NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, September 19, 2016

In August 2014, a few weeks after the launch of Jan Dhan, the government’s flagship scheme under which the unbanked get bank accounts, Kamlesh, a housewife at Purnapur village in Uttar Pradesh’s Bareilly, opened an account at the Punjab and Sind Bank’s local branch. Wife of a farmer, the opening balance in her account was zero. This wasn’t unusual — in fact, accounts like Kamlesh’s, called zero-balance accounts, made up almost half of all the 17.90 crore Jan Dhan accounts a year later given that most of the holders were poor and had little by way of savings.

But on August 5 this year, when Kamlesh got her passbook updated, she was in for a surprise. “Re 1 had been deposited in my account on September 29, 2015. I didn’t deposit the money, I don’t know where it came from. I will ask the bank about this,” she said. It’s not just Kamlesh, and it’s not just that branch in Bareilly, or even that bank.

Investigating information obtained from more than 30 nationalised and regional rural banks under the Right to Information (RTI) Act, The Indian Express went to more than 25 villages and cities spread across six states, checked individual passbooks and interviewed account holders. To find that bank officials are quietly making one-rupee deposits, many from their own allowances, some from money kept aside for office maintenance. Their ostensible goal: to reduce the branch’s tally of zero-balance accounts.

As many as 20 branch managers and officials told The Indian Express, on the condition that they not be identified, that there is “pressure” on them to show that zero-balance accounts are falling in number. “There was a perception that so many zero-balance accounts means no one is using them, so there was pressure on us to change that,” said one official.