Nasir Ali Karam Rahman and family at their home in Haryana.

The two-hour drive from New Delhi to the home of minibus driver Karam Rahman*, in the state of Haryana, is relatively smooth. But the 45-year old’s journey out of poverty has been anything but. Working for hire ferrying local passengers, Karam makes about Rs 7,500 a month, or Rs 12,000 when his eldest son pitches in. But his household expenses total about Rs 20,000, due to the ill health of his wife. His plan to fix this shortfall involves opening a “kirana” — a local convenience store — in his village, as the nearest other shop is about a kilometre away, but he’s twice been turned down for a loan. “At one point, I tried buying a vehicle since I have a driving license. But they make you run around for that too. Officials want a guarantor who owns a vehicle, and despite fulfilling whatever criteria they want, there will always be some middleman who wants a commission.” “Each time I applied for a loan, the [local bank] officials would create some hindrance or the other, saying things like the budget hasn’t been passed yet,” he says. “If I had been a defaulter I understand the apprehension — let the officials be strict. But why did I not get the loan when I have a clean chit [record]? I had no previous debts or loans pending.” Karam’s experience is representative of those who fall through the cracks of the the government’s measures to promote “financial inclusion” — the ability to access financial services, no matter your wealth, gender or social status. The Pradhan Mantri Jan Dhan Yojana (PMJDY), more simply known as Jan Dhan, was launched in 2014. It allows anyone above the age of ten to open a basic, no-frills bank account without any charge. Today, 98 percent of Indian households are said to have a bank account. “The next step is that every individual should have one,” says Dhiraj Nayyar, who at the time of writing was head of economics, finance and commerce at the National Institute for Transforming India or Niti Aayog — a policy think-tank headed by prime minister Narendra Modi. According to Nayyar, India’s main challenges to financial inclusion are the fact that “banks are not physically present in several areas” and “people are not always aware of the government’s schemes”.

But a key problem is that in 117 “aspirational districts” identified by the government for improvement, no additional money to fix these problems has been allocated. Instead of extra funds, Nayyar says that there should be “better convergence of existing schemes and more efficiency”. In 2010, before the Jan Dhan programme came along, Karam was hopeful when his bank told him it might be possible to get a loan from another branch. “Then they asked for a guarantor,” he says. “When I arranged a local headmaster to be one, they wanted one more. It was clear they were delaying the process. Finally I got disheartened and gave up.” Five hundred kilometres away, in the bordering state of Uttar Pradesh, Jumia Mansoori has been fighting her own battle for financial independence.“There is no store to cater to women’s needs in our village, the nearest one is 15 kilometres away,” explains the 24-year-old, who lives with her husband, Sabir (27), and their three daughters (aged 9, 5, 3). Currently together they earn approximately Rs 10,000 per month from odd jobs in workshops that make car parts. “I wanted to open a ‘ladies essentials’ [women’s hygiene and toiletries] shop and required a loan for it. It would have earned over Rs 500 a day, enough to feed my family.”

Nasir Ali Jumia Mansoori with husband Sabir and their three daughters at home in Uttar Pradesh

So she and her husband went to the local branch of the state bank. The officials told them to first get a series of documents in order — an Aadhaar number, an ID card, a witness, and a signed agreement to pay back the loan. “Getting all that cost us Rs 200 at the administrative office,” says Jumia. “A bank official then saw our file and said it was ‘severely lacking’ and we should now get land ownership papers. We didn’t have those so he said talk to the man sitting outside and get your file ‘improved’.” The man sitting outside was a village tout, who refused to give his name but demanded a 20 percent commission to get the loan passed. “In a Rs 200,000 loan amount, Rs 40,000 was a big sum for us.” This experience is common — in a 2018 study, Transparency International reported that about 56 percent of Indians surveyed admitted paying a bribe.

Whatever schemes the government may bring forth for the community, these agents manage to ‘capture’ them first.