Assam is going through a very tough time. The devastating flood has washed out everything of the farmer of the state. The GS Road molestation case has made the Assamese ashamed and the violence in lower Assam has created humanitarian crisis. All along these, relentless blow from the fake financial institution has created havoc in the state. The gravity of the issue pulled out the masses to the street and compelled the government to disclose the list of 119 NBFCs operating the state along with fake financial institutions in the state assembly.
The issue of fake financial institution has been grabbing the headlines for the last couple of months in Assam. It came to light that as many as 23 NBFCs were taking deposit from the customers, violating the RBI norms. Taking the advantage of poor governance and careless attitude of RBI, these fake financial institutions collect huge amount and disappear all of a sudden.
It is observed that the victims of these financial frauds are basically poor men and women of the state. Now, question arises, why the government is not being able to protect the hard-earned money of the poor people of the state or why the RBI being the watch dog of the financial sector seems to be blind to these burning issues and most surprisingly why the people do deposit their money to these institutions. The last question, isn’t more thought provoking?
Yes, the poor people of the state are compelled to go to these institutions to meet their need of various financial services. Dr. Ela Bhatt, founder of SEWA (Self Employed Women’s Association) and known to be the mother of microfinace observed that financial services are to be treated as fundamental need of a human being. But when this fundamental need is not addressed by the state or its concerned agencies, the poor are compelled to knock the door of the fake financial institutions. The rampant growth of fake financial institutions in the state is the result of lack of financial inclusion and financial literacy.
Study shows that financial inclusion can bring prosperity and can also works as a powerful weapon to alleviate poverty. But the scenario in the state and in the country as a whole is not satisfactory at all. More than 50% people of the country are still outside the ambit of mainstream financial system. The bottom the pyramid is excluded as the mainstream financial institutions like banks treat them unworthy to bank upon! The situation in Assam and North Eastern states are more pathetic. The data shows that India has 90 un-banked blocks and it is unbelievable that out of these 90 un-banked blocks 80s are in NE states. RBI has introduced policy to compensate revenue loss of the commercial banks for five years to open new branches in the region to minimise the gap. But, will it make the banks people worthy?
Best way to check the financial fraud is to educate the people about their financials and the financial eco-system as a whole. Till date government has not taken any remarkable financial literacy initiative in the state, besides cautious advertisement in the newspapers, which causes negative impact on the target group. They become more conservative as far as financial risks taking are concern. On the other hand RBI regional office’s role in financial literacy is more pathetic. An NBFC named Sunmarg Microfinance Institution had collected lakhs of amount from the people of the state and now the company is on its way to abscond. The same company was barred to collect deposit from the public in West Bengal much earlier. So called watch dog RBI’s regional office at Guwahati couldn’t trace out the smell of fraudulent activities of the said company in this region. The FLCC (Financial Literacy and Credit Counselling) programme in the state has become another white elephant. Attitude of the PSU banks towards poor remains as reluctant as earlier. They seem to be overburdened!
On the contrary, ray of hope is being shown by some private companies in the region. Most recently, some Microfinance Companies have taken massive financial literacy drive in Assam and North Eastern states. RGVN (Rastriya Grameen Vikas Nidhi) in collaboration with CRISIL has started their financial literacy programme called Pragati in Assam. Dr. Amiya Kumar Sarma, Executive Director of RGVN is optimist that Pragati will make a positive impact on the society. Another leading microfinance institution of the country Ujjivan Financial Services Pvt. Ltd has also taken a huge financial literacy programme in Assam and Meghalaya. They have already educated around 10000 women in Assam and Meghalaya through multimedia training programme called Sankalp in collaboration with Unitus and Lok Foundation. Mr. Samit Ghosh, Managing Director of Ujjivan Financial Services Pvt. Ltd. says that Sankalp has played a tremendous role in the field of financial literacy. He also added that a copy of Sankalp has been provided to BRAC to do financial literacy training in Bangladesh. This month Ujjivan has started another financial literacy programme called Diksha through a well trained and well equipped dedicated team in Assam.
The poor people of the state only can be protected from those fake financial institutions by educating them and bringing them under the umbrella of organised financial system. The failure of the mainstream financial institutions to embrace the bottom of the pyramid literally strengthens the need of a specialized limited liability banking model in India too. Such low cost banking models are viable and working fine in countries like Indonesia, Philippines, Bangladesh etc. But the commitment of our government towards financial inclusion and poverty alleviation seems to be illusive!