Story of a Cashless Village in Rural Karnataka

January 31, 2017
By Rang De Team
A trip to the bank used the take up the better part of the day before a a branch set up services in the village

When we heard about Chandagalu, a village situated some 100 kms from Bangalore in neighbouring Mandya district that had successfully gone digital with the help of a local bank, we were keen to find out the situation on the ground.

In the wake of the government’s move to demonetize large value notes, the country has realised the urgent need to switch to cashless forms of payment.

The informal sector, estimated at over 40% of the economy, has been severely hit because of the cash crunch. It was a surprise to know that a small village has already made the switch well in advance of current events.

Mr Uday, the current bank manager, stated that the bank has opened over 6000 accounts, handed out 600 debit cards — the younger, tech-savvy generation are the primary users of cashless mobile transaction technology while the elders have caught up as well.

“All of us had to travel 8–10 kms to the bank in a village nearby to access banking services. The lack of direct bus services meant that a visit to a bank could take nearly a day,” Bharati, a member of the Gram Panchayat, told us.

Nearly 75% of the village was covered under the the Pradhan Mantri Jan Dhan Yojayana (PMJDY) scheme and the benefits from various government schemes are directly transferred to the bank accounts reducing corruption.

Pavan, a 2nd year science student, told us that all of the youngsters use mobiles for most of their transactions — from paying bills, transferring money to daily mobile recharges.

Filling in the small information gap — information about account balance, access to transaction history, notifications about transaction details — is also making a difference in people’s lives.

“I don’t have to go all the way to the bank in order to find out my balance. When someone tells me they have made a payment, I can immediately verify it. It is no longer an issue of trust,” confessed Mahesha, a marginal farmer.

Sugarcane cultivation and processing is one the mainstays of Chandagalu’s economy

But like in most other places in the country, going cashless has only succeeded in the payment side of the equation. Credit does not come without the human route even as living conditions worsen and the need for loans are increasing.

With failing monsoons, the future prospects for the village appear bleak as well.

“I harvest 120–130 quintals of paddy every year but this year the harvest is just 30 quintals,” Shivakumar, Bharti’s husband, explained.

With a Rs. 2.5 lakh agricultural loan looming over his head and a poor paddy harvest, Shivakumar is unsure about sowing rabi.

“The life of a farmer is tough. This year, there is no price and neither is there rain.”

“Our life is spent in the sun, while yours is spent in the shade,” he bemoaned.

Jayalakshmi, a landless labourer with roots in Tamil Nadu, was worried about the low prospects of employment due to crop failure. Jayalakshmi and her husband depend on dairy farming and animal husbandry for sustenance but she was unable to get loans from the bank due to lack of collateral.

While the youth are moving towards cash transactions, the elderly people in the village still prefer cash payments over digital banking

“It is very hard to get the loan applications passed as a lot of us do not have collateral and the banks are wary about lending us money,” Pavan, the university student, said.

While the village is still some way away from taking up online banking, especially when it comes to accessing credit digitally, the youth are moving towards online transactions.

Access to financial services has made a real difference in the lives of the people but access to collateral-free, affordable credit has not yet gone the cashless route.

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