Financial Exclusion and the Muslims of Assam

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Financial exclusion is very much a part of social exclusion. In fact, deliberate attempts of financial exclusion may increase the disparities caused by social exclusion many folds. Before going to discuss financial exclusion and its impact on Muslims of Assam, let us first figure out what is social exclusion.

After the American and French revolution, the ideology of freedom, justice, equality and fraternity became the dominant ideology. For the first time in human history poverty, marginalization, deprivation etc were treated as a construct, which barred the individual from enjoying the essential rights offered by the society to become its full member. Rene Lenior, a French Minister wrote a book “Les Exclus” which means “excluded”. During 1970s, he identified the marginalized groups like poor, handicapped, suicidal people, elderly people, abused children, drug addicted etc as socially excluded people and passed a law to protect their rights and entitlements. It was treated as the responsibility of the state to take the appropriate measures to allow the excluded groups to realise their full potential as members of the society. In Indian context we see that a number of programmes and initiatives were taken by the government to uphold the rights of various vulnerable groups like dalits, scheduled tribes, differently abled, women etc.

Prof. Amartya Sen classified social exclusion into active and passive forms. He says active social exclusion is a deliberate attempt of the state to debar the individuals from a particular group from enjoying their rights provided by the society. We can take the example of Doubtful Voters or D voters of the state. Most of the D Voters are from Muslim community. The state has denied their voting right as well as right to have access to other welfare schemes of the government. There is a looming doubt on the identity of these people.

In case of passive form of social exclusion, though there is no deliberate attempt from the government but the existing setup like poverty, social norms etc nullifies his/her capability to exercise his rights to the fullest. It also hampers strengthening of democracy. Marion Young in her book ‘Inclusion and Democracy’ points out the need on the part of advocates of deliberate democracy to ensure that decision making in a group is inclusive. Hence keeping in mind passive exclusion, there is a need to move beyond formal equality and create institutional measures to ensure participation by marginalised groups on an equal footing.

As far as financial exclusion of Muslims of Assam is concerned, we find both active and passive form of exclusion prevailing towards the Muslims of the state. The Sachar Committee report has clearly mentioned that many Muslim dominated village and mahallas were notified by the banks and other financial institutions as ‘negative area’. The same thing is being continuing in Assam as well. Muslims living in those notified areas are denied easy access to credit and other financial services from banks and other formal financial institutions. This is a deliberate attempt to keep the community out of the ambit of organized financial system. On the other hand Muslims of the state are financially excluded due to passive factors like poverty, illiteracy, lack of financial literacy, non availability of banking facilities and other financial institutions in the Muslims dominated places etc.

Why financial inclusion is necessary? Why the Muslims of the state had never raised their voice for their inclusion in the organized financial system? Are they all right in the present setup? There are many such questions that make room in our mind when we study the state of financial inclusion among the Muslims of Assam. Various studies conducted worldwide have proved that financial inclusion is a pre-requisite for an inclusive growth. The countries which have larger financial inclusion have transformed faster towards growth and development. In India we are observing that 12th five year plan has talked a lot about inclusive growth. But when we critically examine the state of financial inclusion of the Muslims of Assam we find a pathetic scenario and that also tells us how the community is deliberately excluded from the ambit of organized financial system.

We should remember that Assam as a whole is not at all in good health as far as financial inclusion is concerned. But the Muslims of the state are doubly discriminated. On an average a single bank branch serves more than 21000 people in Assam. But when we segregate the same ratio of Muslims dominated districts of Assam we find the clear picture of double discrimination. A bank branch in Barpeta district serves more than 50,000 people, i.e. more than double of the state average. Dhubri is one of the most excluded districts as far as financial inclusion is concerned. Dhubri has one of its development block listed along with the 90 un-banked blocks of the country! On an average a single bank branch of Dhubri district serves more than one lakh thirty people of the district, which is more than six times that of the state average.

Government of India has initiated a project called “Swabhiman”. Under this project, target was set to include all the villages having more than 2000 population with Ultra Small Branch by 31st March’13. The project is being implemented by corporate Business Correspondences. The corporate BCs use to recruit a local Business Correspondence in consultation with the nearest existing bank branch to start the Ultra Small Branch (USB). We got the opportunity to lead such a corporate BC for the north east region for a few months. While visiting the remote villages of Nagaon, Goalpara, Barpeta we have observed that the project had become indeed a liability for the banks. Not a single bank is working wholeheartedly to make the project a successful one.

There are a number of lacuna and drawbacks of the project. The BCs were not getting their remuneration in time. Technical difficulties are a daily part and parcel of their operation. It is again disheartening to note that Swabhiman is also another non starter in the Muslim dominated areas. In Barpeta districts alone, there are at least 118 villages which have more population than the prescribed requirement to have a banking branch. But surprisingly those villages neither have a break and mortar bank branch nor an ultra small branch (USB) or even a post office! The scenario is no way better in other Muslim dominated districts of Assam.

Now let us discuss another flagship programme of government of India and check out how deliberately Muslims of the state are being excluded from the benefit of financial inclusion. National Rural Livelihood Mission is the restructured mission mode of Swarnjayanti Gram Swarojgar Yojana. Today it is one of the most promising programmes to alleviate poverty through financial inclusion, Self Help Groups, capacity building, access to credit, skill development etc. But the status of implementation of this programme among the Muslims of the state is quiet worrisome.

During FY 2012-13 the programme was operationalized in 6 Resource Blocks, 38 Intensive Blocks and 175 Non-intensive blocks. Not a single block from Muslim dominated lower Assam was identified as a resource block out of those 6 resource blocks. Almost the same thing happened in case of identification of Intensive Blocks, for name sake three to four blocks were identified in this category from the Muslim dominated lower Assam.

We were expecting that during the 2013-14 FY some more blocks will be added in these two categories from this area. But not a single block was added in the said category from Muslim dominated districts of lower Assam in FY 2013-14. It is worthy to note that the allocated amount for 42 intensive blocks is Rs. 16679.65 lakhs, where as the total allocation for remaining blocks are Rs. 13580.40 lakhs only!

Why we are crying for the implementation of such programmes in those Muslim dominated districts? Is it only because we belong to the same place? Or we share the same language or even same religion? Let us make it very clear that our concern is not language, religion or place of birth, but it is the continuous systemic discrimination. When the marginalized groups like dalits, tribals etc are getting fruits of positive discrimination called reservation or the concept of equitable distribution, at the same time Muslims being one of the most marginalised communities of Assam are being subjected to multiple negative discrimination in every sphere of life, including financial sector.

The impact of this age long discrimination is beyond our imagination. Gorky Chakravarty of Institute of Development Studies, Kolkata carried out a research study in three blocks i.e. Mandia, Chenga and Rupsi blocks of Barpeta district. His study revealed that Muslims are not in a position that they do not require any more banking facilities or credit. Moreover the poor Muslims of the state require credit facilities more than that of a well off population group. It is shocking to note from his study that as many as 67% surveyed household are indebted. More shocking part of the findings was the source of the credit! Only 2.43% of the indebted household availed credit from organised financial institution whereas again 67% of the indebted household availed the credit from moneylenders.

More than half of those people mortgaged their agricultural land to avail the credit from the moneylenders. The major purposes for incurring the debt were meeting medical emergencies, to solemnize marriage, to purchase fertilizer, pesticide, insecticide etc. Those poor people have to pay an annual rate of interest on those credits from 72% to 360%!  They do not need lakhs or crores of rupees as credit. They are in dearth need of small amount of loans. The study reveals that more than 77% borrowed less than Rs. 13000/-. We can only begin to imagine their state of helplessness.

Another major impact of financial exclusion of Muslims was observed during the ponzi scams (Saradha, Jeevan Surksha, ABYSS, Ramel etc) in the state. A large section of the victims of those scams were poor Muslims of the state. These people were forced by systemic exclusion by the present financial system of the state to go to the ponzi schemes to meet their financial services needs. Government did absolutely nothing to protect their hard earned money. Government hasn’t done anything to compensate these victims. On the other hand it is alleged that some powerful minister, politician, top cop of police administration and even some journalists got benefitted from the said scams.

The impact of financial exclusion is clearly visible in other government welfare schemes as well. Media reports say that a large number of Muslim students are being deprived from their pre/post metric and merit cum means scholarship for not being able to get a bank account. The rampant corruption in Mahatma Gandhi National Rural Employment Guarantee Scheme, IAY scheme etc could have been checked to a great extent if the beneficiaries were brought under the banking system.

We shouldn’t ignore another important aspect of financial inclusion. To maintain the financial exclusion, the best way is to keep the people ignorant in financial education or financial literacy. And the government is actually doing the same. Financial literacy enables the individual to take the right decision in his personal financial life. As expected by a group with vested interests, the lack of proper financial education is acting as a huge setback for the Muslims of the state to get the least benefit offered by the existing banks and other organized financial institutions. We can take the example of loan from Minority Development Board and Kishan Credit Card. It is alleged that politician had liaison with the Minority Development Board to sanction loan to beneficiaries of his constituency and the uneducated Muslims were kept in dark about the repayment of that loan amount. The beneficiaries were briefed that the loan was something like relief from their leader. Almost all those loans are now bad debts (NPAs). The board is now unable to disburse any more loans.

The instance of Kishan Credit Card is more pathetic and alarming. The banks operating in Muslim dominating areas are severely indulged in corruption in disbursing the KCC loan. Allegedly, the bank uses to identify some brokers or middle men. The broker collects the customer to offer KCC loan. The borrower is again briefed that there is no need to repay the loan, but to get the loan he will have to pay 30% to 50% as commission to bank through the broker. The commission amount is collected by the broker as soon as the loan is disbursed!

Who should we blame; the politician, the corrupt banker, the greedy broker or the borrower? We strongly believe if the borrower were financially educated, if he were aware of the fact that a loan is not a charity by the politician or a favour of the bank manager or the broker but a win-win financial product for him as well as the bank or if he were aware that there is something called credit bureau and his record is going be to recorded in bureau. Being a defaulter he will never be entitled to get any credit from any financial institution in future thorough out his life. He would never have dared to take such suicidal decision. No doubt if the poor Muslims of the state were financially literate, they wouldn’t be easily fooled by ponzi scams like Saradha, Jeevan Suraksha, ABYSS, Ramel etc as well.

Here again, we must admit that the Government has done absolutely nothing to provide financial education or financial literacy to the Muslims living in the rural areas of the state. We have already discussed the discrimination of Assam State Rural Livelihood Mission towards the Muslims of the state. The Resource Block under ASRLM is supposed to take up Financial Literacy Initiative to strengthen the Self Help Groups, but when not a single block from Muslims dominated lower Assam is selected as Resource Block how this initiative can help the Muslims?

Some private organizations like Ujjivan Financial Services Pvt. Ltd., Rastriya Grameen Vikash Nidhi etc are providing financial literacy to their clients. But their financial literacy drive does not reach the Muslim dominated rural areas of Assam. On the other hand RBI is conducting quiz among the school children to promote financial literacy. Unfortunately, RBI is only targeting the elite schools of the metropolis, hence the people who needed the financial literacy most are again excluded from their programme.

Dr. Ela Bhatt, founder of SEWA (Self Employed Women’s Association) urges to treat financial services as a fundamental right of human being. Prof. Mohammad Yunus too believes that financial inclusion can alleviate poverty in shortest possible time. Amartya Sen talked of capabilities as a means of enhancing freedom of individuals. Such systemic financial exclusion cuts short the capabilities of vulnerable groups. The deliberate attempt of the state to exclude the Muslims of Assam from the organized financial sector compels us to think that this is a calculated conspiracy to keep the community oppressed and subjugated for another century or so!

Ponzi-Pyramid, NPS and the Pious Fraud

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TMC MP Kunal Gosh’s arrest perhaps has refreshed your memory of the horrific Saradha scam. If not, let me remind you. Saradha group of companies looted thousands of crores of rupees from the poor people of the states of West Bengal and Assam. It is alleged that West Bengal Chief Minister was fully aware of the detailed functioning of the company and her party was getting maximum benefits from the satellite television channels and newspaper owned by the company. Kunal Gosh claimed that those media houses were working under the direct instructions of TMC. In fact Mr. Gosh claimed that he was compelled to sack one of his editors to satisfy Didi! Same things happened in Assam. Saradha CMD Sudipta Sen himself alleged that a powerful minister of Gogoi cabinet, top cop of the police administration, journalists and even so called artists were benefited out of his fraudulent company.

Saradha was not the only company to loot the hard earn money of the poor investors of the state. There were many other ponzi companies like ABYSS, Ramel etc etc. We also noticed the operation of the fraudulent pyramid companies like Unipay2You, Royal Forex, Sambav etc in Assam. Those companies also looted thousands of crores. Some of the perpetrators were booked and many got spared.

Another such possible threat of pyramid scheme is going to be exposed through this article.  It may be shocking for you to know that government welfare scheme National Pension System is going to be used as a tool to fool the poor people of the state by some pyramid fraudsters.


National Pension Scheme is a social security scheme by government of India. It is meant to provide a secure retirement life to the citizen of the country keeping in mind the inflation, rising cost of living as well as increased life expectancy. Swavalamban Yojana is designed for the workers of unorganized sector under NPS. It is expected that the scheme will benefit the poor workers to great extend. Under this scheme if the subscriber pays a minimum yearly contribution of Rs. 1000 and maximum Rs. 12000; government will contribution another one thousand to their pension account i.e. Permanent Retirement Account Number (PRAN). This scheme will continue to till FY 2016-17 and may be extended also. No doubt it’s a very good scheme for the poor unorganized workers.

Now let’s see how the pyramid fraudsters are planning to the fool those poor unorganised workers. In the first week of this month (Nov’2013), an NGO (Non Government Organization) is register under the Societies Registration Act 1860. The organization has designed such a plan that you even can’t raise question to their noble (?) initiative! They will organize awareness camps to promote Swavalamban Pension Scheme (PRAN CARD). To get involved with the campaign you need to donate only Rs. 500/-. Yes! This is not a big deal. In fact they will be helping the poor to get their legitimate entitlements! But they have different plan to benefit you as well. What is the actual plan?

The subscriber needs to pay Rs. 500/- and the organization will liaison with the Point of Presence (PoP) to open his/her NPS account. Pension Fund Regulatory and Development Authority (PFRDA) have identified 58 PoPs all over the country. PoPs are basically banks (both PSU and private), private financial institutions and Department of Posts. The next move is very interesting. The subscriber will be qualified for an income as soon as he adds three subscribers (A, B and C) in his immediate downline and A and C again add three subscribers each as their immediate downline. The first subscriber (Top of the pyramid ToP) will get a bonus of Rs. 200/-.

Now, calculate the total amount received by the organization. The organization had added 13 NPS subscribers so far and had collected Rs. 6500/- from the bottom of the pyramid (BoP). The organization will be incurring the expenses Rs. 1300/- for their PRAN card and Rs. 200/- as bonus to the ToP. Thus their net profit is going to be approx Rs. 5000/- from the one single ToP!


Remember if the ToP somehow fails to add a single subscriber he/she will not be eligible to get the bonus amount of Rs. 200/-.

The organization has also a very lucrative award and reward plan. If there is a 100 pairs of countable (A and C only constitutes countable pair, B is not countable!) subscribers, the ToP subscriber will get a tab and if there is 25000 such pairs under the ToP, he will get a Skoda car!


Let us make it easy to guess the total benefit of the pyramid organization from such single ToP subscriber 25000x3x400=30000000. Yes, you are not mistaken; the fraudster can earn a hefty amount of approx Rs. 3 crores! So, giving a skoda car as incentive is not a big deal! We shouldn’t forget that the huge income of the fraudster is nothing other than the great loss to the poor people of the state.

Now let’s examine why such scheme is viable to operate in Assam only. The reason behind the rise of ponzi schemes like Saradha, Jeevan Suraksha, Ramel etc is same with the case of this pyramid schemes. Lack of financial literacy, financial inclusion and the anti-poor attitude of the formal financial system are the major reason behind this menace. Financial literacy is a must to protect the financial vulnerability of the poor of the state. Moreover, the status of financial inclusion is worse in Assam. Business Correspondent model ‘Swabhiman’ has become a liability for the banks. At the same time the 58 PoPs identified by Pension Fund Regulatory and Development Authority (PFRDA) are not poor friendly. The fraudsters can read the weakness of the financial system in Assam and they are making cash on it.

This fraud scheme is reaching the interior parts of the state like wildfire. Districts like Barpeta, Nagaon, Dhubri etc are more prone. In fact a huge network has already been built within a couple of days. Some of the subscribers are even thinking that this is the only way to get the PRAN card!

The fear is not only to lose the Rs. 500 alone, but to lose the entire life savings of the poor unorganized workers. Our fear is based on some crucial documents. We have accessed some documents which clearly indicate that even some of the government machinery is also involved in this fraud campaign. We are not disclosing those documents here to help the administration to nab the fraudsters.

We hope, government will wake up and take action against those fraudsters.