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How about sharing our financial freedom?
Monika Halan, Outlook Money | August 20, 2007
The government should do something". We say it. We hear it. We believe it. That this omnipotent entity called the government should do something.
Participating recently in a TV show that discussed the problems of senior citizens whose children had forsaken them, the mutter in the 60-plus audience around me was of the government not doing anything.
More a parenting issue rather than something that can be legislated, I think we thump our favourite punching bag when we run out of things to say about a matter that looks unsolvable.
Amidst all this gripe against the government, a friend invests quietly. But not in money. In her household helpers. She says she has no head for numbers but that did not prevent her from getting her help attain financial inclusion.
Basanti has now been saving Rs 1,000 a month for the last three years in a post-office recurring deposit. She may have missed out on the Great Indian Bull Run, but she feels empowered each month as she makes the journey to the post-office to put away her money.
A substantial part of the 70 million urban poor (about a quarter of the urban population) works to make life easier for the urban mass affluent. They are all around us - the maids, drivers, cleaners, vendors, dog-walkers, car cleaners, electricians, plumbers - making our lives easy to live.
But even as they watch us carp about home loan rates hitting 12 per cent, they hand over 50 per cent interest to basti money-lenders or pawn shops for small loans to tide over a medical or other crisis.
The urban poor remain just outside the De-Sotoian bell jar of financial inclusion. If owning a bank account is a measure of financial inclusion, then RBI data shows that 40 per cent of the urban adult population remains excluded.
Their share of urban formal financial credit is even less - just 14 per cent of the urban adult population has access to such loans. Numbers distance us from these people. And hence their problems. These unbanked numbers make up our Basantis, our Indujis and our Gopals. They have names. And lives. Just like ours.
Why don't they have bank accounts? If the supply side asks for cumbersome documentation and procedures, offers unsuitable products, speaks a confusing language and exhibits a humiliating attitude (Basanti was repeated asked if she could afford the Rs 1,000 she wanted to save each month by a cynical post-office clerk), the demand side is deterred by lack of awareness, low incomes, meagre assets, social exclusion and illiteracy. Not only do they increase the transaction cost, they nudge the person towards a more familiar source of funds - the local money-lender.
As we celebrate our new-found financial freedom, can we extend this freedom to those immediately around us, but just outside the glass jar of prosperity? It takes very little time and effort to help a person open a bank deposit or a public provident fund account.Why not help them get a family floater medical insurance policy this year as we renew ours. And get a basic term life cover for the main breadwinner of the family. Each one free one.