Twenty eight-year-old Revathi has a savings account of her own – not in a bank but in a personal drawer that her husband does not check.

She works as a cleaner in homes in a South Delhi locality and lives in a slum in the Jal Vihar area with her husband and six-year-old daughter. Her husband migrated to Delhi from Tamil Nadu’s Viluppuram district around 20 years ago, and has a bank account here. Revathi came to Delhi after she got married in 2009.

“I never opened a bank account because for that I would have required my husband’s help as I am illiterate,” she said. “My savings would no longer have remained a secret.”

On November 8, when Prime Minister Narendra Modi announced the government’s decision to demonetise Rs 500 and Rs 1,000 notes, Revathi had Rs 6,000 in the drawer, held in Rs 500 and Rs 1,000 notes.

“I did one round of the bank in the initial days and got Rs 4,000 exchanged,” she said. “But that was not an option for weekdays as the queues were long and I have to start working early in the day.”

While she managed to use one of the remaining Rs 500 notes to buy provisions, three notes were still left. She planned to exchange them in a few days – the government had said the notes could be exchanged till December 30.

But in an abrupt and unexpected move, the government closed that window on the evening of November 24. It halted the exchange of old notes to “encourage people who are still unbanked, to open new bank accounts.” The old notes can be deposited in bank accounts till December 30.

On the surface, demonetisation is a radical move. An estimated 165 million Indians like Revathi do not have bank accounts. India’s unbanked population could be the seventh-largest country in the world. Bringing them into the banking system can help raise bank deposits, infusing more credit in the economy.

But forcing the poor to open accounts might not work. In the view of many migrant workers living in urban slums, banking is intimidating, unnecessary and expensive. By hurting their incomes, demonetisation could further dampen their willingness to open accounts.

Revathi does not want to open a bank account because that will expose her savings to her husband. Photo by Abhishek Dey.

Too many forms, lack of documents

On Friday afternoon at 2 pm, E Tilaka, a cleaner at a private hospital in Chennai, was hastily getting ready for her shift. She could not afford to miss a single day at work, otherwise her wages would be cut.

“My salary of Rs 6,000 a month is all my family has,” she said. “It is with this small sum that we run our daily lives.”

Since her husband left her some years ago, Tilaka had been taking care of her two children and her elderly parents on her own. Unable to pay rent for even a single-room house in a slum, the family has built a makeshift home underneath a railway overbridge. As trains rumble overhead all day, Tilaka’s mother sells sweets on a pushcart, scraping in barely Rs 100 a day.

Tilaka’s monthly salary also comes in cash. “This month I somehow managed to get my old notes changed through a friend,” she said. “But I do not know what will happen next month.”

A few days ago, she was informed that her wages would be transferred to a bank account that her employers would help her open. While she is keen to open an account, she is worried that she only has a voter identity card, and no other proof of residence. Would it be enough to open the account, she asked.

Tilaka also has no idea how to use banking facilities. “I have heard that once you go to the bank, you are asked to sign on several forms,” she said. “How will I be able to understand any of this? I am not educated.”

Her relative, an elderly woman named Rani, does not see the point in opening an account. “I earn just Rs 400 a month for washing vessels in a nearby apartment,” she said. “What is the point of putting that money in the bank?”

Mylapore resident S Shanmugam, a 40-year-old auto driver and a father of five, expressed a similar view about opening a bank account. “I haven’t got one made, because I have no money to put into it,” he said. “I make hundred rupees with one passenger, but by the time I scout for the next passenger, I have to [use the money to] fill gas.”

S Shanmugam does not see any value in opening a bank account. Photo by Vinita Govindarajan.

A question of trust

On Friday afternoon, in Srinivaspuri in Delhi, Manglu, a rickshaw-puller in his early 40s, heaved a sigh of relief after getting rid of the last Rs 500 note he had.

“I, along with a few others, handed over our notes to a fellow rickshaw-puller, who has a bank account here,” he said.

A resident of Bihar’s Katihar district, Manglu does not have a bank account in Delhi despite having worked in the city for 16 years. His parents, wife and son live in a village in Katihar, where they cultivate rice on two bighas of land. He sends them money through an informal system.

“There are 10-12 of us from the same village who live together in Delhi,” he said. “Every month, someone goes home. We all hand over our savings to him and that person delivers the money to our family members in the village.”

Manglu has more trust in this informal cash delivery system than in bank transfers. “First, we do not earn a lot of money that we will need a bank to store it,” he said. “Second, if we send money home through bank, my family members will have problems withdrawing as they cannot read and write.”

Another rickshaw-puller in Delhi, Mohammad Manzoor, said he used a shopkeeper’s bank account to send money to his family back home in Bihar, paying Rs 20 for every Rs 1,000 transferred, which came to a charge of 2%. He did not see any value in opening a bank account, which he believes would cost him more than his current arrangement.

“I pay Rs 1,200 per month to rent this rickshaw, an equal amount as rent for a shared room, and spend around Rs 3,000 a month on food and daily expenses,” he said. “Where do I have the money to keep in a bank?”

Over the last two weeks, the cash crunch has reduced the number of passengers that Manzoor gets. “Even the ones I get always want to pay Rs 10 less than what I ask,” he said. Simultaneously, his costs have gone up. “The owner of the hotel where I eat has increased the rate of rotis from Rs 3 to Rs 5, saying his cost of buying flour and rice has increased.”

The government might assume that demonetisation would push people like Manzoor to open bank accounts. But the reduced earnings appear to have further dampened his willingness to consider the idea.

Manglu, a rickshaw-puller in Delhi, sends money through fellow migrants. Photo by Abhishek Dey.

A hidden cost

What did Revathi do with her three Rs 500 notes?

Instead of heading to a bank to open an account on Friday, she pleaded with her employers, asking them to deposit the three notes in their account and withdraw new notes for her. One of them agreed to do so. But her neighbours don’t have anyone to fall back on.

“Many of my neighbours are yet to exchange the notes,” she said. Some were paying agents who were exchanging the notes for a commission. “Till last week, they were offering Rs 400-Rs 450 for scrapped Rs 500 notes,” she said. “Today the rate has gone to Rs 300.”

With inputs from Anumeha Yadav.