Till November, Padmamma received her old age pension of Rs 1,000 in the first week of every month, delivered at her doorstep by a panchayat secretary. On December 8, she set out from her village, heavy walking stick in one hand and an almost-empty gunny bag in the other, to walk the four kilometres to the next village.

Late morning heat had set in by the time she reached the office of Sekhar Duvur, the representative for Indian Bank in Annoor village in Andhra Pradesh’s Chittoor district. “I have come for my pension,” she announced. She shook out the limp bag in her hand and proffered a handful of papers, including her Aadhaar card.

Duvur looked at her and sighed. “Amma, your account is not yet linked in my system,” he said loudly. Padmamma is around 70 years old and her hearing has weakened with age. “You have to wait 10 days,” he added.

Rural distress

The effects of demonetisation have rippled through the economy and into government social services. Each month, local governments across the country make cash disbursals worth crores to socially and economically disadvantaged people. This includes pensions for the elderly, widows and the disabled.

With demonetisation resulting in a severe shortage of cash, the Andhra Pradesh government has credited these pensions directly into bank accounts, and directed the banks to distribute them wherever possible. In rural areas without bank branches, this duty falls to bank representatives called business correspondents. They carry stocks of cash and portable biometric machines to conduct transactions of small value in villages.

Since the government scrapped Rs 500 and Rs 1,000 notes, the services of business correspondents have been crucial in easing rural distress. In the case of pensions, the government has already credited pension accounts with the stipulated money. The only problem for pensioners is to withdraw this amount.

In Padmamma’s case, her pension account is not with Indian Bank. A new account has to be opened for her in the bank and the two accounts linked using Aadhaar verification. Only then will she be able to press her thumb on Duvur’s swipe machine and access her money. By the business correspondent’s estimate, it would be almost January by the time this process is completed.

This pension is vital for Padmamma. She lost two of her four sons, another left the village and never returned, and the fourth is severely disabled as a result of a road accident. She has no husband.

When she understood that her pension account had not yet been linked to the new one, she pushed past Duvur and sat on the office floor. “Another 10 days?” she asked. “What am I supposed to eat for 10 days? I will stay here and you can give me lunch and dinner.”

“What can I do, Amma?” Duvur countered with a rueful laugh. “Go and tell [Prime Minister Narendra] Modi. Go and tell Chandrababu [Andhra Pradesh Chief Minister Chandrababu Naidu].”

Business correspondents like Shekhar Duvur have a vital role in easing post-demonetisation rural distress.
Business correspondents like Shekhar Duvur have a vital role in easing post-demonetisation rural distress.

Banks under pressure

Banks, already floundering under the pressure of reintroducing cash in an economy that lost 86% of the currency in circulation in one shot, are not pleased about being roped in to implement government schemes.

“When I joined banking [35 years ago], banks were white collar jobs,” said an official at Indian Bank in Kuppam in Chittoor district. “Now, every scheme, particularly of the prime minister, is being implemented through banks. Jan Dhan Yojana and now pensions. If we are to do this, we need more manpower.”

He estimated vacancies of around 40% across the industry, in both front and back offices. And new business correspondents are hard to come by for rural areas far removed from urban centres. Nor do banks have the infrastructure to communicate the disbursements to beneficiaries. This is left to block revenue officers, who perform the task of identifying people without Aadhaar cards or pension accounts and inform everybody from where they are to collect their money. This does not happen uniformly.

Take the case of Pappamma of Thambiganpally in Kuppam mandal. She was told to open a new bank account because her pension account did not have biometric data linked to it. Without it, she would not be able to swipe her thumb on the business correspondent’s card machine.

“Last month, they gave me money directly at home,” Pappamma said. “This month, they told me I should open a bank account. I gave my application six days ago but have not yet heard back.”

Her neighbour Nagamma, too, was to receive her pension from a business correspondent but did not know this. She found out from other villagers, and not from the panchayat, that she was meant to approach him.

“There has been no rain here for nine years and, therefore, no work,” said the agricultural labourer. “We have nothing to put in our mouths. But with this pension, we are managing.”

Pappamma must wait for her new pension account to be created before she can access her money.
Pappamma must wait for her new pension account to be created before she can access her money.

Last line of service

Chittoor has almost no mobile banking or point of sale machines and, therefore, depends on cash flows. Business correspondents, who are the only ones with point of sale machines in villages, therefore, become vital sources of cash.

Shaika Reddy is the business correspondent for Kollagunta village in the district. She, too, is tasked with disbursing pensions, but has been struggling to cope. Instead of the full amount, she has been giving people Rs 500.

“I now have an overdraft limit of Rs 50,000,” she said. “If I give out the full Rs 1,000, then I will only be able to serve 50 people. This way, I can at least distribute some money to 100 people at a time.”

The daily limit for withdrawals is Rs 1 lakh. Business correspondents typically withdraw money once in the morning, go to the villages and conduct transactions until they run out of cash. In the afternoon, they go back to the bank and repeat the process.

Since demonetisation, the number of customers has increased, even as cash availability has dropped. Reddy used to get around 20 customers each day. Now she has an average of 120 customers. With only Rs 50,000 in hand at a time, this translates into less than Rs 500 per customer.

Apart from pension accounts, business correspondents are disbursing payments under the National Rural Employment Guarantee Act, doling out around Rs 900 to Rs 1,200 per head each week.

As these transactions are necessarily of low amounts, it is essential for business correspondents to have access to notes of smaller denominations. But this depends on the cash flow at banks. For instance, Reddy received Rs 50,000 in Rs 2,000 notes one day. Her husband managed to get change for all the notes at a small cost. For the most part, she has received bundles of Rs 100 at a time.

Cashless push

As a cash-driven economy struggles to survive without it, the Chandrababu Naidu government has been aggressively pushing its promise of a cashless state.

On the same day that Padmamma made the laborious walk to Annoor, a self-help group in the village gathered at the house of one of its members. They have not been able to access loans since demonetisation, but this was not the subject of their discussion that day. K Mohan, a community coordinator for Annoor cluster, had asked them to gather for a workshop on mobile banking. Mohan was armed with three large banners with explanations written in Telugu. These he strung across the branches of a large mango tree.

You can use mobiles to do account transfers of Rs 200, Rs 500 and Rs 1,000, he told his sceptical audience. You can get your pension with a RuPay card. Soon, you can use your cards anywhere, in shops, to buy clothes, at chicken centres.

A woman called Jnanamani asked disbelievingly, “That is all fine, but can we use a card to get a bus ticket?”

Everyone laughed at the idea.

K Mohan explains the benefits of mobile banking to members of a self-help group in Annoor village.
K Mohan explains the benefits of mobile banking to members of a self-help group in Annoor village.

All photos by Mridula Chari.