Robin Hood Tantya Bhil (Tribal) Self Employment Scheme in Jeopardy: Banks Sensitization a Must

A Typical example where a Well Designed Tribal Welfare Scheme meets a Roadblock due to Bankers Apathy and Unwillingness to take Business Risk

Tribal in Madhya Pradesh

Madhya Pradesh is the second largest state in India with the distinction of having largest tribal population. The population of Tribals in Madhya Pradesh is 12.233 million constituting 20.27% of the total population of Madhya Pradesh (60.385 million), according to the 2001 census. There were 46 recognized Scheduled Tribes and three of them have been identified as “Special Primitive Tribal Groups” in the State.The Scheduled Tribe population in the State is overwhelmingly rural, with 93.6 per cent residing in rural areas. At district level, STs have returned the highest proportion in Jhabua district (86.8 per cent) followed by Barwani (67 per cent).

Self Employment Scheme for Tribal

Being a welfare state, the Government of MP has recently introduced ‘Tantya Bhil Swarozgar Yojana’ (Self employment scheme) for tribal youths. The scheme is supposed to be implemented through banks where the Government provides a 30% subsidy and a Guarantee to the Bankers as regard Returning the Loan. Under the scheme, loans worth Rs. 50,000 to Rs. 2.5 million or more shall be provided to the eligible tribal youths towards creating self employment opportunities. Under Tantya Bhil Swarozgar Yojana, the State Government  also provides a 30 % subsidy, subject to a maximum of Rs. 3 lakh and a 5% loan interest subsidy. Besides, fees and service tax, Guarantee will also be given by the State Government. A target has been set to benefit 5000 tribal youths under the scheme during year 2013. A scheme that shall provide employable opportunities to other tribal  in the belt.

Bankers Apathy

The fact that bank guarantees are being provided by the GoMP has failed to impress upon the bankers who are unwilling to lend a helping hand to the target population. It is a well known fact that the recovery rates amongst the bottom of pyramid as micro finance / credit are much higher (almost 99%) than the usual NPAs that banks have with the middle and higher income clients including corporate. Yet, the bankers are unwilling to learn from the Self Help Group (SHG) and Joint Liability Groups (JLG) and are not ready for loans to be distributed under the scheme as they consider it a ‘High Risk’ game. For the bankers, it is perhaps more difficult to devolve the guarantee on the State rather than recovering from the tribal. In a typical case of Indore district near Jhabua district, there were 250 applications under the tribal scheme for loan of which 74 have been approved by the Tribal Department for loan by bank and subsidy (30%) by the GoMP, and yet Only One Single Applicant has been fortunate enough to get the loan processed by the Bankers.

While there is a complete synchronization between the GoMP and the bankers in MP as regard the MP Financial Inclusion model called, ‘Samruddhi’ – Prosperity (at the Bottom of Pyramid), and the system is working well for all G2P payments and bank accounts being opened at the doorsteps of the community, the apathy of the bankers towards increasing their business risk by lending under the scheme is highly regrettable and unfortunate. A dialogue between the bankers and GoMP on one hand and GoMP and district administration including the tribal department should be immediately initiated so as to resolve such deadlocks. The state level bankers would do well to instruct their subordinates and specially at the district level to ensure that the schemes of the Government reaches the poor tribal seamlessly and offer them all possible helping hand towards credit and asset generation.

Samruddhi Penetration Flaw

 The Samruddhi (Prosperity) model opens an opportunity for every citizen of MP to have their own banking and financial identity. It facilitates an increase of money supply in the ecosystem and hence serves a great opportunity for the state to achieve financial deepening that usually refers to the improvement or increase in the pool of financial services that are tailored to all the levels in the society. This would typically precipitate an increase in the ratio of money supply to GSDP / Other price index which ultimately postulates that the more liquid money is available in the economy, the more opportunities exist in that economy for continued and sustainable growth. The G2P services under the Samruddhi model creates liquidity in the ecosystem while offering SCRIPT (Savings, Credit, Remittances, Insurance, Pension and Term Deposits) as financial products could serve the poor in different manner including covering the risks of death (Insurance), longevity (Pensions), unemployment (deposits and savings) etc. However, such roadblock and stopping stones provide a setback to noble initiatives of the Government.

As mentioned in another blog of mine, financial inclusion is incomplete and meaningless without the ‘teachable moments’ of financial literacy and capacity building at the BoP. The real success of Samruddhi model in MP shall be known only in due course of time as the model is still in its initial stage and yet to reach maturity. However, the model is based on solid rock foundation and follows the global best practices that could be replicated and scaled across the country with greater political will of the governments. The apathy of bankers such as cited above shall only create a bad name for the Samruddhi model and hence corrective action should be taken up immediately. Best Wishes to GoMP, The Tribal Department and May Better Sense Prevail to the Bankers to take the Samruddhi Model Marching Forward.