Now, all 30,000 villages have access to banking services in Karnataka

The remote villages of Haralakatte in Tumakuru and Viranjol in Uttara Kannada were the last of Karnataka’s “unbanked” human settlements as its residents were devoid of any access to banking services.

But now, Karnataka has claimed to have covered every single village with access to banking facilities, including the 375 people of Haralakatte and 156 of Viranjol.

“This is a significant achievement,” Karnataka Administrative Reforms Commission chairperson T M Vijay Bhaskar, who chaired his last State Level Bankers’ Committee (SLBC) meeting as the chief secretary on December 28 where this feat was announced, told DH.

“Now, every village has access to either a brick-and-mortar bank branch, an ATM or a business correspondent (BC).”

The state government kept pushing banks with deadlines to achieve financial inclusion. “There was a lot of pressure by the government on banks,” Finance Secretary (Fiscal Reforms) Manju Prasannan Pillai said.

Karnataka has some 30,000 villages. According to the RBI, an “unbanked rural centre” is a Tier-5 and Tier-6 place that does not have a brick-and-mortar structure of any scheduled commercial bank for customer-based banking transactions. The RBI asked banks to prioritise such villages and that banking outlets must be made available within a 5-km radius of unbanked villages.

The Finance ministry had identified 609 such villages in Karnataka where CBS-enabled banking outlets were to be started on priority. Only Managalli village in the backward Chamarajanagar district was left out, but Kotak Mahindra Bank is now all set to start an outlet there.

In the case of Haralakatte, there is a banking outlet of India Post, a branch of the SBI and a business correspondent available in Hagalwadi, about 5.8 km away. Similarly, Viranjol is about 6 km away from Akheti that has a banking outlet of the India Post. Therefore, the SLBC decided to consider these two villages as ‘covered’.

“As per the Jan Dhan Darshak app and the Financial Inclusion Plan portal, there are no unbanked villages within a radius of 5 km from any village in Karnataka,” the SLBC said.

Providing banking services in remote parts largely depends on business correspondents (BCs) hired by banks. At present, there are 8,637 BCs who are crucial in providing the last-mile connection and their sustenance is the next challenge for the government.

“The challenge is that there are inactive BCs,” Pillai said. “Covering all villages with banking services is no mean achievement, but we have to keep monitoring the activities of BCs as they take much of the load of the brick-and-mortar branches.”