P. Sainath

In the same period, scheduled commercial bank branches in metros doubled

The figures muddy claims of massive increases in rural credit

More farmers being pushed towards moneylenders

MUMBAI: India has seen the closure on average of one rural branch of a scheduled commercial bank (SCB) every single working day for the last 15 years.

In the same period, bank branches in urban metros doubled, opening at a rate of more than one every day. The figures muddy government claims of massive increases in rural credit and plans to boost it.

The Reserve Bank of India’s Handbook of Statistics on the Indian Economy (2006-07) shows there were 30,639 rural branches of SCBs in 2007. That is, 4,750 less than the number in 1993. In other words, an average of 26 bank branches shut down each month, or one every working day.

However, branches in metros shot up from 5,753 to 11,826 in the same period. In other urban centres, the number climbed from 8,562 to 12,792 in this period, while also going up in semi-urban locations from 11,356 to 16,214.

Bankers and RBI officials argue that these are not all closures but “consolidation,” or “mergers” or the creation of satellite offices.

The fact remains, though, that there were 4,750 rural branches less in 2007 than at the start of the reforms period.

The trend holds through most of UPA years. Indeed, 2006 saw the sharpest drop, with 1,503 branches shutting shop at a rate of one every six hours, on average. The rapid decline has pushed more farmers towards moneylenders.

“If you ‘merge’ a couple of banks 200 kilometres apart,” says Devidas Tuljapurkar of the All-India Bank Employees Association, “how does this make life easier for villagers already journeying far to their banks? It just rules them out. And it is absurd to say that more ATMs have opened to fill the need. ATMs are mostly in cities.” Also, loans are not given at ATMs.

The share of rural credit as a percentage of total credit disbursed by all SCBs (including Regional Rural Banks) stood at just around 7.93 in March 2007. Less than the previous year’s 8.39 per cent. Much less than the 10 per cent it stood at in 2001. And farmers account for only a part of it. ‘Rural credit’ includes many sectors beyond agriculture.

The 2001 Census says 72 per cent of Indians live in rural areas. However, the share of urban and metro regions in total credit went up to 82.32 per cent in the same period as the closures.

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