[Reader-list] Banking woes of an “excluded” community

[Javed]

Some people didn't believe in such a news when I posted earlier:
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The banking woes of an “excluded” community
Vidya Subrahmaniam

Banks have designated red zones where the vast majority of Muslim
clusters fall. This fact is confirmed by the rash of banking-related
complaints received by the National Commission for Minorities.

A little over a year ago, Ali Arshad, a resident of Okhla in Delhi,
went to a well-known private sector bank to open a bank account. He
thought his case would be fast-tracked because he had a banking
background, he worked with a well-known investment and brokerage
company and he had the necessary documents: A passport, a pan card and
a house rent agreement notorised on stamp paper.

He still has not heard from the bank. The manager of the branch
informally told him that his passport showed a Patna address and the
bank did not accept rent agreement as proof of residence. The Hindu
checked the website of the bank and found that the bank did accept
house rent agreement as proof of residence. A call placed to the bank
confirmed that a passport (proof of identity) and a rent agreement
(proof of residence) were enough to start a bank account.

Mr. Arshad finally opened a salary account with a bank that had his
company's corporate account. “The bank could not refuse me because I
came as a package,” Mr. Arshad says. He attributes his banking
difficulties to the fact that he stays in Muslim-concentrated Okhla,
an unofficial red zone for banks. Indeed, in the Muslim belt of Okhla,
Zakir Nagar and Batla House stories abound of residents not being able
to open bank accounts and of banks turning down their loan
applications. The situation, residents say, has got worse after the
September 2008 killing of two alleged terrorists in Batla House.
“Landlords here refuse to give residence proof documentation for fear
of being tracked down,” says Hasan Shuja, editor of Urdu daily
Sahafat. Mr. Shuja, who has gone from bank to bank looking for a loan
to expand his business, says, “I gave them all possible documentation
but to no avail. But not just Delhi, you will hear the same thing
wherever Muslims are in large numbers.”

The sense of “exclusion” among Mr. Shuja and others has only
heightened with recent reports that in Andhra Pradesh alone as many as
90,000 Muslims students were unable to open bank accounts to deposit
their scholarship cheques. The complaints were received by the State
Minorities Commission which, in turn, referred them to the National
Commission for Minorities in Delhi. The Ministry of Minorities has
since taken up the matter with the State's Chief Secretary. The
puzzling thing here is that banks have shown the audacity to turn away
students despite a standing RBI circular instructing them to open
basic, no-frills accounts for people from deprived categories.

At the NCM, officials cannot cope with Muslim complaints relating to
banking. The Commission receives an average of five banking complaints
a day from across the country, with most complainants recording
specific details of discrimination. The NCM recently intervened to
have a dismissed Muslim official of a leading private sector bank
reinstated. The official was found to have been falsely accused of
fraud.

Up until the Sachar Committee report, which conclusively established
unacceptable levels of Muslim deprivation, there were not many takers
for Muslim-specific banking complaints which were typically dismissed
as an exaggeration. The other commonly held perception was that
Muslims were averse to banking because of religious injunctions
against receiving interest.

Several significant findings emerged in the investigations of the
Sachar Committee which analysed access to Priority Sector Advances
(farm sector, small-scale industries and small advances to weaker
sections) across Socio Religious Communities. To start with, banks
confirmed the existence of “red zones” where they offered minimal
services. Says Abusaleh Shariff, who was member-secretary with the
committee: “We did not use the term discrimination in the report but
we did find banks to be unacceptably insensitive. They accepted that
they don't like to provide services in the red zones. Unfortunately,
most of the areas where Muslims live fall in the red zones.”

The committee was also able to bust the myth that Muslims were against
banking. Muslims held a 12 per cent share in PSA bank accounts which
was rather low considering the high concentration of Muslims in
socially and economically deprived sections. Nonetheless, as Mr.
Shariff points out, the figure established that given a chance Muslims
opened bank accounts.

The committee's third major finding was that Muslims did not easily
get loans. The community's share of outstanding PSAs was pathetic —
only 4.6 per cent as against a population share of 13.4 per cent. The
ratio of loans to population was even worse in the Minority
Concentration Districts. In 44 such districts, where the Muslim share
of the population was 33 per cent, their share of PSAs was an abysmal
7.9 per cent. The share of other minorities, who together constituted
two per cent of the population, was 3.7 per cent. In 11 of these
districts, where the Muslim share of the population was 51.4 per cent,
their share of PSAs was 12.9 per cent. With a 1.2 per cent share of
the population in the same districts, other minorities received 3. 4
per cent of PSAs while Hindus, who formed 47.4 per cent of the
population, got a PSA share of 63.1 per cent. Over all, other
minorities fared twice as well as Muslims in the priority sector.

When the UPA government came to power in 2004, one of its early
priorities was to address the “development deficit” among Muslims. It
recast the old 15-point Minority Welfare Programme and established a
time-frame for programme-specific interventions. It set up a Ministry
of Minority Affairs (MMA), following it up with the first-ever
exhaustive study of the community's social, economic and educational
status. Simultaneously, it started a programme of financial inclusion
through the Reserve Bank. The RBI's charter, reiterated through
repeated circulars, included expanding access to banking through “nil
balance, no frills” accounts as well as smoothening credit flow to
Muslims.

Six years later, the government, and the MMA in particular, are still
battling systemic resistance to minority welfare. This situation is
despite the ministry's exemplary commitment and overall vision.
Ministry sources say that with each year, they are getting closer to
reaching the target, exceeding it in some programmes such as the award
of scholarship. And yet it has been literally a case of inching
forward. Take the National Minorities Development And Finance
Corporation established 17 years ago. In all this time, it has
disbursed loans only to 5.39 lakh minority beneficiaries. A drop in
the ocean for a Muslim population of over 130 million.

The MMA points out that as against this dismal figure, the corporation
achieved a target of 1.46 beneficiaries in 2009-2010. However, the
ministry had to move mountains for this, as the States, with some
exceptions, simply would not cough up their share of 26 per cent to
the scheme. For instance, Uttar Pradesh has so far contributed only 7
per cent (Rs. 7 crore) of its share of 26 per cent (Rs. 44 crore). The
Ministry offered to set up a separate fund for strengthening the state
channels for disbursal. “Not one State has responded to our offer,”
said a top ministry source. In the 90 Minority Concentration
Districts, too, progress has been uneven, with development plans going
back and forth and the States not being quick with their feedback.
Need to black list errant banks

The MMA was patting itself on the back for its success in the
scholarship scheme when reports came in of banks refusing to open
scholarship accounts for Muslim students. The ministry has swiftly
moved to address the problem but the news has understandably upset the
community. As politician Abdul Khaliq remarked: “This situation will
not change unless Muslim representation in banking staff goes up. And
government must black list errant banks and punish the guilty
officers.”

http://www.thehindu.com/opinion/op-ed/article540507.ece