Banks and People in the Development Process: A District-Level Analysis of the Banking Habits in India

Banks and People in the Development Process: A District-Level Analysis of the Banking Habits in India

Atanu Sengupta (Burdwan University, India) and Sanjoy De (Burdwan University, India)
DOI: 10.4018/978-1-4666-6268-1.ch035
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Abstract

Economic development is crucially an end product of mobilizing dormant savings into the fragrance of a new life - what is commonly called as investment. Banks play a crucial role in this channelization. In an underdeveloped economy like India, there are many traditional avenues of savings (such as gold, land, livestock, real estate, and so on). There may be many motives why people opt for traditional avenues rather than formal banking. The traditional avenues are believed to be more trustworthy and down to earth. The strict rules and stereotyped functioning of the formal banks can make them uncomfortable to the people in the underdeveloped areas. Thus, a huge fund in India is caught in the web of informal banking streams. This chapter seeks to understand how far and to what extent these changes have occurred in India. First, the authors consider a case study from rural India that depicts disparate banking behavior of rural populace. Next, they use district level data on banking habits across all the states of India. The authors first note the pattern and distribution of banking habits of people across the subcontinent. They then try to assess the reasons behind such discrepancy.
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2. Case Study

In line with our scheme of things, here we incorporate a case study. The case study is based on a socio-economic study conducted by the Post Graduate students of the University of Burdwan in a cultivable area in Bolpur in Birbhum district during February 2013. The study is based on the data collected from 306 households coming from different villages within the Sian Muluk of Bolpur, Srineketan block.

The villagers in this are engaged in various types of semi-skilled and unskilled jobs. This includes working in agriculture, unskilled non-farm labor service, various types of petty businesses, services and others. Among the women there are many who remain as housewives. These people are not all of homogeneous categories. Out of the families surveyed, about 39% are above the official poverty line while 61% are below the poverty line (Table 1).

Table 1.
Economic profile of the households surveyed
No of HouseholdsPercentage of Households
APL          11938.89
BPL18761.11
Total306100

Source: A socio-economic survey conducted by the Department of Economics, Burdwan University

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