JS ParthibhanBanking should help the world’s poorest people and not just be profit driven, says Indian banker J S Parthiban. As India elects a new government, he tells how he has pioneered banking schemes to free people from the grip of exploiting money lenders.

I have always believed that banking is a service-oriented holistic business, rather than just an enterprise where customer service is only part of the overall profit strategy.

In 1998 I became Branch Manager of the government-owned Indian Bank at Connaught Place in New Delhi. I used my position there to help beggars and street vendors to manage their money intelligently and live a life of dignity. There were no bank schemes designed exclusively for them. Yet many people were selling flowers, water, toys and other things on the streets. I watched them doing their business, wondering what they did with all the money they earned.

I was astonished to find that they earned Rs 500 to Rs 600 daily, which not even a graduate or a government official earned. But they also had to pay bribes demanded by the police to allow them to operate on the streets. They were all street smart and the beggars took their work very seriously. But they were ignorant in money management. Parthibhan understanding the less privileged

Most of them came from nearby states, such as Uttar Pradesh and Bihar, with a lot of dreams, leaving their families back home. They wanted to earn enough money to clear their debts back home, and get their daughters married. They came hoping to return home soon with lots of money and gifts for family members.

But the reality in Delhi was a lot different. There were no steady jobs and their earnings were never enough to make both ends meet. They would borrow money from money lenders, at very high interest rates, to get over their immediate problem and frequent borrowing turned into a habit. They never earned or saved enough to clear their debts or take money back home.

Living alone, with no proper place to stay, led them into a life of frustration with no way out. As a result they became alcoholic with some of them getting into the habit of visiting prostitutes.

Their situation would turn from bad to worse when they visited their villages back home during festivals or other occasions. They would borrow more money from money lenders and visit home with lots of gifts and money, hiding the reality of their lives in Delhi.

Once they returned to Delhi they would have to work twice as hard. The high interest rates of money lenders never allowed them to get out of the debt trap. Yet they were totally ignorant of the role that a bank could play in managing their earnings.

I wanted them to get out of debt and live a life of dignity. So I took the initiative to educate them. It took time and a lot of patience to earn their confidence. I would stand by their side, observe them and pick up a conversation. I showed my genuine concern to understand their lives and businesses.

Seeing my sincerity, they opened up and started talking but rejected outright my suggestion of saving money in the bank. They complained that there was no money to save when they didn’t even have enough to make both ends meet. My persistence convinced them at least to give it a try, with small savings to begin with.

They had no idea how to go about it. It was difficult to open a bank account in those days, with many documents needed such as the PAN (Permanent Account Number) card for tax purposes, ration cards and proof of residence. So I made sure that my bank staff made them comfortable in their understanding of how to open a savings account. In a few initial cases, I even took their personal guarantee. Their need was genuine and I took the risk. The next logical step was for them to open a fixed deposit, which required less convincing. We opened almost 500 savings accounts and 300 recurring deposit accounts for beggars, newspaper vendors, fruit vendors, tea and pan wallahs, shoe shine boys, restaurant waiters, auto rickshaw and taxi drivers, housewives, police constables and inspectors, everyone opening a bank account for the first time in their lives.

Parthibhan talking to village womenI remember a young man who sold cold water on the street for 50 paisa per glass. He would earn anything from Rs 600 to Rs 700 per day. He would have Rs 20,000 to Rs 25,000 in his pocket and did not know where to keep it. The idea of a bank savings account clicked with him. By the time I moved south to the state of Tamil Nadu in 2002, he had about Rs 2 lakh (Rs 200,000) in his account and he had repaid his entire loans. He was free from worry and started spending quality time with his family.

Another person was worried about how to educate his son in a decent institute. He found that the bank could take care of the financial aspect, thanks to schemes in this regard with the bank where he had saved his money. A lady, who used to sell fruits, saved enough money to get one of her daughters married and came back again to set up another account with us.

Now I am the branch manager of the India Bank near Salem, a city of over 750,000 people in Tamil Nadu. The state government initiated Self Help Group schemes, mostly for women who would hardly step out of their houses. The scheme gives them a chance to come out of their shells and be a leader in many local functions. The banks lend money at a low interest rate for their needs. Under the scheme the groups can distribute the loan amongst themselves charging an extra 1%. The additional amount is saved by them for future lending to others in the group at a fraction of the rate.

My branch has helped around 188 Self Help Groups, with loans totaling Rs 22.5 million. It gives me great joy to see so many groups getting the top prizes for their performance from the Tamil Nadu government.

In one poor village I discovered the tattered life of families where they cut trees for firewood and brewed illicit alcohol for their livelihood. It was a life they despised but knew no other way to make a living. The husbands were alcoholics making the life of the women and children a constant torture. I listened to their stories and wanted to do something. I convinced them to take a loan from the bank to buy buffalos and work hard to change their lives.

Today they are selling milk and converting buffalo dung into biogas. There is no more brewing in the village and cutting down the forest stopped. They have already repaid their entire loan. Life for them has taken a complete U-turn for the better.

We have worked out other schemes to empower individuals to live a life of dignity, including auto-rickshaw drivers, policemen, prisoners, and even eunuchs who are too often marginalized. I am personally organizing meetings with them to explain bank schemes that will empower them economically. They have understood this and are now saving with the bank, which is playing a key role in transforming society in and around Salem. It gives me great satisfaction to bring happiness to so many poor individuals and their families.

I learnt from my parents that serving others is like serving your God, and to always look for opportunities to help others in need. My meeting with the group now called Initiatives of Change, when I was president of the student union at Sacred Heart College near Salem (1971-72), was also a turning point that changed me forever. They spoke of building a new world and that to change the world one must start with oneself. This has been my conviction ever since.

J S Parthiban was talking to Amit Sen and Mike Smith. This article first appeared in the Guardian Weekly