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India Opens 15M Bank Accounts in Modi’s Inclusion Drive

bloomberg.com

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Re: India Opens 15M Bank Accounts in Modi’s Inclusion Drive

#21

Post by sspiff »

> Reserve Bank of India Governor Raghuram Rajan this month urged the government to directly transfer cash to the poor instead of offering them public services

That sounds like a terrible idea. This opens up the door for further extortion, corruption and exploitation of the masses. Say the government hands out $15 per child for education, there way to prevent debt collectors to harass the poor into paying that money to them. Plus, the extorter knows he can collect at least $15 per child!

I think offering a service instead of "free money" is much more valuable.

Re: India Opens 15M Bank Accounts in Modi’s Inclusion Drive

#22

Post by frozenport »

arahant wrote: post #2

Not quite sure how this will end poverty. If anything, it will bring 15M people into the banks' debt and interest clasp.

It is modernity. For example, 1/3 of Americans are in debt (and have negative money) but I would call them wealthier and better off then the poor in India who have a few rupees in their wallets.

Re: India Opens 15M Bank Accounts in Modi’s Inclusion Drive

#23

Post by heydenberk »

sspiff wrote: post #21

> Reserve Bank of India Governor Raghuram Rajan this month urged the government to directly transfer cash to the poor instead of offering them public services That sounds like a terrible idea. This opens up the door for further extortion, corruption and exploitation of the masses. Say the government hands out $15 per child for education, there way to prevent debt collectors to harass the poor into paying that money t…

This is what people tend to assume, but it based more on emotion than reason. Conditional cash transfers have been very successful in places like Brazil. There a few good articles about it in the Economist. Here's one: http://www.economist.com/node/16693323

Re: India Opens 15M Bank Accounts in Modi’s Inclusion Drive

#24

Post by kashkhan »

sspiff wrote: post #21

> Reserve Bank of India Governor Raghuram Rajan this month urged the government to directly transfer cash to the poor instead of offering them public services That sounds like a terrible idea. This opens up the door for further extortion, corruption and exploitation of the masses. Say the government hands out $15 per child for education, there way to prevent debt collectors to harass the poor into paying that money t…

Are you saying that we shouldn't give money to the poor because if they had money they would be robbed? By that logic banks shouldn't have ATMs becuase people get mugged after going to ATMs.

We should give money to the poor so they can not be poor. Even if 10% of them get robbed, even then 90% will be better off than before the money transfer.

Services are nice but central planning of services provides worse allocation than well functioning markets. Even for the poor.

Re: India Opens 15M Bank Accounts in Modi’s Inclusion Drive

#25

Post by somberi »

I have some experience in this space. A decade ago, I led a talented team to design the largest (at that time) satellite-based network to expand India's largest bank (it was not then) to rural india.

The government, via Reserve Bank of India, earmarks specific sectors, in line with their current policy, as "priority sector". This can be housing, agriculture, rural electrification, etc. And banks are mandated to increase their focus and show metrics that prove they are engaging bona fide with the "priority sector". Rural banking is one such.

The cash deposits and reserves from these customers, broadly speaking, are not that much. They tend to be big in Gold Loans and a source of Agriculture / Animal Husbandry loans.

Re: India Opens 15M Bank Accounts in Modi’s Inclusion Drive

#26

Post by pavanred »

throwawayHN123 wrote: post #3
arahant wrote: post #2

Not quite sure how this will end poverty. If anything, it will bring 15M people into the banks' debt and interest clasp.

This is for poor and labor class people. Currently these people earn hand to mouth and spend daily as per their need. Husbands spend on drinking and there is no money left for medicines or child care. If they get bank accounts 1)They will start saving. 2)They will understand the benefits of saving and be the owners of their own money. 3)Any govt schemes or benefits will directly reach them which currently is going in…

Not to mention these people will not have to deal with the loan sharks and their huge loan interest rates. Besides, this scheme is not just a bank account but also includes debit cards, which should help people against problems of keeping all their money in cash on them at all times, and an insurance, in most of India agriculture is dependent on the monsoon and mainly by this there is a big problem of farmer suicides in the past.

Re: India Opens 15M Bank Accounts in Modi’s Inclusion Drive

#27

Post by sspiff »

heydenberk wrote: post #23
sspiff wrote: post #21

> Reserve Bank of India Governor Raghuram Rajan this month urged the government to directly transfer cash to the poor instead of offering them public services That sounds like a terrible idea. This opens up the door for further extortion, corruption and exploitation of the masses. Say the government hands out $15 per child for education, there way to prevent debt collectors to harass the poor into paying that money t…

This is what people tend to assume, but it based more on emotion than reason. Conditional cash transfers have been very successful in places like Brazil. There a few good articles about it in the Economist. Here's one: http://www.economist.com/node/16693323

Interesting link, I can't read it right now, but I'll be sure to check it out later. Thanks!

Re: India Opens 15M Bank Accounts in Modi’s Inclusion Drive

#28

Post by nnain »

somberi wrote: post #25

I have some experience in this space. A decade ago, I led a talented team to design the largest (at that time) satellite-based network to expand India's largest bank (it was not then) to rural india. The government, via Reserve Bank of India, earmarks specific sectors, in line with their current policy, as "priority sector". This can be housing, agriculture, rural electrification, etc. And banks are mandated to incre…

> The cash deposits and reserves from these customers, broadly speaking, are not that much.

Indeed the deposits by the very poor aren't much. But this is a government scheme targeted at enabling the poor, not to help the banks.

My mom once mentioned, how nice it was when my parents first got a bank account. They started saving. Money became easier manage. To enable 15Mn people to have bank accounts is a good step.

Re: India Opens 15M Bank Accounts in Modi’s Inclusion Drive

#29

Post by pessimizer »

frozenport wrote: post #22
arahant wrote: post #2

Not quite sure how this will end poverty. If anything, it will bring 15M people into the banks' debt and interest clasp.

It is modernity. For example, 1/3 of Americans are in debt (and have negative money) but I would call them wealthier and better off then the poor in India who have a few rupees in their wallets.

They are, but it's not because they have bank accounts.

Re: India Opens 15M Bank Accounts in Modi’s Inclusion Drive

#30

Post by codemod »

nmridul wrote: post #17
nb1981 wrote: post #11

Earlier quoted context omitted.

..and people call me a dreamer. 1. They will start saving: No. They won't. They will have what little money they have put into a system outside of their control and systematically syphoned away. 2. The benefits of saving are not something people need to learn; the benefits of saving money are harder to justify to someone who isn't already wholly dependant on it (and maybe even perceives it as a tool used against his…

You should understand that most of the banks that opened these accounts are Public sector banks (or Government Banks). And most of these accounts have no minimum balance requirements and not many surprise charges. And deposits in Government banks are guaranteed (insured upto a certain amount). So there is no question of the money getting siphoned off.

Totally agree... also.. government run banks make it difficult to get loans than private banks.. and even to this date older people tend to stay away from private banks because of hidden charges and surprises.
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