-modest dwelling of a labourer. “You can always mortgage the house to pay for your son’s education,” someone offers a well-meaning advice.  

The last breaks Patra’s reverie. “I am already in debt. Nakula (the moneylender) is charging Rs 2 per Rs 100 lent every month. The two tolas (1 tola = a little over 10 g but less than 11 g) of gold that my wife had got when we got married is with him, as mortgage,” he answers. A back-of-the-envelope calculation and one finds out that he has to pay a whopping Rs 24,000 every year as interest alone!

At the moment, it seems unlikely that Patra will ever get his gold back. In Surat, the contractors he works with pay him Rs 200 a day. With a median of 25 workdays a month, he makes Rs 5,000 putting in nearly 10 hours of being perched on ladders and makeshift stilts, inhaling toxic fumes as he paints. In the evenings, he comes back to an ill-lit room he shares with six others, all migrant workers from Ganjam. After rent, food and other expenses (“Mostly on tobacco,” he says, laughing), there is nearly Rs 2,000 to be sent home every month. In the months that he is home, during the farming season, the daily wage (he works on the fields of the land-owning class in his village) falls to Rs 130.

By now, the conversation around the building of the house has become a long preamble to the one on financial inclusion that follows, not so subtly prompted by this reporter. We begin with the bank account he holds. Patra insists that had it not been for his brother who works with the Berhampur municipal corporation, he would have gone without one for long, maybe even life. Durga Prasad Panda, the gram rozgar sevak (GRS), a Panchayat-level functionary with the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), helped him fill in forms. Though the government has mandated that nationalised banks open no-frills accounts (accounts not requiring a minimum deposit at the time of opening) for the rural poor, Patra was advised to start with a deposit – the minimum he could afford to spare. “So, I deposited Rs 500,” he explains. “It helped having the account when I was approved for receiving the housing grant (under IAY).”

He retrieves the passbook which he had carefully hidden in a loft. The safekeeping seems exaggerated. It is not used often enough, evidently. The state of the passbook confirms my suspicion – it is remarkably without folds or dog-ears even though it has been with Patra for nearly a year now. The only transactions recorded on it are the IAY deposits and withdrawals. With household income barely enough for the family to scrape through, savings are a distant concern. Asked why he chose to borrow from the moneylender at such exorbitant rates while he could have borrowed from the bank, he doesn’t have any definite answers. A little prodding later, he pins the blame on his own diffidence and his neighbours’ advice.

“I have no idea how to approach the bank for a loan. And in any case, I don’t think I would have got a loan for this. They would have asked for collateral and the gold I had may not have sufficed. Besides, everybody told me that the bank will not entertain a housing loan request from someone like me,” he sums. It is a curious plight – his neighbours could be right, but it also seems that there are many like him in the great unbanked, those who have very little idea about what they can expect of formal financial institutions and how they can go about getting these services. For now, the debt trap, courtesy the village moneylenders, is their reality.

I had been curious about Patra’s remittances right from the start. In the age of ‘core banking’ (branches of the three nationalised banks present in Sheragada – State Bank of India, Andhra Bank, and Punjab National Bank – are core banking enabled, that is, connected through a network so that customers can do transactions from any branch), how does he send home his savings from distant Surat? “Tapawala” is the cryptic reply. Patra is incredulous that I don’t know what system this is.  

It turns out that this is a system that exists solely for the service of the migrant workers. A conduit, preferably a man from the same state and region of a cluster of migrant workers, collects the money they want to send home. After a sum has been deposited and a receipt made out to the worker, the money is paid to the kin at the doorstep of his/her home in his native land within 24 hours. The tapawala charges Rs 50 per Rs 1,000 to be remitted. A convenient system for Patra and his brother migrants, he assures me.

 But would it not be equally fast and cheaper to engage a bank for the transaction? “My wife is illiterate and so am I (he can sign his name though). With the tapawala, neither of us need to fill any forms or go anywhere. Even though the bank is near (a couple of kilometres away), I don’t think my wife can deal with the severe processes of withdrawals and deposits. Besides, the account is in my name. So, I have to be physically present to make these withdrawals,” he answers. He could always start an account in his wife’s name, he is told, but he shakes his head dismissively. “She won’t know how to operate the account. We could rely on our children but they are too young to handle money,” he says, pre-empting the other question that I would have thrown at him.

I ask him if the tapawala isn’t risky – what if the one of the conduits were to decamp with his savings? Someone reminds him that it has happened before. There’s a guy in Ramachandrapur, a neighbouring village who went bankrupt paying back the savings of people after he lost it all gambling. “The system itself has some risk-containment. The conduits are usually from neighbouring villages. So, we can try and recover the money from their families in case they decide to loot us,” he says. Others concur. The only security against losses is social shaming.

Patra’s neighbour Jagili Dakua, who has been listening on, says that there is little awareness about banks which is why most people are dependent on informal sources like moneylenders and loan-sharks for financial services. Dakua, a BPL card holder, is unaware that there are plans to replace the public distribution system (PDS), the government’s welfare scheme that feeds his family, with direct benefit transfer (DBT). A farmhand, he has never thought of opening a bank account. “Nobody has told us that we might need one. But, we have been told to get Aadhaar numbers that will help us open bank accounts,” he says.  

After a short explanation of the DBT alternative to PDS, the gathering of ten-odd people outside Dakua’s thatched hut falls silent. An elderly man begins, “This is a very bad idea. If the government will give money to the women, it will only increase their suffering. Their husbands will beat them to get the money to go drinking. After all, one can’t buy liquor with the ration card, can he?” Titters. Food for thought?

Durga Prasad Panda, the Takarada GRS, says that the primary responsibility for mobilising people to open bank accounts and helping them fill forms is part of the list of duties his post is assigned. “We have to do it for MGNREGS as the wages are credited in bank accounts only. But at the same time we are also expected to help non-(MGNREGS job-)card holders to open accounts. With the DCT scheme, it might fall on our shoulders to get every BPL/APL family to open accounts,” he says, adding “after all, our designation is also multi-purpose assistant.”

The curious absence of business correspondents in Sheragada, at least in the case of the State Bank of India, is rooted in the failure of an organisation known as Zero Mass. Zero Mass had been engaged by the bank to pay wages to the MGNREGS workers at their homes, minimising bank visits. Modelled on the concept of business correspondents, the interface of the bank at the village level were field agents. The bank would give these field agents the money to be paid and they would deliver it to the MGNREGS workers in paperless transactions with only a receipt for the amount paid generated. However, a lack of trained field agents and high costs of transactions ultimately led to delayed payments and an ensuing collapse. An outsourced business correspondent service had failed.

The block development officer (BDO) of Sheragada, Manoj Kumar Swain, says the focus has to be elsewhere. “In Sheragada, we are focussing on financial literacy for the beneficiaries as much as on their financial inclusion. So, even as we are gearing up account opening drives and linking people to the banks, we are also conducting awareness drives. For example, with the self-help groups (SHGs), we are training women to be micro-entrepreneurs even as we are helping them come up with micro-investment projects. In the next few months, we will link these SHGs with banks for loans for micro-enterprises,” Swain says.

On the question of Sheragada’s readiness for financial inclusion, the BDO says that all three banks will have to cater to beneficiary population. “Engaging block and panchayat officials in financial inclusion drives will be a policy question for the government. But at the moment, we have engaged functionaries, especially with MGNREGS, to help beneficiaries access formal banking.” MGNREGS and IAY, apart from a few others, are welfare schemes where beneficiaries have responded with earnest to direct benefit transfer.

However, Governance Now found out from many existing and potential beneficiaries that the banks in Sheragada had advised them against getting no-frills accounts even though the government has mandated that public sector banks have to open such accounts. Asked about this, Swain says that the advice is such because the banks are bound by their own policies. “The banks have informed us that for cheque deposits and other such transactions, the beneficiaries have to hold a savings account. So, if they have to open one after getting a no-frills account it is an unnecessary hassle for both, the bank and the beneficiaries.” With the government policy being to pay all grants exceeding Rs 250 by cheque, for many in Sheragada, financial inclusion has to begin with Rs 100 (the minimum savings account deposit).