It was a sobering experience last week to visit the local bank in Jonha, the main settlement in Angada block of Jharkhand’s Ranchi district. The Jharkhand Rajya Gramin Bank had only two employees – a manager and a cashier. For fear of coronavirus infection, only one or two customers were allowed inside, and the rest were made to queue outside the premises.
With distance being duly maintained, the queue snaked all the way downstairs and then up the lawns in a zig-zag. About 80 people were patiently waiting, most of them exposed to the blazing sun. No one had felt it necessary to arrange shade for them, let alone a token system that might have spared them the trouble of queuing for hours.
There was nothing surprising about this, indeed we had already observed similar scenes outside other banks in the area. What is worrying is that the queues are all set to get much longer after the lockdown is lifted or relaxed. For now, there is no transport in the area, and people are afraid to move around anyway. When movement becomes easier, many people are likely to head for the bank, all the more so as cash reserves go down and hopes of relief money go up. One shudders to think of the hardships many people will endure, braving the distance, heat and exhaustion, to withdraw a few hundred rupees from their bank accounts – or even just to find out about their bank balance.
The manager reassured us that the area had a good number of “business correspondents” who disbursed cash in the villages on behalf of the banks. So, we visited a few business correspondents in the area – Angada as well as Ratu block, closer to Ranchi. Their work left much to be desired.
One of them was closed, much to the displeasure of a group of helpless customers who were waiting outside. Another was blissfully ignoring the most elementary precautions against coronavirus infection. A third one was constrained to advise five or six customers in a row to go to the bank due to transaction failures, flagged by cryptic error messages such as “DemoAuth failed”. Even then, the business correspondents seemed to play a useful role, by enabling some people at least to withdraw cash from their accounts without having to go to the bank.
The danger of biometrics
But there is a catch. The business correspondents use Aadhaar-based biometric authentication, more precisely fingerprint authentication, as a protection against identity fraud. And fingerprint authentication is not safe in the time of coronavirus. None of the business correspondents were aware of any technology that might enable them to work without fingerprint authentication. In principle, Aadhaar-based biometric authentication could perhaps be replaced with a one-time password or OTP system, except that the seeding of bank accounts with phone numbers is very patchy, especially in areas like Angada or Ratu.
The business correspondents were aware that biometric authentication had become a health hazard and some were quite nervous about it. They knew that they were supposed to apply sanitizer after each transaction, but it is doubtful that most of them do it. In fact, one business correspondent served several customers in front of us without as a much as a glance at the box where he claimed that he was keeping sanitizer. The business correspondents have no incentive to use sanitizer, except at the beginning of the day, just before they put their own fingerprint in the machine to log on.
Interestingly, the discontinuation of biometric attendance for government employees was one of the first safety measures adopted by the central government on March 6, 2020, after it woke up to the coronavirus crisis. The personnel ministry stated its case with impeccable logic in the discontinuation order: “It is learnt that the most common method of transmission of the virus seems to be through infected surfaces. Therefore, it is desirable to avoid touching surfaces, which might be infected due to human touch.”
Similar orders were passed later on, in some states at least, against the use of Aadhaar-based biometric authentication in the public distribution system. In Jharkhand, for instance, biometric authentication was discontinued and replaced with a simplified OTP system. However, it continues to be used with abandon by business correspondents.
Removing biometric authentication from the public distribution system is not difficult. For one thing, it is not indispensable – the system can work without it. For another, the removal of biometric authentication does not cause any major inconvenience to users. For many of them, in fact, it is a liberation.
The situation is very different with business correspondents since there is no obvious way for them to work without biometric authentication. Closing business correspondents altogether would cause serious inconvenience to many poor people. On the other hand, it seems hard to justify exposing them to risks that have been deemed unacceptable for government employees.
Alternative systems
Ideally, business correspondents should be promptly replaced with alternative payment systems. For some schemes at least, cash payment in public is one possible alternative. It has been used with good effect for years in Odisha, where pensions used to be paid promptly on the 15th of each month at the panchayat bhawan. Wages under the National Rural Employment Guarantee Act used to be paid in cash, and some states at least were able to do that without major leakages. More recently, a cash-in-hand method has been used in Telangana to provide support to stranded migrant workers.
Alas, it would be very difficult to use cash-in-hand as a substitute for bank transfers to women’s Pradhan Mantri Jan Dhan Yojana accounts – the main provision for cash relief in the central government’s relief package. The reason is that, unlike social security pensions or NREGA wages, Jan Dhan Yojana transfers cannot easily be clubbed village-wise. Pension lists are available village-wise, but Jan Dhan Yojana transfers are just transfers to individual bank accounts without village identifiers.
The bottom line is that we are heading for a possible crisis in retail banking soon after the lockdown is lifted or relaxed, especially in rural areas with a poor banking infrastructure. Crowds are likely to swell as people crave for cash and small amounts are sent to them in multiple installments under various schemes – the Pradhan Mantri Kisan Samman Nidhi, better known as PM-KISAN, gas subsidies, Jan Dhan Yojana transfers and others, in addition to the routine pensions, scholarships and NREGA wage payments.
The involvement of business correspondents using Aadhaar-based biometric authentication will be increasingly difficult to justify as the coronavirus spreads. Alternative payment systems such as cash-in-hand may be possible for at least some schemes, but deploying them in a hurry is likely to be hard and risky. Meanwhile, poor people will continue to run from pillar to post for their meagre cash benefits.
The author is Visiting Professor at the Department of Economics, Ranchi University.