EXTENT AND NATURE OF FINANCIAL EXCLUSION OF TRIBES...

Chapter 6 Extent and Nature of Financial Exclusion of Tribes

Financial Exclusion among the Scheduled Tribes: A Study of Wayanad District in Kerala 151

Chapter: 6

EXTENT AND NATURE OF FINANCIAL EXCLUSION OF TRIBES

6.1 Exclusion from Bank Account (Banking Exclusion) 6.2 Credit Exclusion 6.3 Exclusion from Insurance: An Introduction 6.4 Exclusion from Pension Schemes 6.5 Concluding Observations

6.1 Exclusion from Bank Account (Banking Exclusion)

The access to using banking services is considered as a universal need as it is

“fundamental to enable full participation in economic and social life” (Sinclair, McHardy,

Dobbie, Lindsay, & Gillespie, 2009). The lack of it may stigmatize the people, leading

even to social exclusion (Anderloni, 2008). Having a bank account is imperative in the

sense that it is an entry into an array of financial services, which can be offered to people

to mitigate different type of shocks that can come in their way. Having bank account is an

important precondition to participate in the economy in which a person lives

(Gloukoviezoff, 2007). In simple parlance and in its very raw form financial exclusion is

generally understood to connote the condition of not having availed of bank account or

transaction account from a formal bank. This is because, the primary and the fundamental

financial service that one should get in the realm of finance is to have an account in a

formal bank with all facilities that such an account offers. In the study area, which we

have covered in our analysis, there are banks both public and private under the formal

system to offer bank accounts to tribes, implying that the supply side bottlenecks, as far as

the banking infrastructure is concerned, appears apparently absent in the study area.

Moreover, supplying bank accounts do not pose any threat to banks as no risk is involved

in it. Often we observe bank staff conducting mobile account opening facilities in some

occasions seemingly to fulfill their targets of financial inclusion. Hence, our first attempt



is to look into how many tribe households have secured bank accounts from the formal

banking system.

Contrary to general perception, it is found that banking exclusion, that is exclusion

from having a savings bank account, is extremely negligible (around 5 percent) among

the tribal communities(Figure No.6.1). Obviously, the drive of banking inclusion

strategies that have been aggressively followed under the stewardship of Reserve Bank of

India might have contributed to this huge number of tribes holding a bank account.

Nevertheless, what is observed here is just a picture of tribes holding at least a bank

account or those who have opened a bank account irrespective of whether they use it or

not. What is noteworthy is that approximately 95 percent do hold an account, while the

rest of the story remains to be narrated in the sections to follow.

Figure 6.1 Extent of Exclusion from Bank Accounts (Savings Exclusion)

Source: Field Survey, 2012.

After having seen that the extent of banking exclusion or savings bank exclusion is

the lowest among the tribes, it is worthwhile to look into whether there exist any

differences among tribe communities in respect of their access to bank account. For this

purpose, the study has run a Chi-Square Analysis and the results of which are summarized

below. First, we shall have a look at the following table (Table No.6.1), which reveals

that amongst the tribes the Kuruma tribe has 97.4 percent of its households having access

to savings bank account with a formal banking institution, while the Paniya tribe, both a

backward and a non-primitive tribe have 93.1 percent of households with savings bank

accounts. Chi-square test reveals that there is no significant difference among tribe

communities in respect of having bank accounts (Table No.6.1).

Having bank

Account95%

Having No bank Account

5%

Other5%



Table 6.1 Status of Having Accounts-Tribe Wise

Status of having bank accounts Tribal Communities

Total Kurichya Kuruma Paniya Adiya

Yes, do have bank accounts 96.20 97.40 93.10 96.60 94.80

Not having bank accounts 3.80 2.60 6.90 3.40 5.2

within tribal group 100 100 100 100 100

Source: Field Survey, 2012. Chi-square P value is .345 (Not significant)

6.1.1 Type of Bank Accounts

In the preceding section, our endeavor was to examine the status of holding

account among the tribes that is whether the tribes hold bank accounts or not, irrespective

of the type of account. We know that banks offer different type of accounts viz. savings

bank account, current account, recurring deposit account, and deposit account to the

customers. Apart from these, with the implementation of MGNREGS programme, the

workers who avail of the works offered by the MGNREGS are mandatorily required to

open accounts with banks, through which their remuneration would be paid. Thus, this

scheme has added one more account, the MGNREGS account, which has become very

popular in recent times in rural areas. Besides this, we know that India has one of the

largest postal net works in the world, and more over post offices are popular in rural

areas. Therefore, accounts with the post offices are also reckoned as a type of accounts

relevant for our study. From the discussions which we had with the bank officials and

tribal promoters, we have come to know that many households among tribes tend to have

both savings bank accounts and NREGS account, and hence we have also added one more

category, namely ‘both Savings bank and NREGS account category.

Table 6.2 Tribe Wise Distribution of the Type of Accounts

Type of Account Tribal Communities


Savings Bank Account 31.00 44.60 15.20 33.30 25.30

Post Office Account 1.00 0.00 0.00 7.00 1.10

NREGS Account 44.00 14.90 68.70 33.30 50.80

Both SB Account and NREGS Account 24.00 40.50 16.00 26.30 22.80

% within tribal group 100 100.00 100 100 100.

Source: Field Survey, 2012. Chi-Square Test P value is .000 (Significant)



The above table reveals the type of bank accounts, which the tribal households

hold (Table No.6.2). It is evident that most of the tribe households posses MGNREGS

account, showing the phenomenal importance that the MGNREGS programme has

received among the tribes (Dreze & Khera, 2011). However, the percentage of tribe

households holding Savings Bank Account alone appears to be only 25.3, while 22.8

percent hold both Savings Bank Account and NREGS account together. This is because

of the fact that MGNREGS account has been considered as a special purpose account,

which is opened to receive income arising out of works done under the MGNREGS

programme. It is interesting to note that tribes relatively hold less number of post office

saving bank accounts. Although the study has included two more categories in the

interview schedule viz. current account and recurring deposit account, in the analysis we

have found none holding such accounts.

Our next attempt in this section is to investigate into inter tribal differences in

holding different type of accounts. First, we shall have a look at the tribe wise distribution

of the type of account. Among the tribe communities, the Kuruma tribe has exhibited a

distinguishing picture as exactly 44.60 percent of households belonging to this tribe hold

savings bank account and 40.50 percent hold both saving banks and MGNREGS account

(Table No.6.2). The percentage of Kuruma households holding MGNREGS account alone

hovers around just 15 percent. None from this tribe appears to have secured a Post Office

Account. In contrast to this, the Paniya tribe has not fared well in possessing different

type of accounts. Its historical backwardness has reflected on their pattern of holding

bank account as well. Among the Paniya community, only 15.2 percent hold savings bank

account alone where as 68.7 percent hold MGNREGS account not combined with the

Savings Bank Account. The percentage of Paniya households holding both Savings Bank

account and MGNREGS account hovers around only 16 percent. Quite interestingly, it

appears, however, that the Kurichya and Adiya tribe, respectively a forward and

backward tribe community, share seemingly similar status in respect of the type of

account they hold. For instance, the percentage of Kurichya household possessing savings

bank account is slightly lower (31 percent) than that of the Adiya household (33.3

percent). Similarly, regarding both Savings bank account and MGNREGS account,

amongst the Kurichya and Adiya tribes respectively 24 and 26 percent hold these

accounts. The holders of Post Office Savings Account are relatively more amongst the

Adiya tribe (7 percent). It again astonishes that amongst the Kurichya tribe 68.7 percent



hold only MGNREGS account. The reason why Kurichya tribe hold more MGNREGS

account is that members of this community are more actively involved in MGNREGS

work on account of the awareness of this programme amongst this community.

Let us now turn to the Chi-Square test to see whether there prevails any significant

difference amongst these tribe communities with regard to the distribution of different

type of bank accounts. The analysis shows that since the P value is .000 at 5 percent level

of significance, there is significant difference in respect of the distribution of different

type of bank accounts (Table No.6.2).

6.1.2 Banks in which Tribes have their accounts

Now, it is imperative to look into the banks, in which the tribes have opened

accounts. It has been briefed at the outset that in its simple parlance financial exclusion

connotes exclusion from the formal banking institutions. Therefore, in the list of banks,

which we consider here, we encompass, Nationalized Banks, Scheduled Private Sector

Banks, Regional Rural Banks, Cooperative Banks, and Post Offices. As far as the

Regional Rural Banks are concerned, they have been popular in the Malabar Region of

Kerala, although recently they have started spreading across southern Kerala as well.

Table 6.3 Banks in which Tribes have Accounts

Name of Institutions Tribal Communities

Total Kurichya Kuruma Paniya Adiya Nationalized Banks 25.00 90.50 75.70 52.60 64.60

Scheduled Private Sector Banks 1.00 1.40 0.00 1.80 0.60

Regional Rural Banks 67.00 5.40 23.00 35.10 31.00

Cooperative Banks 6.00 2.70 1.20 3.50 2.70

Post Offices 1.00 0.00 0.00 7.00 1.10

Total 100 100 100 100 100

Source: Field Survey, 2012. Figures are in percentages

Unsurprisingly, a little more than 64 percent of tribes have accounts with the

nationalized banks, especially the State Bank of India, State of Bank of Travancore,

Syndicate Bank and the Canara Bank, while in Regional Rural Banks roughly 31 percent

of tribes have opened accounts. This perhaps compels us to “fall back again on the



commercial banking model for seeking a satisfactory solution to the problem of

increasing financial inclusiveness” (Patil, 2010). Only around one percent has obtained

accounts from the Scheduled Private Sector Banks, mainly the Federal Bank Limited. The

role of Cooperative Bank in offering accounts to tribes appears to have been relatively

poor as only 2.7 percent of tribes have accounts with the Cooperative Banks. This

vindicates the opinion (Patil, 2010) that “the experience so far indicates that the

cooperative movement is bogged down in a political quagmire making it an undependable

route for financial sector inclusion”. In this background, we find nothing bizarre in more

tribes having opened accounts with the nationalized and regional rural banks. Moreover,

in the study area banks from these two groups have been widely spread.

Tribe wise distribution evidently brings us some appealing facts about the relative

importance of different banks in offering services. For instance, Kurichya community

have more accounts with the Regional Rural Banks (67 percent), while the Kuruma (90.5

percent), Paniya (75.7 percent) and Adiya (52.6 percent) have obtained relatively more

accounts from nationalized banks. Only 25 percent Kurichya household have accounts

with the Nationalized Banks. It is to be observed from the table that Kuruma tribe’s

reliance on the Regional Rural Banks for savings bank accounts appears to be abysmally

low at 6 percent. Nevertheless, the distribution of tribe household based on the name of

banks in which they have accounts has nothing to do with the core of our analysis. Many

factors, which perhaps lie beyond the limit of this study, might have been at work to

entice tribes to prefer a particular bank for opening account.

6.1.3 Reasons for Exclusion from Having Bank Accounts

Now a peep into the factors that have culminated into the exclusion of a meager 5

percent of tribes from having bank accounts is necessary. It is apparent from literature on

financial exclusion that the factors leading to financial exclusion, more particularly

banking exclusion, could be compressed into broad five factors viz. Price Exclusion,

Marketing Exclusion, Condition Exclusion, Access Exclusion, Self Exclusion and

Geographical exclusion (Sinclair, 2001). Not all these factors when taken individually

may be as relevant to the tribal communities as it applies to a general population.

Nevertheless, for analytical exercise it would be apt to enquire about these factors leading

to banking exclusion of tribes in the study area.



Table 6.4 Reason for Exclusion from Bank Accounts

Reason for Exclusion

Tribal Communities Total Kurichya Kuruma Paniya Adiya

Access Exclusion 0.00 0.00 11.10 0.00 7.70

Condition Exclusion 25.00 50.00 0.00 50.00 11.50

Marketing Exclusion 0.00 0.00 16.70 0.00 11.50

Self Exclusion 75.00 50.00 72.20 50.00 69.20

Total 100 100 100 100 100


As the table portrays (Table No.6.4), one cause of banking exclusion namely

geographical exclusion which arise either due to the lack of sufficient number of bank

branches or due to the closure of existing braches, called ‘geographical desertification’ in

the literature on financial exclusion, has rarely been cited to be a factor resulting in

banking exclusion in this study1. Of the rest of the four causes shown in table, we find

that most of the respondents excluded from having bank accounts have suggested that

they own no account with bank because of reasons attributed to themselves. Needless to

add, one needs to explore on this ‘self exclusion’, the most frequently cited cause of

banking exclusion (69 percent). Condition exclusion has been cited to be the second most

important reason contributing to banking exclusion. Around 12 percent of the respondents

have opined that conditions attached to opening bank accounts tend to dissuade them

from attempting to open accounts. The other two types of causes have also been cited as

factors leaders to the banking exclusion of the tribes.

As regards tribe community approach to the causes of banking exclusion, it is

obvious from the table (Table No.6.4) that 75 percent of Kurichya tribe has cited self-

exclusion as the most important factor discouraging them from opening accounts. The

Paniya (72 percent) and Kuruma (50 percent) communities have also cited self-exclusion

as the main cause of banking exclusion. Hence, it can be presumed that financial

exclusion is self-driven, or demand driven, as supply side bottlenecks are apparently

insignificant. Thus, it is obvious that self-exclusion has been singled out as the main

1 It is to be noted here that ‘current debates over the pattern and causes of financial exclusion have moved beyond the issue of geographic proximity to other aspects (Sinclair, McHardy, Dobbie, Lindsay, & Gillespie, 2009).



reason for banking exclusion among the tribes. To gauge into more aspects of self-

exclusion, one needs to conduct Focus Group Discussion (FGD) ensuring the

participation of selected respondents from the sample.

6.1.4 Reasons for Taking Bank Accounts

In the preceding section, we have observed that an overwhelming number of tribe

households in the study area are in a position of having received at least one bank

account, and most of them hold either a savings bank account or an MGNREGS account.

Perhaps, owing to the wide popularity that MGNREGS has received, it is observed that

the tribe households, regardless of the community in which they belong, hold both

savings bank account and the NREGS account. This being the picture of the status of

holding bank accounts among the tribe households, now it would be of interest to

investigate into the reasons that influenced the tribes to open accounts with banks. As we

know for anthropological peculiarities tribes, especially the backward tribes have been

generally averse to using the services of modern financial institutions, and hence, probing

into the reasons for opening accounts would throw light on the change in the behavioral

pattern that has happened to the tribes thanks to their increasing openness to the outer

world. Below we provide quantitative information as to what have been the reasons cited

by tribes for opening accounts.

Table 6.5 Reasons for Taking Bank Accounts

Reason for Taking Accounts Tribal Communities Total

Kurichya Kuruma Paniya Adiya Self Decision 48.00 58.10 13.60 24.60 29.1 Pressure from Banks 3.00 13.50 9.50 24.60 10.5 Pressure from relatives and friends 2.00 9.50 4.90 12.30 5.9 for NREGS 47.00 18.90 72.00 38.60 54.4 Total 100 100 100 100 100


As the table exhibits (Table No.6.5), the study has put forth five possible reasons

that might have acted as compelling factors behind tribes opening accounts with banks.

Of course, the first is ‘Self Decision’, and around 29 percent of tribes have cited this as

the main reason for taking accounts. Indeed, how to delve on the reason of ‘self decision’

is a matter to be fathomed, for which we really need to rely on sources other than the pure



statistical data. Nevertheless, more enticing is the role of MGNREGS, an employment

guarantee programme, in forcing the tribes to open bank accounts. The mandatory

practice under MGNREGS is that the payment is disbursed to the workers via bank

accounts, which make owning, and operating bank accounts unavoidable for all the

beneficiaries of MGNREGS, no matter how effectively and frequently they use it. It is

here we have to ponder over the influence of labor market in the process of inclusive

growth and more particularly in the context of widening access and use of financial

services among the tribes. Referring to the Integrationist Approach to Financial Inclusion

that has been elaborated on in an earlier section in this work, we reiterate that the best

way of connecting people with finance and thereby ensuring their participation in the

whole gamut of economic and social process is nothing, but first to connect the people

with the labor market. In fact, what MGNREGS has done in the case tribes is this. The

data captures from this study also corroborates this aspect, where it has been find that an

overwhelming percentage of tribes, that is in the vicinity of 54 percent, have cited their

involvement in MGNREGS as the main reason for taking bank accounts. Since Tribes

lead a community life involving much interdependence among households and members,

one may naturally expect that friends and relatives may have influences on the decision

making process of tribes with regard to opening bank accounts. However, contrary to this,

the present study has found that relatives and friends have hardly had any role in making

a household included in the banking system. This is evident from the fact that only a

meager 5.9 percent of tribes have opined that they took bank account consequent upon the

pressure exerted on them by their friends and relatives. In the light of financial inclusion

drive that has been on an unprecedented pace in India under the direction of RBI, the

pressure from banks on tribes for opening accounts should have been a major reason for

opening bank accounts. Nonetheless, the data in this study has hardly anything

substantiate to suggest that banks have been pressurizing tribes for opening accounts. The

table speaks of the fact that only 10.5 percent of tribes have reported that they opened

accounts following pressure from banks. Now, our endeavor is to understand whether

different tribe communities exhibit any difference in respect of the reasons for opening

banks accounts. This would through light on the factor, which has worked well for a

particular tribe community in their decision of opening accounts with banks.

Looking at the table (Table no.6.5), it is obvious that 47 percent of Kurichya

households choose to open bank accounts merely because of reasons attributed to



MGNREGS and nearly 48 percent owns bank accounts because of their own decision.

Only 3 percent and 2 percent of Kurichya households hold banks account because of the

reasons viz. pressure from banks and pressure from relatives and friends respectively. For

the Kuruma tribe the dependence on MGNREGS for opening accounts is considerably

very less, which is clear from the fact that only around 19 percent have suggested

MGNREGS as the root cause for opening accounts whereas 58 percent consider ‘self

decision’ as the main reason for opening bank accounts. Not surprising is the role of

MGNREGS in tempting the households from the Paniya tribe to have bank accounts. It is

found that an overwhelming percentage, that is 72 percent, of Paniya households hold

account because of their participation in MGNREGS. The influence of self-decision (only

around 14 percent) is remarkably very less as far as the Paniya tribe is concerned. Among

the Adiya tribe, another backward tribe under our study, while approximately 24.6

percent each cite self-decision and pressure from banks as the main factor forcing them to

have bank accounts, around 39 percent is of the view that it is their participation in

MGNREGS, which has prompted them to open bank accounts. Since the P value in the

Chi-Square Test is less than .05, the study concludes that there is significant difference

among tribe communities as far as the factors that influence them to open accounts are

concerned.

6.1.5 Current Balance in the Pass Book

The next indicator to understand as to how extensively and effectively tribes use

banks accounts is to have a look at the balance amount recorded in the Passbook. Since

tribes are low-income people, it is unusual to expect them to keep large sums of money in

accounts. However, a check at the balance figures would obviously provide us some light

into the habit of saving or keeping money with the bank accounts. Needless to add that

collecting information on balance kept in the passbook is rather a difficult exercise as

tribes are reluctance to share such evidence with the interviewers. Lack of financial

illiteracy among the tribes could also make the collection of such recorded data a tiresome

endeavor. Luckily, in certain cases the respondents showed the magnanimity to disclose

their passbook records before the researcher. Nevertheless, in most of the cases the

researcher found it difficult to elicit data on the balance kept in the passbook by the tribes.

Generally, it has to be taken granted that the tribes do not appear to be interested in such

records, rather they are curious about what they receive from different sources.



Table 6.6 Descriptive: Current Balance in Accounts

Tribes N Mean Std. Deviation Std. Error Minimum Maximum

Kurichya 100 405.0000 579.2062 57.92062 100 5000

Kuruma 74 724.3243 732.5712 85.15967 100 5000

Paniya 243 272.8395 288.6327 18.5158 100 1500

Adiya 57 457.3684 302.6934 40.09272 100 1200

Total 474 393.3966 481.2836 22.10609 100 5000


Test of Homogeneity of Variances

current balance in pass book

Levene Statistic df1 df2 Sig.

9.128 3 470 .000

Table 6.7 ANOVA: Current Balance in Passbook

Sum of Squares df Mean Square F Sig.

Between Groups 11882469.214 3 3960823.071 19.058 .000

Within Groups 97680362.220 470 207830.558

Total 1.096E8 473


Average current balance is a ready pointer towards the overall position of the

current balance kept in accounts by all tribe household. In this analysis, we have found

that the mean current balance is estimated at Rs.393.396 only which is by any yardstick

may appear to be dismally low. The minimum and maximum current balance is Rs.100.00

and Rs.5000.00 respectively. The range is also too big denoting huge difference amongst

tribe households in respect of the current balance kept in accounts. All tribe communities

have Rs.100 as the minimum balance. This is due to the influence of MGNREGS account.

The beneficiaries of MGNREGS should adhere to the rule of keeping Rs.100.00 in the

account just to keep the account active.



More startling is the difference that we observe among tribe communities with

regard to the mean values of balance in the passbook. A glance at the table (Table No.6.6)

suffices these differences in a better way. What is of interesting is that there does not exist

any difference in the case of minimum balance kept in the account while the maximum

balances differ widely. Unsurprisingly, Kuruma and Kurichya tribe have the maximum

amount of Rs. 5000.00 kept in the savings bank account whereas the Paniya and Adiya

tribes have Rs.1500.00 and Rs. 1200.00 respectively. The economic and social

backwardness that these two tribes exhibit get reflected in their tendency to keep

abysmally low balances in the passbook. As regards the mean balance, we find that

Kuruma tribe has the maximum mean balance, which is to the tune of Rs.724.32. The

Kurichya community has Rs.405 as their mean current balance kept in the account. More

worrisome is the trend among the backward tribes. The Paniya tribe has Rs.272.83 as its

mean balance while the Adiya tribe has Rs.457.36. These figures undoubtedly tell us the

fact that although banking exclusion is not rampant among the tribes, the actual use of the

savings bank account for keeping money balances is not up to the mark. A pertinent

question that arises now is as to the resourcefulness or the saving capacity of the tribes,

which deserves to be fathomed.

Now, one has to look at the differences that we observe among the tribes in respect

of their tendency to hold balances in the account for which we go in for ANOVA. The

table portraying the results of ANOVA reveals that there prevails significant difference

among tribe communities with regard to the balance amount held in the account. Having

done ANOVA, it is of inquisitive interest to look at between which groups of tribe the

difference is more pronounced, for which the study relies on the post hoc analysis.

The table (Table No. 6.8) evidently shows that when we compare the case of Kurichya

with their counterparts we observe that the difference is significant between the Kurichya

and Kuruma tribes. In addition, when we pair Kuruma with other tribes, significant

difference lies between Kurichya and Paniya tribes, and we find significant difference

between Paniya and Kuruma when Adiya is placed against other tribes. Thus, the

emerging picture is that Kuruma is distantly different from other tribes in respect of

holding balances in the account.



Table 6.8 Multiple Comparison: Current Balance in the Passbook

(I) tribal group (J) tribal group

Mean Difference (I-J) Std. Error Sig. 95% Confidence Interval

Lower Bound Upper Bound

Kurichya Kuruma -319.32432* 102.99013 .012 -587.2376 -51.4110 Paniya 132.16049 60.80816 .137 -26.2735 290.5945 Adiya -52.36842 70.44306 .879 -235.3296 130.5927

Kuruma Kurichya 319.32432* 102.99013 .012 51.4110 587.2376 Paniya 451.48482* 87.14932 .000 222.8176 680.1521 Adiya 266.95590* 94.12542 .028 21.1259 512.7859

Paniya Kurichya -132.16049 60.80816 .137 -290.5945 26.2735 Kuruma -451.48482* 87.14932 .000 -680.1521 -222.8176 Adiya -184.52891* 44.16176 .000 -300.3559 -68.7020

Adiya Kurichya 52.36842 70.44306 .879 -130.5927 235.3296 Kuruma -266.95590* 94.12542 .028 -512.7859 -21.1259 Paniya 184.52891* 44.16176 .000 68.7020 300.3559

*. The mean difference is significant at the 0.05 level. Games-Howell Test


To conclude, the low balance or keeping only mandatory balances in the account

stands testimony to the fact that tribes are not using the bank account properly and

effectively. They keep it for the sake of availing remuneration or money from the

government. Obviously, just an increase in the number of people holding bank account

without serving the real purposes, for which the access to such accounts is meant, is

something that does not need to be appreciated. It pinpoints the fact that the banking

inclusion strategies that have been vigorously followed in recent times have not yielded

the desired results rather than making it a number game where merely the number of

people holding bank account is reported to have been skyrocketed mostly through

government run programmes (Thingalaya, 2009). Suffice to say that we need to probe

into in detail whether the tribes have received anything in real terms due to this all

exercise of number game gimmicks in the name of banking inclusion, which, however,

does not fall within the purview of the present study. Now, it would be of paramount

interest to see whether tribes have been offered or using other services associated with

having accounts in banks, which are imperative in making inclusion effective. Of other

associated services, we consider only two, holding ATM/Credit card being the first one



and the provision of Cheque facility, the second one. First, we shall focus on ATM/Credit

Card.

6.1.6 Tribes holding ATM/Credit Cards

In a straightforward commonsensical view, one would argue that tribes have

nothing to do with modern developments in banking as they are not even as exposed to

the primary functions of financial institutions, as is the general population. Although this

contention may seem to be true, the field experience is not that much pessimistic. Tribes

do have ATM cards, no matter whether they use it or not. Today, banks issue ATM cum

debit cards simultaneously with the opening up of accounts, especially savings bank

accounts. Nevertheless, unlike ATM cards, normally banks issue Credit Cards on demand

and that too after having been satisfied with the eligibility of the customer.

In this study, we have never observed any household having both ATM and Credit

cards. Nor have we found any household possessing Credit Card alone. Nonetheless, it

has been observed in the study, that a meager 6.8 percent possess ATM cards (Table

No.6.9). This implies that technical financial exclusion is rampant among the tribes

perhaps because tribes are averse to using such services. Banks, on the other hand, hardly

find any use in offering high-end services to tribes based on the presumption that tribes

never use it. It is evident from the data that among tribe group, ATM cards are widely

held by the Kuruma tribe, a forward tribe. Paniya and Adiya tribe hold comparatively less

number of ATM cards, which is quite natural considering the economic backwardness of

these tribes. The low number of tribe households holding ATM cards clearly shows that

tribes are inclined not to use ATM cards and the banking services that have been offered

to tribes are limited to just opening an account in the name of the tribes. To understand

the inter tribal variation in holding ATM/Credit Cards Chi-square Tests have been

conducted, and the results have turned out to be significant at 5 percent level, evidently

revealing that there is significant difference among the four tribes in respect of holding

ATM/Credit cards (Table No.6.9). Although holding of ATM card shows a remarkable

improvement in the financial behaviors of tribes, the use of ATM/Credit card matters a

lot. Let us now discuss the usage pattern of these facilities by the tribes.



Table 6.9Tribes Holding ATM/Credit Cards

Status of ATM holding

Tribal Communities


Only ATM Card 5.00 17.60 4.50 5.30 6.80

Neither ATM nor Credit Card 95.00 82.40 95.50 94.70 93.20

Total 100 100 100 100 100


6.1.6.1 Usage of ATM Card among Tribes

After examining the number of tribe households holding ATM cards it would be

interesting to see whether they have been using it or not. Even the general population

having ATM cards are averse to using it because of their shyness in using technology. In

our study, it is found that only 28 percent of those holding ATM card have used them

once and a meager 13 percent have used more than one time (Figure No.6.2). A

significant percentage of household hovering around 60 percent have never used ATM

cards. It implies the fact that tribes, perhaps like other segments of population belonging

to the higher realm of the social ladder, might not be interested in applying technology in

dealing with financial matters due to the lack of technical knowhow.

Figure 6.2 Usage of ATM/Credit Card by Tribes


Studies have shown that people despite holding ATM facilities are averse to using

it properly due to the lack of technical issues that they have to confront with while

operating it alone in an ATM machine. Some may find it worthless, as they have hardly

59%28%

13%

Never Used Used Once Used more than one time



any business to do with the ATM facilities. Let us now discuss why tribes are reluctant to

use it.

6.1.6.2 Reasons for not using ATM

Now it would be worthwhile to enquire into why the tribes holding ATM cards are

reluctant to use it. Among various reasons suggested by tribes, the study has observed

that 31 percent of them opine that they have never used it because they do not know the

mechanism of operating it (Figure No.6.3). Nearly 32 percent hold the view they have not

felt any need of using ATM chiefly due to the reason that they do not have enough money

to keep in their accounts. What is of curious interest is the fact that approximately 37

percent of the tribe households have not operated ATM cards because of technical fear

that they may lose money while operating the ATM machine. We find no tribe having

used ATM/Debit Cards for buying commodities. Although certain shops in the city where

tribes regularly visit have swiping machines, tribes have never used it for the mere reason

that they never knew they could use such facilities. Neither have shoppers informed the

tribes that they could use such facilities provided they do possess ATM/Debit cards.

Moreover, using such cards for transaction would enhance the social status and

self-esteem of tribes, giving them more avenues for better socialization and entry into the

modern form of transaction facilities. As the supporters of detribalization argue that tribal

dress itself is ‘a mark of inferiority and should be replaced by short and shirts’, we hope

using Debit card in this case would help them shed their inferiority status at least to some

desirable extent (Rustomji, 1989). All these pictures take us to the fact that time has

ripened enough to spread financial literacy among tribes along with the general literacy

programmes. Only by integrating tribes into modernity through productive and

constructive ways without jeopardizing their unique value system, can we bring desirable

changes and better financialization in tribal life. As has been mentioned earlier talking

about something like the use of ATM or Credit cards by the tribes may appear to be at

odds with the general perception about the life of tribes. But, it must be born in mind that

tribes, being a part of the society in which such developments take place at rocket speed,

should be made aware of such new tools of financial dealings regardless of whether they

would use it or not. Now, we turn to another service that banks generally offer, that is the

chequebook facility.



Figure 6.3 Reasons for not using ATM


6.1.7 Pattern of Holding Cheque Book by the Tribes

Chequebook is an important cash transaction instrument that banks offer to its

customers on demand. Cheques can be used to transfer money from one account to

another account, besides using it instead of pure cash for transaction purpose. Cheques are

issued to customers holding amount more than Rs.1000.00 in the Savings Bank account.

It is by virtue of issuing cheques, which can replace pure money in transaction purposes,

do we consider deposits as a component of the broad measure of money supply. Since

only banking institutions are empowered to issue cheque against the deposits that they

receive, we regard banks as not only the purveyors of money but also the creators of

money. As tribes do not have much cash balances being kept in their accounts they hardly

hold chequebook. The data we have from our study also proves this. Only around 6

percent of the whole tribes, which come under this study, have been issued chequebook.

Since banks issue cheque on demand, it can be inferred that the rest, approximately 94

percent of tribes, may not have demanded chequebook probably as they do not require it

(Table No.6.10). As tribes are a unique community having relatively low-income

resource, it may sound illogical to expect that they hold chequebook as in the case of

general population. Nevertheless, the meager number of tribes having chequebook clearly

points to the fact that tribes lag behind in using major financial services. Their inclusion

in the banking system on prima facie ends with having a mere bank account. No frills

have been added to their accounts.

31%

32%

37%

Don't know how to operate it No need to operate it

Fear of using ATM card



Table 6.10 Status of Holding Cheque Book

Holding Cheque Book

Tribal Communities


Yes, do hold. 16.00 9.50 2.40 0.00 6.10

No, do not hold. 84.00 90.50 97.60 100.00 93.90

Total 100 100 100 100 100


Looking at the tribe wise distribution of holding chequebook, it has been found

that only among the Kurichya tribe a substantiate percent of households have been issued

chequebook where as in the case of Adiya tribe not a single household has been found to

be holding cheque book (Table No.6.10). In the case of Kuruma, too, the status of holding

chequebooks is abysmally low. The Chi-square test conducted in this regard has come out

to be significant at 5 percent level, showing apparently that there is significant difference

among tribes in the case of holding chequebook.

6.1.7.1 Pattern of Usage of Chequebook

Like in the case of financial products, holding chequebook does not bear any

significance unless people put them into use. Hence, now, the study probes into the

pattern of using chequebook by the tribes, which helps us examine whether tribes are in

the habit of using banking services. From the data, as presented in the table, it is evident

that approximately 52 percent of the tribes with chequebook have never used them even

for one time. This also stands testimony to the fact that tribes generally do not make use

of available banking services. Tribe wise, the study has found that the tendency of using

chequebook, even at least once, is found to be more among the Kurichya tribe. Among

the Paniya tribe, majority of households, which own chequebook, have not used it even at

least once. This study has also enquired about the possession of passbook by the tribes

and found that tribes do possess passbooks; hence, an in-depth look into other aspects

pertaining to holding passbook remains unwarranted now.



Table 6.11 Pattern of Usage of Cheque Book

Usage of Chequebook Tribal Communities

Total Kurichya Kuruma Paniya Never used 43.80 57.10 66.70 51.70

Used at least one time 56.30 42.90 33.30 48.30

Total 100 100 100 100


6.1.8 Alternative Mode of Saving

As is evident from the figure no.1, it is obvious that approximately 95 percent of

the tribes do have bank accounts regardless of the use of other services they enjoy by

virtue of having it. Further, investigation into other related aspects of holding bank

accounts viz. minimum balance kept in the account, holding ATM and chequebook, has

nonetheless brought us a discouraging picture. It has been observed that inclusion of

tribes into the banking system dismally ends with having just a bank account in the sake

of including them into the banking net work or to claim some dole out from government

either in return of physical work done as in the case of MGNREGS or transfer incomes.

The pertinent question now is whether tribes owing to their peculiar socio-economic and

cultural features consider savings bank account as a means to park their small savings or

not. Unquestionably, Tribes are assumed to have a particular economic system with

traditional and seemingly outdated modes of savings. Hence, presumably it is uncertain

that they may make use of savings banks account as a way of parking their money should

they have income left after consumption.

In this background, undoubtedly it would be both fascinating and inquisitive to

examine the alternative mode of savings that tribes traditionally have been relying on for

years, of course for reasons peculiar to them. Not only tribes, but also even low-income

people among general population tend to rely on informal way of saving like keeping

money in liquid form (Kempson & Whyley,1999). It is because of this reason that the

study ventures into examining the alternative mode of saving for all tribes regardless of

whether they own bank account or not, presuming that even those having bank accounts

may have been resorting to their traditional alternative forms of saving.



As is obvious from the table (Table No.6.12) approximately a little less than 60

percent of tribes keep their money in liquid form rather than letting their hard-earned

money go into other sources. One important destination where tribes’ savings reaches is

chit funds, which are unarguably a popular way of saving especially in remote regions of

our country. ‘Any other mode’, including parking money with friends and relatives, is, of

course, an important mode of saving that tribes find better to rely on. Investing in

precious stones like jewelers, a valuable form of saving as far as the general Keralites are

concerned find no more takers among the tribes (only 3 percent). Since inquiry into

alternative mode of saving is important in the case of tribes, we desperately need some

more explanation into this aspect.

Table 6.12 Tribal Wise Distribution of Alternative Mode of Saving

Alternative modes of saving

Tribal Communities


Keeping Money in Liquid Form 51.00 30.30 70.10 57.60 58.60

Investing in Chit Funds 21.20 28.90 8.00 16.90 15.00

Investing in Jewels 1.00 5.30 3.10 3.40 3.00

Any other modes 26.90 35.50 18.80 22.00 23.40

Total 100 100 100 100 100


One may regard keeping money in liquid form as an outdated, crude, and primitive

way of saving which is not rationale from the point of view of economics, as it fetches

nothing to compensate the erosion of value of money because of soaring price level.

Nevertheless, for tribes to whom the terminology of erosion of value of money

consequent upon inflation is quite unknown and indigestible, we can seldom expect them

to save in banks. Hence, apparently tribes continue to consider saving with bank not as a

prime mode of saving money despite the penetration of formal banking institutions

although at snail’s pace into the tribal areas.

Now, we move on to examine whether there exists any inter tribal variation as far

as the choice of alternative mode of saving is concerned. The data presented in the above

table (Table No.6.12) speak volumes about the difference among tribes in respect of their

alternative modes of savings. Unsurprisingly, the table reveals that the Paniya tribe being



a backward tribe mostly nurtures the habit of keeping money in liquid form, that is around

70 percent of them keep money under pillows whereas among the Kuruma, a forward

tribe, only approximately 30 percent keep money under pillows unknowingly or

knowingly about the possible erosion of the value of money. Further, investing in chit

funds is comparatively popular among the Kuruma tribe which is not so among other

tribes. Paniya seem to be much disinterested in putting money in the business of chit-

funds. What is of utmost curiosity is that among the Kurichya tribes only one percent park

their savings in precious stones, the lowest among all other tribes groups, both forward

and backward. To see whether there is any inter tribal variation in the above said aspect

we have run a Chi-Square Test. Since P value is less than .05, we reject the null

hypothesis and state that there is significant difference among tribes with respect to their

alternative mode of savings. Now it would be pertinent to examine the opinion of tribes

with respect to different attributes of having savings bank account.

6.1.9 Opinion of Tribes about Different Attributes of Keeping Money in Bank Accounts

As we know, putting money in bank account rather than keeping them under the

pillow and mattresses has many advantages. Barring some well educated and informed

tribes having good socialization and commonsense in dealing with financial matters the

tribes in general do not know the technical aspects of these advantages. Considering this

lacuna in putting such questions before the tribe folk, we first attempted to elaborate on

such theoretical advantages of keeping money in bank accounts and then elicited their

responses. Major advantages we have listed are: 1. holding bank account nourishes the

habit of savings. 2. It insulates from soaring inflation. 3. Accounts help utility payments.

4. Accounts are easy to operate. 5. It is an entry to other financial services. We attempted

to rate the opinion of tribes on a five point Likert scale: Strongly Agree, Agree, No

Opinion, Disagree, and Strongly Disagree. The opinions elicited from tribes are tabulated

as follows.



Table 6.13 Opinion of Tribes with regard to the Advantages of having account (in Percentage)

Opinion

Statement

Strongly

Agree

Agree No

Opinion

Disagr

ee

Strongly

Disagree

Total

It boosts the habit of saving 26 53 11.9 3.4 5.7 100

It insulates from inflation 6.5 35.8 28.5 24.9 4.2 100

Helps utility payments 5 48 37.3 6.3 3.4 100

Easy to operate account 4.2 52.8 19.3 18.2 5.5 100

Entry to other services 2.7 9 14.9 45.7 27.7 100


As far as the fist advantage of savings account is concerned around, half of the

respondents agree that having accounts boosts the habit of saving in them although they

appear not to have been saving much with the bank accounts, which is evident from the

relatively low balance they keep in their accounts. Regarding the merit of saving with

bank, which insulates one from soaring inflation as it accrues interest rate, very few either

strongly agree or strongly disagree with it. However, relatively more respondents opine

that they agree with the capacity of bank accounts adding to their savings in times of

inflation. When informed about the usage of accounts and ATM cards thereof in helping

to meet payments requirements, tribes overwhelmingly agree with the view that accounts

are useful for utility payments. Surprisingly, more than a little half of the respondents

agree with the view that accounts are easy to operate. Nevertheless, sadly majority of the

respondents disagree with the view that accounts are regarded as entry to the world of

financial services offered by the banking institutions. The reasons for this could be

gauged from the lack of other services that the tribes enjoy from the banking system in

addition to mere namesake bank accounts they hold thanks to flagship porgrammes like

MGNREGS. Hence, it is apparent that the tribes have unfortunately ruled out the notion

that bank accounts are entry to the edifice of financial services. Paradoxically this is

against the findings of certain studies which found that ownership of a bank account is a

‘gate way’ to other financial products like credit and insurance (Hogarth & O'Donnell,

2000). Now, it is worthwhile to look into what happens to the extent of financial

exclusion among tribes, when we neutralize the effect of programmes making opening



accounts mandatory like the one, which we have referred in this work, MGNREGS. The

forthcoming section is an attempt in this direction.

6.1.10 Extent of Banking Exclusion sans NREGS Account

The figure that begins this chapter presents the extent of exclusion from banking

system in terms of having savings bank account. In that analysis, tribe households that

have opened accounts exclusively for receiving benefits under the MGNREGS was also

reckoned as households included in the banking system. The inclusion of MGNREGS

accounts has thus played a catalytic role in technically making near cent percent banking

inclusion as far as the tribes are concerned. Nevertheless, the discussions that precede this

section obviously take us to the belief that mere holding of bank account seldom serves

the purpose. Moreover, a brush up of the theoretical underpinnings of the strategies of

financial exclusion shows that there have been two ways of financial inclusion or doing

away with the opposite, the financial exclusion viz. the supply leading and demand

following measures. Of these two, the second one is advisable in the sense that it would

ensure a hierarchical ordering in the ownership of financial products which cements the

use of financial services by the households for many years whereas the first one is mostly

likely to be ceased to continue as soon as the inclusion is taken place in the form of giving

account.

Figure 6.4 Extent of Banking Exclusion sans NREGS Account

Source: Field Survey, 2012

What would happen to the extent of banking exclusion of tribes if accounts opened

exclusively for MGNREGS is not considered? MGNREGS makes it mandatory for all

beneficiaries to open account for disbursing payment through it. As the figure (Figure

No.6.3) reveals 53 percent of tribe households do not have accounts when the

MGNREGS account is not considered. That is 53 percent are excluded from the banking

system without MGNREGS where as only 5 percent are excluded with MGNREGS

47%53%

53%

Have Account Do not have Account



account. This shows the influence that MGNREGS has made on the extent of financial

exclusion/inclusion of the tribe household. To further probe into whether there is any

significance difference among tribal communities in respect of banking exclusion sans

MGNREGS account we have run a Chi-Square Test the result of which are elaborated as

follows.

Table 6.14 Extend of Banking Exclusion sans NREGS Account-Tribe Wise

Exclusion from Bank accounts sans

NREGS

Tribal Communities

Kurichya Kuruma Paniya Adiya

Have Account 53.80 82.90 29.50 64.40

Do not have Account 46.20 17.10 70.50 35.60

Total 100 100 100 100


As is evident from the table (Table No.6.14), taking away the influence of

MGNREGS account has done a little impact on the status of having bank accounts as far

as the Kuruma tribe is concerned. A little more than eight percent of the household falling

under this tribe still are included in the banking system. Nevertheless, the picture that

emerges from the Paniya tribe is worthy of mentioning. In this case, of this tribe, now

only around 30 percent of household are included in the banking system visa-a-visa with

a little more than ninety percent included when the NREGS account is included (Table

No.6.1). The position of Kurichya, a tribe that claims to have gone ahead of other tribe

communities in many development indices, does not seem to be encouraging. In the case

of Adiya tribe, nearly 36 percent are excluded from having bank account when

MGNREGS account is not considered. All these unquestionably point towards the fact

that tribe households exhibit interest in opening account not because of the feeling that

accounts are prerequisites for them to be a part of the exchange economy, but they do

open account merely to serve the mandatory requirements essential to receive monetary

dole out from the government. Since the P value in the above table lies below .05, it can

be inferred that there exists significant difference among tribes in respect of banking

exclusion when MGNREGS account is not considered.



6.1.11 Summary

Thus in this chapter we have highlighted the extent and nature of banking

exclusion among the tribal communities that come under this study. The study reveals

that banking exclusion on prima facie is not widespread among the tribes as ninety-five

percent of the tribe household in our study hold bank accounts. Simply put, they have not

been excluded from the banking services at least in the name of providing a bank account.

Looking from the use of banking services, we may have to assert that tribes have not

enjoyed the full benefits of having been included in the banking sector. In the case of

tribes, the study has found that most of the tribes have taken account just to bring in line

with the mandatory requirements by the government such as the disbursal of wage of

MGNREGS though the bank accounts. From this perspective, we may have to contend

with the fact that forcefully tribes have been asked to open accounts. We find hardly any

sign of demand following financial inclusion among the tribal communities. The effect of

MGNREGS account is enormously high which is evident from the hike in the percentage

of excluded from the banking services when we take away the MGNREGS account from

the analysis. The analysis of inter tribal variation with regard to banking exclusion and

reasons thereof provides us with interesting results. More worrisome is the preference that

the tribes show to some very remote and rude method of saving money even after availing

of bank accounts. The next section looks into other key aspects of financial exclusion

that is exclusion from the credit market especially from the formal credit market.

6.2 Credit Exclusion

Access to and use of credit is imperative to manage resources to smoothen the

effects of different kinds of shocks in one’s life span like income and employment shocks.

Going through the theoretical underpinnings of the problem of credit exclusion one could

comprehend the distinction that has been drawn between ‘access’ and ‘use’ of credit. As

is often understood, ‘access’ does not imply that those who have been offered credit

facilities do use it. Many people both in developed and developing world self segregate

themselves from using credit facilities even when such facilities are available at their

doorsteps.

As far as the tribes are concerned, we know that since they are generally low-

income people, they badly require quick credit but of small quantity. The real question is



how to address this peculiar credit need of the tribal folk when we experience that formal

banking institutions are reluctant to offer short-term credit as it affects their credit

operations, probably resulting in high operational costs and consequently low profit

levels. ‘Indebtedness’ connotes the meaning that indebted are caught in a plight as they

have expenditure surpassing income. This comes out to be a truism as far as the low-

income people as the tribes are concerned. Nevertheless, the pertinent issue is how they

cope with this mismatch between expenditure and income. Surely, to bridge the gap they

need to rely on short-term money management policies, which can be tackled by way of

knocking the doors of credit suppliers, either formal or informal. If they get access to

formal credit providers, which normally supply credit at reasonable interest rates, then it

is a sign of the fact that the system works to help them to smoothen the occasional short

fall in their income, providing much relief to this people. Greater the access to the formal

credit modes, greater will be the extent of their inclusion into the financial system.

The story, however, turns out to be precarious when it comes to the informal credit

suppliers. Indebtedness is the consequence of overreliance on informal credit sources by

the vulnerable low-income people like the tribes when formal credit sources become a

bane for them thanks to exclusionary conditions and onerous procedures. This makes

credit almost interest inelastic for the vulnerable and disadvantaged, fueling the demand

for informal credit even at exorbitant and unjustifiable usury. This high cost of borrowing

from ‘non-mainstream sources can lead them (the vulnerable) to a ‘cycle of indebtedness’

(Bridges & Disney, 2004). That said, however, one thing is apparent that if the credit

seeker happens to be as ineligible even as to borrow from informal credit sources, then

the situation warrants serious rectifications. This is in fact abject exclusion from the credit

sources, which may have serious deleterious repercussions on the economic and social

well-being of such people. Mostly, tribes being economically and socially backward at

least in the eyes of informal credit suppliers, who normally belong to the non-tribe

communities, in times of financial trouble they (the tribes) may feel themselves deprived.

6.2.1 Extent of Credit Exclusion (Both from Formal and Informal Sources)

Now, we first put forth a pertinent question as to what extent tribes have been

excluded from the credit market. For this, as mentioned in the preceding section we

followed the credit exclusion yardstick adopted by the NSSO, which measures whether a



particular household has been indebted or not, given the assumption that every household

desperately require credit.

Figure 6.5 Extent of Credit Exclusion


The results that we have got following this method are in fact very startling. Only

53 percent of tribe households have been indebted contrary to the 95 percent included in

the banking system by virtue of having opened an account with the formal banks (Figure

No.6.4). This apparently shows the extent of credit exclusion among the tribe households.

Viewing it from the definitional point that NSSO usually follows in respect of measuring

financial exclusion, one would have to be contented with the fact that only 53 percent of

the tribe households have been financially included, of which some of them are not even

included in the formal system as they have not been indebted to the formal institutions.

Tribal community wise examination of the status of indebtedness would perhaps provide

much insight into the inter-tribal variation in credit exclusion, which happens to be an

important objective of our study. As is evident from the table (Table No. 6.15),

households belonging to Kuruma community exhibit the highest percentage of

indebtedness whereas it is the lowest among the households under the Adiya community.

The high indebtedness in Kuruma tribe stands testimony to the fact that they appear to be

creditworthy for both formal and informal credit suppliers. The economic advancement

that this tribes is said to have achieved compared to other tribes may also be partly due to

the access to credit that this community enjoys over the years. Paniya and Adiya being

two backward communities appear to have been excluded from the credit market owing to

the economic and social backwardness of these tribes, resulting in their less

creditworthiness.

yes indebted53%

not indebted47%

Other47%



Table 6.15 Tribe Community Wise Distribution of Indebtedness

Status of Indebtedness


Yes, indebted

62 52 133 18 265

(59.60) (68.40) (51.00) (30.50) (53.00)

Not indebted

42 24 128 41 235

(40.40) (31.60) (49.00) (69.50) (47.00)

Total 104 76 261 59 500

(100) (100) (100) (100) (100)

Source: Field Survey, 2012 Figures in parenthesis are in percentages

Chi-Square Test P value is .000 (Significant)

To test whether the tribal communities exhibit any inter tribal differences with

respect to the extent of indebtedness to both formal and informal sources of credit we

have conducted a Chi-Square Test. As shown, here in the table (Table No. 6.15), the P

value lies below .05, implying that with more than 95 percent confidence we reject the

null hypothesis and state that there is significant variation in the extent of indebtedness

among different tribal communities that have come under this study. From the above

discussion, it has become evident that the extent of credit exclusion is rampant among the

tribes. Now, we attempt to probe into the source of indebtedness of tribal households.

6.2.2 Sources of Indebtedness: An Introduction

Broadly speaking we could categorize the sources of indebtedness into two:

Formal and Informal Sources. Formal sources encompass those financial institutions,

which are regulated by the government or those coming under the regulatory framework

of RBI. On the other hand, informal sources cover money lenders, money borrowed from

relatives and friends (‘relational capital’ as it is sometimes called) in sense that

institutional framework is absent to decide rate and service provisions in respect of these

types of credit sources. Access and use of finance originating from formal sources is a

good sign of financialization process that a society undergoes. Excessive dependence on

informal players in the field of credit supply is normally reckoned as something, which

deteriorates the economic and social well being of people. The difference between formal



and informal sources in the credit market lies in the price at which lending takes place.

Normally, the credit suppliers in the informal market charge exorbitant and exploitative

interest rates whereas regulatory mechanisms act as a watchdog over the charging of

interest rate in the formal credit market. Informal borrowers also facilitate ‘reciprocal

lending’, which is common among the low-income people, where if you pay back the

credit today you would be eligible to borrow the same tomorrow (Kempson, Bryson, &

Rowlingson, 1994). Thus it is generally held that informal sources of credit quickly

responds to the credit demand of the potential borrowers which is said to have given an

edge to the informal players over the formal players in the realm of supplying credit

especially to disadvantaged segments of society like tribes. Perhaps on account of this,

that ‘informal finance still represents a major source of credit for many households’ in

India (Carbo, Gardner, & Molyneux, Financial Exclusion, 2005). This is because ‘formal

financial institutions are often unable to meet the demand for grassroots credit’ (Tsai,

2004). With this brief note on the formal and informal credit, now the study proceeds to

analyze the picture that emerges in the present study.

6.2.2.1 Sources of Indebtedness

The following figure shows the source wise indebtedness of tribal households.

Evidently, 39 percent of all tribal households are indebted to formal sources and 61

percent indebted to informal sources, which are also sometimes designated as ‘non-status

lenders’ (Carbo, Gardener, & Molyneux,2007) in the literature on financial exclusion.

This relatively high extent of indebtedness to the informal system is a pointer to the extent

to which tribe households have been excluded from the formal financial institutions.

Figure 6.6 Sources of Indebtedness


39%61%

61%

Formal Informal



Now, we proceed to analyze whether there is any difference among tribal

communities with regard to access to different sources of credit viz. the formal and

informal credit. The following table (Table No. 6.16) throws light into this aspect of our

study.

Table 6.16 Tribal Wise Distribution of Sources of Indebtedness

Sources of

Indebtedness

Tribal Communities


Formal

26 38 37 2 103

(41.90) (73.10) (27.80) (11.10) (38.90)

Informal

36 14 96 16 162

(58.10) (26.90) (72.20) (88.90) (61.10)

Total 62 52 133 18 265

(100) (100) (100) (100) (100)


Analyzing the tribal wise distribution of sources of indebtedness it would be

obvious that informal indebtedness is highest among the Adiya households followed by

Paniya and Kurichya tribes. This is seldom unusual as these two tribes, Adiya and

Paniya, belong to the backward tribal category. Nevertheless, what is startling is the

increase in informal indebtedness in the case of Kurichya tribe, a forward tribe in terms

of many indices of development. On the other hand, in the case of Kuruma tribe formal

indebtedness is substantially high denoting the relative advancement that has been made

by this community in respect of accessing credit from formal sources. This relative high

indebtedness to formal credit is partly attributable to the remarkably high level of

common awareness about banking especially formal banking among the Kuruma tribe.

Paniya tribe usually observes the formal credit institutions with suspicion and regards

them as unfriendly to the credit needs whereas the informal lending agents are seemed to

be more approachable to the Paniya tribe. To see the general picture regarding the tribe

wise difference with respect to the dependence on formal and informal sources of finance

we have done the Chi-Square analysis. As the table reveals (Table No.6.17), since the P

value lies below the 5 percent level (0.000), we state that there is significant difference

among the tribal groups with regard to the indebtedness to the formal and informal

sources of credit.



Table 6.17 Chi-Square Tests: Sources of Indebtedness

Value df Asymp. Sig. (2-sided)

Pearson Chi-Square 38.525a 3 .000 Likelihood Ratio 39.384 3 .000

Linear-by-Linear Association 13.245 1 .000 N of Valid Cases 265

a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 7.00.


6.2.2.1.1 Indebtedness to Formal Sources of Credit

Now, we look into different type of formal sources of credit that the tribes usually

avail of. Formal sources of credit encompass nationalized banks, cooperative banks,

regional rural banks, scheduled private banks, new generation banks, private banks and

the like which are properly regulated by the government and the concerned regulating

agencies. In our study, we have found mainly three sources of formal credit viz.

nationalized banks, cooperative banks and the regional rural banks. It is found that among

the tribe households under this study most of them (43.70 percent) appear to have been

indebted to the cooperative banks whereas the second and third position correpspondilgy

goes to the nationalized banks and regional rural banks (Table No. 6.18).

Table 6.18 Tribe Wise Distribution of Formal Sources of Credit

Formal Sources of Credit tribal group

Total Kurichya Kuruma Paniya Adiya Nationalized Banks 26.90 36.80 32.40 50.00 33.00 Cooperatives Banks 15.40 57.90 51.40 0.00 43.70

Regional Rural Banks 57.70 5.30 16.20 50.00 23.30

Total 100 100 100 100 100


Looking at the tribe wise distribution of different sources of formal credit we have

found that households belonging to the Kurichya tribes are most indebted to the regional

rural banks and least indebted to the cooperative banks as a source of formal credit (Table

No.42). Contrary to this, among the Kuruma tribe, we have observed that their

indebtedness to regional rural banks is the lowest whereas they are more indebted to

cooperative banks. Focusing on the backward non-primitive tribes’ viz. Paniya and Adiya



we observe that while the Paniya tribe is mostly indebted to the cooperative banks and

least to the regional rural banks the indebtedness of Adiya tribe appears to be the same

towards the nationalized banks and the regional rural banks. This change, however,

cannot be attributed to any economic and social reasons specific to the tribal households.

The peculiar spatial distribution of bank branches across tribal areas in our study has been

on prima facie found to be responsible for this. This implies that tribes do approach those

banks, which are proximate to their dwellings or colonies, which is a classical case of

‘Proximity Banking’.

Having discussed the sources of formal credit, in the next section we move on to

the discussion of informal sources of credit.

6.2.2.1.2 Informal Sources of Credit

Generally, the low-income poor households like the tribes borrow frequently from

‘relatives, shopkeepers and fellow villagers’, which constitute the informal source of

credit, a ‘significant part of the complex rural financial market’ (Llanto, 1989). It is

generally held that the mere existence of formal banks and cooperatives in a locality does

not make informal lending unimportant. In India, even in localities where there is a bank

branch nearby, only 6.4 percent of borrowing is from banks and cooperatives (Banerjee &

Duflo, 2007). The rest undoubtedly depends on informal sources. In this study, three

informal credit sources have been found prominent among the tribal households:

Moneylenders, Self Help Groups, and credit supplied by Relative and Friends or

Relational capital (Commission, 2008). Quite expectedly, the reliance on moneylenders

for credit is apparently high (54.3 percent) among all tribal households taken together

(Table No. 6.19) whereas their dependence on relatives and friends constitute near about

30 and 15 percent respectively.

Table 6.19 Tribe Wise Distribution of Informal Sources of Credit

Informal Sources of Credit Tribal Communities

Total Kurichya Kuruma Paniya Adiya Money Lenders 38.90 64.3 58.30 56.30 54.30

Self Help Groups 27.80 21.40 32.30 31.30 30.20

Relatives and Friends 33.30 14.30 9.40 12.50 15.40

Total 100 100 100 100 100




The heavy dependence on moneylenders for credit despite the presence of formal

banking system poses complex questions on the success and effectiveness of the banks

and cooperatives in catering to the peculiar credit requirements of the tribes. Self Help

Groups despite all tall claims of its success in supplementing the formal financial

institutions in serving the financial needs of marginalized and weaker sections have not

been able to make a dent on the increasing dependence of tribes on moneylenders for

credit.

A look at the tribe wise analysis of dependence on various informal sources of

credits brings us contrasting pictures (Table No.6.19). What is of interesting is the fact

that moneylenders are heavily relied upon for credit by the Kuruma community, a

forward tribe among which the dependence on formal sources has also been found to be

substantially high. This implies, to some extent, that economic and social backwardness

and cultural inhibitions may not bear any significance in the case of dependence of tribal

households on different sources of credit. What deserves to be noted is that it is the need

of credit and the credit worthiness, which makes a household indebted to a particular

source of credit regardless of whether it is formal or informal. In the case of all tribes, it is

revealed, that the dependence on moneylenders as an informal source of credit is high.

This stands testimony to the fact that among the credit suppliers particularly the informal

credit providers moneylenders traditionally have a distinctive role. This is primarily

because they most probably belong to the same locality and this enables them to hurdle

the ‘information barrier’ (Llanto, 1989) which act as a deterrent in credit delivery process

as far as the formal payers are concerned.

Thus, it follows from the preceding discussion that tribes appear to be depending

on both formal and informal sources of credit, with informal dependence surpassing

formal dependence. The persistent coexistence of formal and informal credit suppliers in

the rural credit market apparently shows that it is a truly ‘dualistic’ one (Singh &

Balishter, 1991). Perhaps because of this realization that the Technical Group constituted

by RBI in 2006 had recommended to establish ‘a link between formal and informal credit

providers to be called “Accredited Loan Providers” for the use of an additional credit

delivery channel’ (Thorat, 2008). This is undoubtedly an attempt to legitimize the role of

moneylenders in the rural credit market of our country, which may make life troublesome

for the disadvantaged rural people like the tribes.



6.2.3 Use of Credit Availed by Tribal Households

Having discussed the extent and source of indebtedness of tribal households the

next attempt is to analyze the purpose for which the tribes indebted themselves to

different sources. To classify the purposes the study uses the classifications adopted by

the NSSO in its 59th round in which it listed nine specific purposes for which SC and ST

put their borrowings (GOI, 2003). If the credit is used for more than one purpose then the

purpose for which the most portion of the credit is used is considered for analysis. Table

No. 6.20 provides the statistics pertaining to the purpose of credit. Now, let us consider

the overall credit use pattern before we come to the tribe wise distribution of the purpose

of credit. Gauging into the table, it is obvious, and perhaps not contrary to the general

understandings, that the largest percentage of tribes has borrowed money for repaying the

earlier debt (23.80 percent). This undoubtedly throws light on the problem of ‘cycle of

indebtedness’ (Bridges & Disney, 2004) which is rampant among low income and

disadvantaged communities like the tribes. The tribal community, which has put the least

credit amount for repayment of debt, is the Kuruma (11.5 percent) whereas the 44.4

percent of Adiya household who borrowed money have used their credit for repayment

purpose alone. Next to the repayment of debt, tribes have used borrowed money mainly

for meeting current household expenditure, which is of course by any count an

unproductive purpose (Palanisamy, 2002). Nevertheless, since household expenditure

often surpasses hard-earned income, it is not unusual that to bridge the gap credit may be

used for this purpose as well.

Among tribe communities, it is found that the Kuruma tribe has used credit the

least for meeting current household expenditure, which is of course a sign of the financial

discipline that this community exhibits whereas Adiya tribe has put more credit for the

purpose of current household expenditure. What is of interesting is the irony that none of

the tribe communities has spent substantial amount of credit for farm operations both

under the heads current and capital. Surprisingly, all tribes taken together have spent less

than 7 percent of credit for farm operations, which perhaps point to the declining interest

of tribes in farm operations while around 29 percent of tribes use credit for meeting

current household expenditure. Another aspect to be mentioned is that a little more than

10 percent of all tribe households taken together have used their credit for the education

purposes of their kiths and kin. Forward tribe viz. Kurichya and Kuruma are ahead of



backward tribes in using credit for education purpose. A little less than six percent of

Paniya households have used credit for education purpose. Another important item for

which around 15 percent of tribe households have used their credit is none other than the

construction of houses. Here, again Kuruma tribe has come ahead with its 25 percent of

household having spent credit for the construction of houses.

Table 6.20 Purpose of Credit

Purpose Tribal Communities Total

Kurichya Kuruma Paniya Adiya Capital Expenditure in Farm

Operations 0.00 13.50 2.30 5.60 4.20

Current Expenditure in Farm Operations

3.20 5.80 0.00 0.00 1.90

Current Household Expenditure 24.20 3.80 39.80 38.90 29.10

Household Capital Expenditure 8.10 17.30 6.80 5.60 9.10

Building human capital 22.60 13.50 4.50 0.00 10.20

repayment of debt 22.60 11.50 26.30 44.40

23.80

current expenditure in non-farm business

0.00 1.90 0.00 0.00 0.40

capital expenditure in non-farm business

4.80 0.00 2.30 0.00 2.30

marriage of daughters 0.00 3.80 0.00 0.00 0.80 others 1.60 3.80 4.50 0.00 3.40

Construction of House 12.90 25.00 13.50 5.60 15.10 Total 100.0% 100.0% 100.0% 100.0% 100.0%


In sum, we could observe from the above analysis that tribal households appear to

have been using their credit mainly for unproductive purposes like the repayment of debt

and for meeting current household expenditure. This kind of a pattern of credit use might

have forced tribes to remain in economic backwardness for long periods. To combat this

menace of putting credit for unproductive uses and thus pushing tribes into further

darkness, it is imperative that programmes have to be designed to enhance the quality of

credit offered to tribes. With this note on the use of credit by tribes, now the study

proceeds to examine the amount of credit availed by the tribes.



6.2.4 Amount of Credit Availed by Tribes

Low-income households like those belonging to tribes generally avail of credit of

small size, and often for small durations. The descriptive statistics provided in the table

given below (Table No. 6.21) reveals that for all tribal households taken together the

mean of credit hovers around only Rs. 18818 with Rs.500 as the minimum and Rs.150000

as the maximum. Among tribal communities, the Kuruma tribe has the largest average

amount of credit availed which is Rs.32630. Adiya tribe, on the other hand, has taken

credit with a mean size as low as Rs. 7677. The minimum amount of credit availed in the

case of Kurichya tribe happens to be as low as the overall minimum that is Rs.500 only.

Table 6.21 Descriptive- Amount of Credit

N Mean Std. Deviation Std. Error Minimum Maximum

Kurichya 62 18508.0645 25024.33110 3178.09323 500.00 150000.00

Kuruma 52 32630.7692 39073.36758 5418.50117 1000.00 150000.00

Paniya 133 15071.4286 29998.30443 2601.18288 1000.00 150000.00

Adiya 18 7677.7778 11405.29060 2688.25277 1000.00 50000.00

Total 265 18818.8679 30839.77813 1894.47251 500.00 150000.00


To analyze whether there is any significant difference among the four-tribe

communities in respect of the mean amount of credit availed we have gone in for an

ANOVA test and the results of which are summarized in the following table (Table

No.6.22). We frame the following hypothesis before moving into the explanation.

H0 = There is no significant difference among tribal communities with respect to

The mean amount of credit availed.

H1 = There is significant difference among the tribal communities with respect to

The mean amount of credit availed.

Test of Homogeneity of Variances amount of credit

Levene Statistic df1 df2 Sig. 4.386 3 261 .005



Table 6.22 ANOVA: Amount of Credit

Sum of Squares df Mean Square F Sig. Between Groups 1.403E10 3 4.676E9 5.148 .002 Within Groups 2.371E11 261 9.083E8

Total 2.511E11 264


Since the P value is less than .05, we reject the null hypothesis and state that there

is significant difference among the tribal communities with respect to the mean of credit

that households have availed.

Table 6.23 Multiple Comparison-Amount of Credit

(I) tribal group (J) tribal group Mean Difference (I-

J) Std. Error Sig. 95% Confidence Interval

Lower Bound Upper Bound Kurichya Kuruma -14122.70471 6281.75385 .119 -30589.1982 2343.7888

Paniya 3436.63594 4106.87581 .837 -7241.0736 14114.3455

Adiya 10830.28674 4162.56886 .055 -153.2265 21813.7999

Kuruma Kurichya 14122.70471 6281.75385 .119 -2343.7888 30589.1982

Paniya 17559.34066* 6010.51639 .023 1769.3607 33349.3206

Adiya 24952.99145* 6048.70712 .001 9016.5544 40889.4285

Paniya Kurichya -3436.63594 4106.87581 .837 -14114.3455 7241.0736

Kuruma -17559.34066* 6010.51639 .023 -33349.3206 -1769.3607

Adiya 7393.65079 3740.70252 .209 -2504.6247 17291.9263

Adiya Kurichya -10830.28674 4162.56886 .055 -21813.7999 153.2265

Kuruma -24952.99145* 6048.70712 .001 -40889.4285 -9016.5544

Paniya -7393.65079 3740.70252 .209 -17291.9263 2504.6247

*. The mean difference is significant at the 0.05 level. (Games-Howell)


Now, to see in between which tribal community the mean difference with regard to

the amount credit is the largest, the study goes in for the analysis of multiple comparison

and the results of this analysis is given in the table (Table No.6.23). It is obvious from the

table that the mean difference is the widest between the Kuruma and the Adiya tribe.

Now, we proceed to explain one vital aspect of our work that is the extent of exclusion

from the formal credit suppliers.



6.2.5 Exclusion from the Formal Credit Suppliers

Tribes are by nature averse to have credit from formal sources as the formality

involved in application procedures to seek credit may not appear to be as digestible to the

believes of tribes as it is to the mainstream population. In our study, we have taken care in

examining the extent of exclusion of tribes from the formal credit market.

Table 6.24 Extent of Exclusion from the Formal Credit Suppliers

Status Frequency Percent

Excluded From the Formal Credit 397 79.4

Not Excluded from the Formal Credit 103 20.6

Total 500 100

Source: Field Survey, 2012

The results are worth mentioning. As the table reveals (Table No.6.24), around 79

percent of tribes willingly or unwillingly are denied access to credit from the formal

credit providers. This may lead one to arrive at a wrong inference that formal credit

institutions are mostly unfriendly towards supplying credit to the tribes, which is,

however, incorrect. To elucidate more on this, here we need to borrow two concepts,

which have been brilliantly come out of the conceptual clarity of Prof. Amarty Sen; they

are Active and Passive Exclusion (Sen, 2000). The meaning of these two terms has

already been elaborated on in a previous section. Yet for a brief recollection, we may

touch upon these concepts. Active exclusion, as the name connotes, implies exclusion by

the system, here in this study the formal Credit system, whereas passive exclusion

happens when those expected to seek credit decide not to seek credit from the system, and

thus voluntarily excluded from the formal credit system. In the latter, it is altogether

incorrect to find fault with the system offering credit to the tribes.

Table 6.25 Denial of Credit by the Formal Credit Institutions

Whether denied credit by formal players Tribal Communities


Yes (Active Credit Exclusion) 26.90 15.80 10.00 18.60 15.40 Not Denied 25.00 50.00 14.20 3.40 20.60

Never Sought Credit (Passive Credit Exclusion) 48.10 34.20 75.90 78.00 64.00 Total 100 100 100 100 100




As is evident from the table (Table No.6.25) Active Credit Exclusion (the ‘Yes

Category’) denotes those who have been denied credit by the suppliers citing different

reasons like lack of sufficient collateral or the non-existence of scheme. ‘Not denied’ are

those who have been given credit by the institutions and are akin to those who have been

indebted to the formal sources of finance. The last category titled ‘Never Sought Credit’

are those who have chosen themselves to remain out of the credit supplied by the formal

system due to various reasons which are further discussed in this study. It is quite

interesting to see that most of the tribes are excluded from the formal credit market not

because of any type of active denial by the formal credit institutions but by the decision of

the tribes to keep aloof from the ambit of the formal credit. Nearly 362 percent of tribes

appear to have sought credit from the formal system whereas only around 16 percent have

been denied credit actively by the formal credit suppliers. It appears that 64 percent of

tribes have never sought credit from the formal source, which makes them ‘self excluded’

(Kempson & Whyley, 1999). Now it is pertinent to look at the reasons for not seeking

credit from the formal sources despite the fact that formal system offers credit at

reasonable rate of interest and the issue of over exploitation at the hands of banks is low

compared to the rough behavior of moneylenders, who controls the chunk of informal

credit.

6.2.6 Reasons for not seeking formal credit

From the preceding discussion pertaining to the denial of credit by the formal

sources to the tribes, it is evident that 64 percent of tribes have not sought any form of

credit from the formal sources. In this section, we attempt to probe into the reasons,

which force tribes not to approach formal credit sources for borrowings despite they offer

credit seemingly at affordable interest rate.

The table (Table No.6.26) contains tribe wise data pertaining to the reasons for not

seeking formal credit by the tribe households in the study area. A quick look at the total

figures clearly provides us the fact that majority of tribe households (around 37 percent)

have cited fear of refusal if they seek credit as the most prominent reason for not seeking

credit from the formal sources viz. banks and cooperatives. Around 24 percent have

highlighted lack of collateral as the factor, which deters them from seeking formal credit.

2 This covers both the ‘yes’ (Active Credit Exclusion) category and ‘not denied’ , that is 15.40+20.60=36)



Interest rate appears to have played insignificant role in making tribe households averse to

seeking formal credit. The tribe wise look at the reasons for not seeking formal credit

would provide us more insight into the picture. ‘psychological barriers’, which create a

feeling in the minds of low-income people that financial services are not meant for them

(Kempson & Whyley, 1999), have been regarded as an important factor preventing

people from seeking formal credit. In our study, 10.3 percent of tribe households have not

sought formal credit because of psychological barriers. Lack of collateral and the fear of

refusal are cited to be the main reasons for not seeking formal credit by both the Kurichya

and Kuruma tribes. The same is almost the case with other two backward tribes viz.

Adiya and Paniya tribes.

Table 6.26 Reasons for not seeking formal credit

Reasons for not seeking formal credit


No need is felt 12.00 3.80 9.60 8.70 9.40

Lack of Collateral 34.00 26.90 22.20 15.20 23.40

Interest Rate 6.00 11.50 10.60 6.50 9.40

Fear of being debt trapped 14.00 11.50 8.60 15.20 10.60

Psychological Pressure 14.00 7.70 8.60 15.20 10.30

Fear it would be refused 20.00 38.50 40.40 39.10 36.90

Total 100 100 100 100 100


Having observed the factors that force tribes not to seek credit from formal

sources, now it is worthwhile to examine the reasons for the rejection of credit by the

formal sources. In the following section, we attempt to examine this aspect of our study.

6.2.7 Reasons for the Rejection of Credit by the Formal Credit Suppliers

Looking into the reasons for the rejection of credit, the study has found that the

lack of adequate security or collateral is attributed to the denial of credit to half of the

tribal households seeking credit from formal sources (Table No.6.27). It often happens

that banks, if not interested to entertain the credit seekers, may cite quick excuses as the

scheme under which credit is sought has ceased to exist or the purpose or the project to



which the credit is meant cannot be considered as viable. In our study, we find that

approximately 14 percent of tribes report that banks have denied credit to them citing the

reason that the scheme is not in existence. Evidently, more households from the Kuruma

tribe have been denied credit in the name of non-existence of the scheme.

Table 6.27 Reasons for the Rejection of Credit by Formal Credit Suppliers

Reasons for the Rejection of Credit Tribal Communities


non-existence of the scheme 10.7 33.30 11.50 9.10 14.30

non-viability of the project 7.10 16.70 23.10 18.20 15.60

inadequate security offered 64.30 41.70 46.20 45.5 51.90

bad credit history 17.90 8.30 19.20 27.3 18.2

Total 100 100 100 100 100


Another reason for the rejection of credit is the bad credit history. In this study,

however, this has not been cited as a prominent reason for the rejection of credit. It is

interesting to note that in the case of Kurichya tribe either non-existence of the scheme or

the non-viability of the project has not been cited as a main reason for the rejection of

credit by the formal institutions. Interestingly, bad credit history has also played a

significant role in denying credit to the households belonging to the Adiya tribe. It must

be understood that since tribes are generally ignorant about these things, it is easy for

bank officials to deny credit-citing reasons, which are not digestible to the credit seekers.

Tribes generally do not make repeated attempts to meet their credit needs from the formal

sources. Once the bank officials tell them about the difficulty in processing their loan

requests, they stop all endeavors in getting the credit sanctioned, and start searching for

informal sources. This is the plight of the people uninformed of banking activities. This

calls for making tribes aware of their rights to avail of banking facilities especially in the

case of credit.



6.2.8 Alternative source of Credit for the Tribal Households

The question that we want to investigate now is- what would a tribal household do

when credit is denied from a source, which it prefers to rely on primarily as and when the

need of it is felt. Undoubtedly, Banks are largely considered as a first choice provided it

offer credit that caters to specific requirements of the tribe households, although quite

often it does not happen. Therefore, from the list of alternative source of credit, we

exempt banks including cooperatives (Table No.6.28). Gauging into the table providing

the tribe wise distribution of alternative source of credit, it is obvious that majority of

tribal household regard knocking the door of moneylender as the second best alternative

source of credit notwithstanding all inconveniences and complexities associated with

borrowing from moneylenders. Next to moneylender comes the ‘relational sources’

(Commission, 2008) which is opted approximately by 25 percent of tribal households as

alternative source of credit in this study. On the other hand, borrowing from the current

employers/shoppers is preferred as the alternative source of credit by a little less than 19

percent of tribes in our study which of course has deleterious repercussions as it may lead

to the situation of ‘un-free labour’ among tribes (Srivastava & Chaturvedi, 1989). Quite

interestingly, a little less than ten percent of tribal household prefer to choose SHGs and

‘any other sources’ as the alternative source of credit. Now, to analyze whether there

exists any inter tribal variation in choosing alternative source of credit, we have run a

Chi-Square Analysis. The table no.6.41 provides the summary of the results of this

analysis.

Table 6.28 Alternative Source of Credit

Alternative Sources of Credit Tribal Communities Total Kurichya Kuruma Paniya Adiya

Self Help Groups 10.60 10.5 8.40 5.10 8.80

Money Lenders 47.10 28.9 47.10 40.70 43.60

Relational Sources 23.10 25.00 23.00 35.60 24.80

Employers 15.40 30.30 17.20 15.30 18.60

Any Other 3.80 5.30 4.20 3.40 4.20

Total 100 100 100 100 100


First, we make the following hypothesis.



H0 = There is no significant difference among tribal households with regard to the

Preference for alternative source of credit.

H1 = There is significant difference among tribal households with regard to the

Preference for alternative source of credit.

As the table shows (Table No.6.29), the P value is not less than .05 and hence we

do not reject the null hypothesis and conclude that there is no significant difference

among tribal households with regard to the preference for alternative source of credit.

This means that differences in tribe communities do not act as a factor influencing the

households’ preference for alternative sources of credit.

Table 6.29 Analysis of Chi-Square Test

Value df Asymp. Sig. (2-sided) Pearson Chi-Square 16.815a 12 .157

Likelihood Ratio 16.272 12 .179 Linear-by-Linear Association .108 1 .743

N of Valid Cases 500

a. 3 cells (15.0%) have expected count less than 5. The minimum expected count is 2.48.


6.3 Exclusion from Insurance: An Introduction

After having bank account and access to credit facilities, the next important

financial service that a household requires to manage its resource over time is access to

affordable and adequate insurance services. Nevertheless, unlike banking services and

sources of credit, access to and use of insurance products have rarely been debated and

researched in the sphere of studies on financial services. Despite the emergence of micro

finance3 as a tool to effectively scale down the credit default rate and simultaneously

enhance the financial resourcefulness of low income and hitherto un-creditworthy people,

micro-insurance has not received wide and deserving attention not only in the policy

deliberations of government but also among the self help groups and associated non-

governmental organizations (Karlan & Morduch, 2009).

3 Broadly speaking, Micro Finance is interpreted to encompass both micro credit and micro savings although both these have been used interchangeably in recent times. Micro credit is defined as a set of programmes offering credit for self-employment to very poor persons (Kaladhar, 1997).



Apparently, it seems to be undeniable that access and use of insurance is as

important as access to banking services and credit sources. This is perhaps due to the

reason that in the absence of specific purpose insurance products viz. health insurance,

when people fall ill they have to run down all savings built up over the years. In addition

to this, very often, they may have to borrow conditionally from informal sources, which

slide them into complete debt trap and abject poverty. Hence, to protect people against

these odds in life, they need to be equipped with adequate insurance products.

Broadly, insurance products are categorized into two: Mandatory and

Discretionary Insurance Products. Vehicle insurance, for instance, is a kind of mandatory

insurance. The access to this insurance happens when the customer agrees to own a

vehicle and hence it has nothing to do with other economic characteristics of the insurer.

Another example is credit plus insurance, where when credit is disbursed to the borrower,

a condition is laid down that the borrower will have to take an insurance against risks that

lead to the loan being unpaid, as in the case of a home loan being not repaid when the

borrower breaths the last. Researchers especially those in the field of economics seldom

focus on these types of insurance products. Quite distinct from mandatory insurance

products, people avail of discretionary insurance products when they themselves feel the

necessity of having it, if they have the ability to buy such products. A fitting example to

this is life insurance, and to some extent health insurance, although in recent times some

governments have made health insurance compulsory.

Now a pertinent question that arises is whether the low-income social groups like

the tribes needs insurance products. As said earlier, insurance as far as it insulates people

from vulnerabilities of various kinds, which adversely affect their capability to participate

in the economic process, then undoubtedly, insurance for low-income people appears to

be as important as in the case of a general population. Tribes live on meager income,

which they earn from jobs pertaining primarily to agricultural sector characterized by

seasonal fluctuations in activities. Insurance against mishaps in their life, hence, appears

to be a necessity. Since, they live on low-income, and stay in places and houses unsafe in

many respects they are prone to communicable diseases that take on their lives. When the

breadwinner of the household fall ill, hospital expenses wash away the entire savings and

assets they posses, which in turn lead them to irreparable miseries in life. Increasing

insurance cover for low-income people is made imminent in the light of the fact that even



temporary shocks translate into long terms losses (Collins, et al 2009). Over time, low-

income households end up depleting their assets in their attempts to pay for hospital

expenses including medicines. In poor households, persistent incapability to cope with

temporary fall in income ‘leads to choices that directly harm children (Rose, 1999). To

put concisely, studies have found the unquestionable relation between ill health and abject

poverty, and hence, recommend proper health insurance measures that mitigate the

problem of abject poverty. Besides, the holding of insurance product especially life

insurance products inject a feeling of security in the minds of people, which make them

more confident in taking riskier jobs and earn more income.

6.3.1 Insurance Exclusion among the Tribes

At the outset, we need to examine the extent of exclusion of tribes from the

insurance sector. For this, the study put the question before the respondents from each

household that whether they hold an insurance product or not. Insurance product covers

any type of insurance product either life insurance or medical insurance, or any other kind

of insurance products barring those, which are mandatory like the vehicle insurance.

Figure 6.7 Extend of Insurance Exclusion


In this study, it has been revealed that 59 percent of tribe households do have an

insurance policy (Figure No: 6.5). It does mean that 41 percent of tribe households have

been excluded from having an insurance product. This appears to be slightly rosy

compared to the data on almost similar aspect at all India level. For instance, a study in

rural India suggests that only 15 percent households report having any insurance (Basu,

2006). For a better understanding of the problem of insurance exclusion, one needs to

look at the tribe community wise distribution of the extent of insurance exclusion.

Yes, do have an insurance

policy59%

No, do not have an insurance

policy41%

Other41%



6.3.2 Tribe Wise Distribution of the Extent of Insurance Exclusion

The pertinent question is to enquire whether the economic and social

backwardness play any role in determining the extent of financial exclusion among the

tribes. In this study, we have chosen two groups of tribes depending on the level of

economic and social advancement. As stated elsewhere in this work, the Kurichya and

Kuruma tribe exhibit high standard of economic enhancement whereas the Paniya and

Adiya tribe have lagged behind in progress and social advancement (Rajasenan, 2009).

Running contrary to this deep-rooted belief, the tribe wise distribution of the insurance

exclusion brings us startling inferences. As is evident from the table, in the case of all

tribes barring Adiya tribe, the percentage of households holding any insurance outweighs

those having no insurance policy. More astonishing is the improvement that the Paniya

tribe has made in terms of having access to insurance policies compared to Kuruma tribe.

The reason for this contrasting difference lies mainly in the canvassing strategy adopted

by the insurance agents in the study area, and has apparently nothing to do with any

socio-economic features.

As we know, vibrant policy agents in every nook and corner of India market the

life insurance policies. From the observation and discussions we had with the stake

holders in the field of insurance marketing, we have understood that it is on account of the

frequent visit and persuasion by the agents that tribes commit themselves to avail of

insurance policies, a fact which perhaps applies to general population as well. Since the

Paniya is, on prima facie, landless agricultural workers, and they live in housing colonies

provided by governments, agents find it easy to market insurance products among this

community. On the other hand, in the case of Kurichya, and largely for Kurumas as well,

as they are land-owning class, their dwellings are farther away from each other, which

make it difficult for agents to reach on foot the households of these tribes. This aspect has

made considerable impact on the difference in access to insurance that has been witnessed

among the tribal communities.



Table 6.30 Tribe Wise Distribution of Exclusion from Insurance

Status of having insurance

Tribal Communities


Yes, do have an insurance policy

70 43 167 17 298

(67.30) (56.60) (64.00) (28.80) (59.40)

No, do not have an insurance policy

34 33 94 42 203

(32.70) (43.40) (36.00) (71.20) (40.60)

Total

104 76 261 59 500

(100) (100) (100) (100) (100)

Source: Field Survey, 2012. Figures in parenthesis are in percentages, P=.000.

The Chi-square test has shown that there prevails significant difference among

tribe communities with respect to the access to insurance products (Table No.6.30). As

has been discussed above the difference among tribe communities in access to insurance

products appears to have hardly anything that connects with the socio-economic status of

these tribe groups.

6.3.3 Type of Insurance

In the above section, we have elaborated on whether tribe households under our

study hold any kind of insurance products or not, without any due regard to the type of

insurance products they hold. Nevertheless, it is obvious that the nature and the type of

insurance products that are held by the households matter a lot. This is on account of the

reason that nowadays as a part of the government programme the poor, that is those who

fall under the BPL category, have been compulsorily provided with health insurance

products by the state health department in association with even private entities in the

health sector. It is to be worthy of mentioning at this juncture that such freebies do not

bear any economic significance as such products appear to have been not demanded by

tribe households which should have reflected, had demanded otherwise, their buying

power backed by the self felt necessity of having it. On the contrary, the holding of life

insurance products, if they are not mandatory supplied by the government, is a pointer

towards the understanding of the tribes about the need to have such policies. In the case of

general insurance, as well the above said argument holds good. Our study has found that a

little more than 53 percent of tribe household’s irrespective of tribe communities do

posses life insurance products whereas 46 percent have health insurance, and less than



one percent hold general insurance products (Table No.6.31). The relatively high

percentage of tribe household possessing life insurance products can be partly attributed

to the vigorous marketing campaign that has been unleashed by the smart insurance

agents among the tribe households.

Undeniably, it is proper to argue that holding life insurance products may be

deemed as the hallmark of economic advancement that the households have attained. This

is equally true for tribe households as well. The data on tribe wise distribution of the type

of insurance held by the respondents clearly provides information on the pattern of

holding different type of insurance products (Table No.6.31).

Table 6.31 Tribe Wise Distribution of Type of Insurance

Type of Insurance Tribal Communities


life insurance 71.40 79.10 35.90 82.40 53.20

health insurance 28.60 18.60 64.10 11.80 46.10

general insurance 0.00 2.30 0.00 5.90 0.70

Total 100 100 100 100 100


As far as the Kurichya and Kuruma households are concerned, more than 70

percent of the households do hold life insurance products, which undoubtedly tell the role

of relative economic advancement along with other factors including marketing by the

agents, in determining the demand for life insurance products by these tribe communities.

On the other hand, only around 36 percent of the insurance holding households falling

under the Paniya tribe do posses life insurance products. It is to be born in mind that

Paniya tribe is economically backward among the non-primitive tribes in the study area

(Rajasenan, 2009). Nevertheless, unlike the Paniya tribe, the study has found that Adiya

households appear to be holding more life insurance products to the tune of around 82

percent. Turning to health insurance4, which is, as described in the preceding section,

almost a freebie from the government, the study reveals that 64 percent of the Paniya tribe 4 The objective of RSBY (Rashtriya Swastya Bima Yojana) is to provide financial security to BPL families from hospitalization related expenses; improve access to quality health care; provide beneficiaries the right to select the health care provider; It provides a coverage up to Rs.30, 000 for a family of five. Both the Centre Governent (75%) and the State governments (25%) jointly provide the premium fund.



have accessed this whereas among all other tribes only a fewer percentage of households

do hold them although such health insurance products are meant for all tribes falling

under the BPL category. In the case of general insurance since only a negligible meager

percent of tribes as a whole hold it, a tribe wise discussion on this becomes redundant.

The inference that we get from the above analysis is that it is the socially and

economically forward tribes viz. the Kurichya and the Kuruma who have accessed the life

insurance products whereas the Paniya tribe being backward in key economic and social

parameters hold less insurance products and more health insurance supplied almost free

of cost by the government. This apparently throws light on the fact that the exclusion of

tribes especially backward tribes like Paniya from life insurance owes much to the fact

that they have lagged behind in attaining economic advancement compared to other tribe

communities that come under this study.

6.3.4 Insurance Service Suppliers in the Tribal Area

Now we turn to the discussion on the service providers of insurance products in

the tribal area that fall under this study. As we know that with the implementation of

insurance reforms in line with the neo-liberal financial sector reforms that Indian

economy has witnessed since 1991, there have been the emergences of private and

foreign players in the insurance sector along with the modernization of existing public

sector players in tune with the changing competitive environment in the insurance market.

We have today mainly three players in the insurance sector viz. public sector companies,

private sector, and foreign entities. Although, both private and foreign players, often in

collaboration with their Indian counterparts, have made inroads into the insurance market

especially in urban and sub urban areas, public sector players still continues to hold the

chunk of insurance business India. The story however does not appear to be different in

the case of tribal communities as well. Our study has found that among the tribal

households who have availed of insurance of different types, an overwhelming majority

hovering around nearly 52 percent has sought insurance services from the public sector

giant Life Insurance Corporation whereas nearly 46 percent households have been

benefited from the government supplying insurance policies (Table No.6.32).

Unsurprisingly, our study has not found the presence of either private or foreign firms

marketing insurance products among tribes most probably due to the reason that tribes, in



technical parlance, seem to be unworthy of being insured profitably from the point of

view of these insurance companies.

Table 6.32 Insurance Service Providers: Tribe wise

Service Providers

Tribal Communities


LIC 70.00 69.80 35.90 82.40 51.50

Government 28.60 18.60 64.10 11.80 46.10

Others 0.00 2.30 0.00 5.90 0.70

PLI 1.40 9.30 0.00 0.00 1.70

Total 100 100 100 100 100

Source: Field Survey, 2012. Figures are in percentage

Tribe wise distribution of the insurance service providers reveals that an

overwhelming majority of Adiya tribe has availed of insurance service from the LIC

whereas only around 36 percent of Paniya tribe has relied on LIC for insurance. The

dependence of Paniya tribe on Government for insurance that is for health insurance is

remarkably high at more than 64 percent. Interestingly, a certain percentage of

households falling under the Kurichya and Kuruma tribe have availed of PLI.

Surprisingly, not a single household from either the Paniya or the Adiya tribe has

demanded insurance products from the PLI.

It is interesting to have a discussion on the service provider of various types of

insurance products among the tribal households. In India, life insurance policies are

marketed mainly by the LIC in rural and remote areas as it has wide net work of agents

dedicated to market policies in faraway places. This study has found that the life

insurance policies have been offered to tribal households mainly by the LIC, with PLI

contributing barely a negligible part. However, in the case of health insurance, we see that

it is the government, which has been actively engaged in providing compulsory health

coverage to all tribal households. It is to be noted here that in the case of health insurance

the role of LIC is almost nil. Although general insurance is found to be abysmally low

among the tribal households, ‘others’, that is, public sector players like United insurance

and National Insurance offer the existing general insurance products. It is quite

interesting to note that tribes in the study area have never heard the name of any other



insurance companies except LIC. They are under the impression that life insurance

connotes only LIC policies. What appears to be appreciable is the fact that tribes find

health insurance policies being offered mandatory by the government as most helpful and

they are constantly relying on such avenues when they fall ill. This has immensely

benefited them in the sense that they could now set aside money for many other things

which they would have spent on hospital expenses had they been deprived of compulsory

health insurance scheme by the government.

Figure 6.8 Service Provider Wise Distribution of the type of Insurance


6.3.5 Reasons for taking insurance

Now, it is pertinent to enquire about what ultimately led the tribes to go in for

insurance policies especially when they are the recipients of a meager and erratic income

flow unlike the regular income earners and other plainsmen for whom it might not be so

strenuous to take insurance policies. Of course, such an enquiry, that is enquiry into the

reasons for taking insurance may seem to be superfluous, on prima facie, because as has

been narrated occasionally in many contexts in this study, life insurance policies are

availed even by general population, not to speak of tribes, thanks to the marketing

pressure exerted on them by the agents. In this study, too, it has been found that relatively

more percentage (nearly 44 percent) of tribe households have become insured owing to

the frequent demand by the agents (Table No.6.33) while a little less than 47 percent

appear to have accessed insurance especially health insurance because of it being a part of

government programme. What is worthy of mentioning is that only around 10 percent of

tribe households have secured insurance products on account of the felt- need by

themselves which clearly shows that self-demand for insurance products is obviously very

low among tribe households. This is quite unusual as far as the tribes are concerned that

0.00%

50.00%

100.00%

LICGovernment Others

PLIboth LIC and

PLI

96.00%

0.00% 0.00%3.00%

1.00%

0.00%100.00%

0.00% 0.00% 0.00%

0.00% 0.00%100.00%

0.00% 0.00%

life insurance health insurance general insurance



they remain disinterested in having insurance policies unless they are made aware of the

need to have insurance policies at the behest of the interest of either government or

insurance marketing agents. Suffice to say that the holding of insurance products for a

long time, so that the tribes feel the benefit of having it at the event of raising a claim over

policy, is possible only if the demand for insurance products stems from the tribes

themselves.

Table 6.33 Tribe Wise Distribution of Reasons for Taking Insurance

Reasons for taking insurance Tribal Communities


Frequent demand by agents 58.60 51.20 34.1 58.80 43.80

As a part of government programme 28.60 20.90 64.10 11.80 46.50

Self Decision 11.40 25.60 1.80 29.40 9.10

Any other reasons 1.40 2.30 0.00 0.00 0.70

Total 100 100 100 100 100


A tribe wise analysis of reasons for accessing insurance products takes us to

fascinating facts. The table (Table No. 6.33) reveals that majority of tribal households

belonging to Kurichya and Kuruma communities have suggested frequent demand from

agents as the reason for buying insurance product while in the case of Paniya tribe only

around 34 percent of households are of the view that they did buy life insurance owing to

pressure from agents. Nevertheless, among the Adiya community around 59 percent of

households have opined that frequent demand from agents persuaded them to go in for

insurance products. Majority of households under the Paniya tribe have bought insurance

product, mainly health insurance product as discussed above, owing to the reason that it

has been offered by government as mandatory. It needs to be jotted here that only a

negligible percent of households from this tribe community has remarked self-decision as

a motivating factor for taking insurance.

As is evident from the preceding discussion, it is obvious that tribe households

hold mainly two types of insurance products viz. life insurance and health insurance. Now

we attempt to elucidate the reasons for availing these two types of insurance products,



which are mainly accessed by the tribes. In the case of life insurance, it is apparent that

approximately eighty percent of the tribe households have cited frequent demand from the

part of agents as the main reasons that tended them to buy life insurance and nearly

twenty percent have bought due to their own intention to hold it. However, in the case of

health insurance cent percent of the tribe households have opined that they hold health

cards, as it has been made available to them mandatory by the government (Figure

No.6.7) not because of any need felt by them.

Figure 6.9 Insurance Product Wise Distribution of Reasons for Taking Insurance


It is observed that frequent demand from the part of agents has been considered as

prime reason for availing life insurance products and the forward tribal communities have

demanded more life insurance product because of the pressure exerted on them by the

agents. Needles to add that along with pressure from the part of agents, the tribes must

have the capacity to pay premium to such insurance products.

Thus it is obvious that insurance is indispensable to a greater extent should one

like to be protected from unforeseen untoward incidences in life which result in

irreparable consequences leading inter alia to a fall in income. Although insurance has

been thought to be something, which fits to the shoes of rich and middle-income group,

now with the entry of micro insurance in tune with the micro finance, it has become a

prerequisite for the low-income group also. Nevertheless, as we have seen in the case of

tribes, for low-income people like tribes, still availing insurance seems to be not as easy

as it is in the case of the general population.

For a comprehensive understanding about the pattern of insurance that the tribes

aspire to have we pose an important query to the tribal households as to the type of

0.00%

100.00%

79.40%

0.00% 20.60%

0.00%

0.00%100.00%

0.00%0.00%

LIC Government



insurance products they most prefer to have. The query was put across all tribe

households irrespective of whether they hold insurance product or not. The results that we

have, however, do not turn out to be unsurprising. Most of them are, as is evident from

the table (Table No.6.34) that is around 58 percent, are of the view that they require life

insurance followed by health insurance (32.40 percent).

Table 6.34 Tribe Wise Distribution of the Insurance Service Required by Tribes

Type of Insurance Tribal Communities


Life Insurance 57.70 48.70 61.70 52.50 57.80

General Insurance 10.60 0.00 2.30 0.00 3.40

Health Insurance 27.90 35.50 29.90 47.50 32.40

Crop Insurance 3.80 15.80 6.10 0.00 6.40

Total 100 100 100 100 100


The tribes do not earnestly require crop insurance and general insurance

unlike in the case of both health and life insurance products. Another pertinent question

that deserves to be examined now is how the preference of insurance products differs

among tribal communities. A glance at the table (Table No.6.34) provides us the fact that

majority of households belonging to all tribe communities in our study prefer to have life

insurance products followed by health insurance.

6.4 Exclusion from Pension Schemes

The next financial product that merits attention in this study is the access to

pension, which is important particularly for the elderly. Access to an appropriate pension

scheme, which takes care of the bare needs during the old age, is indispensable, and forms

a fundamental financial prerequisite that one desperately requires to protect oneself from

different type of shocks that are likely to occur as life passes by. The palpable result of

not having an adequate pension provision is nothing but a severe risk of slipping into

poverty and hardship in old age. Moreover, in the process of financialization5, having

5 Financialization means that financial products are less and less avoidable to lead a “normal” life. The word financialization is understood to mean the growing necessity to use financial products to meet everyday needs.



access to an appropirate pension scheme assumes unparallel significance due to the fact

that every kind of financial product is closely associated with the process of

financialcialization from a bank account to pension schemes. It is apt to mention at this

point the importance that has been attached to consumption during the old age by the Life

Cycles Hyopothesis. If one needs to meet his consumption and health needs at old age,

then he or she must have some appropriate pension schemes.

It is undeniable that lack of specifically desinged pension schemes creates

hazardous for the people living in economically and socially deprived circumstances and

surviving on meagre income. As far as tribes are concerned, they have historically been

deprived of basic amenities of life and devoid of many life supporting systems. They lack

assets to generate income and deprived of opportunities for sustenable works. Under these

conditions, saving during the earning years is likley to be low and insufficieent to

subscribe to a pension scheme that supports their life upon old age. In todays money

based exchange system where even money based transaction is being replaced by cashless

system, access to certain well designed pension scheme is very essential for tribes also.

Although many pension schemes offered by governments carry a little money, when that

reaches the hands of beneficiaries it would be interesting to see the blemish of joy

appearing on the face of them which clearly paints the value that they attach to the

pension scheme. Nevertheless, it has been observed in our study that the extent of

excluion from pension system is rampant among the tribe households. Roughly speaking

it has been observed that nearly only 32 percent of tribe households do have access to

pension schemes, which show a dismal, picture (Figure No.6.7).

Figure 6.10 Tribal Households Covered Under any Pension Scheme


Yes, do have

pension scheme32%

No, don't have pension scheme

68%Other68%



6.4.1 Tribe Wise Distribution of Number of Pension Holders

In this section, an attempt is made to see the distribution of pension holders among

the four tribal communities. A look at the figure (Figure No.6.8) evidently provides the

fact that there is no much difference among tribe communities with regard to the

distribution of pension holders except in the case of Paniya tribe. It is obvious that in the

case of Paniya tribe relatively a good percent of the households have pension schemes,

although most of which are widow pensions. This may on prima facie run contrary to the

general perception that among the Paniya tribe, a backward tribe, the percentage of

households holding pension schemes should have been less compared to other forward

tribes. Discussion with the key informants has revealed that STPs are more active among

the Paniya tribe as this is the most vulnerable group, and this has immensely helped

households belonging to Paniya tribe to apply for pension policies at the right time.

Surprisingly, Kurichya tribe has the least number of pension holders. This is perhaps

partly due to the underreporting of data by the Kurichya tribe. The inference that one can

arrive at is unlike accounts and, to some extent, insurance products, tribe communities are

excluded largely from accessing pension schemes. This pinpoints the limit that has

happened to the extent of access to financial products as far as the tribe communities are

concerned. It is revealed that tribes have not been provided with adequate pension welfare

schemes nor have they been made aware of the existence of pension schemes so that they

could have accessed them in accordance with their financial position. This underlines the

fact that tribes are still in darkness as far as the information on various scheme, both of

government and private providers, are concerned. For a better in-depth into the pattern of

accessing pension schemes among the tribe communities it would be worthwhile to

examine different types of pension products that various tribes communities have

accessed to. The next section looks into this aspect of our analysis.



Figure 6.11 Tribe Wise Distribution of Pension Holders


6.4.2 Pension Schemes that the tribes hold

Pension schemes that are available at present to tribes could be categorized into

welfare pensions, statutory pension, and contributory pension schemes. Old age pension,

widow pension, and agricultural labour pension are the best examples of welfare pension,

which are also available among the tribe households that come under this study. Here we

have one more classification namely ‘any other pension scheme’ that covers statutory

government pension, contributory pension and provident fund pension and the like which

are, however, not popular among the low-income people like tribes. Our study has

revealed that old age pension, widow pension, Agriculture labour pension, and any other

pension are most popular among the tribe households in the study area. Among the

welfare pension schemes it is obvious that a reasonable percentage of households to the

tune of a little less than 27 percent benefit from old age pension (Table No.6.35). Widow

pension, another welfare pension, gives financial relief to nearly around 26 percent of

tribe households. Interestingly, only approximately 21 percent of tribe households have

access to any other pension schemes, which covers mainly service pension and other

pension that the tribes demand backed by their resourcefulness to subscribe it. A relative

low holding of this clearly reveals the lack of active demand from the side of tribes for

pension schemes. Unsurprisingly, agriculture labour pension is a preferred pension

scheme that the tribes rely on. From the discussion with the key informants, it has become

evident that none of the tribe households has access to public provident fund pension

scheme, which is gaining momentum in India in recent times especially since the advent

of aggressive financial sector reforms. A word of caution has to be made here that while

Kurichya

Kuruma

Paniya

Adiya

23.10%

26.30%

38.70%

25.4

76.90%

73.70%

61.30%

74.6

Yes,do have pension No, don't have pension



reporting the status of having pension schemes, households having more than one pension

schemes, say, one old age pension and agricultural labour pension, are unlikely to report

the latter because of their tendency to underreport the dole out they receive from

government departments.

Looking at the tribe wise distribution of pension schemes, it is obvious (Table

No.6.35) that among the Kurichya community around 33 percent households have old age

pension schemes while a little more than 29 percent hold agriculture labour pension.

What is noteworthy is the fact that unlike Kurichya, the Kuruma community, a forward

tribe like the Kurichya, has nearly 35 percent of households holding ‘any other pension

schemes’ comprising of statutory pension schemes, public and private pension schemes.

Another striking feature is that among the Paniya tribe, shockingly nearly 33 percent of

households survive partially on widow pension. This trend, it is to be noted, is quite

unobserved among other tribes and hence requires serious attention. A probe into this

aspect has led us to the increasing menace of addiction of Paniya adults to alcohol and

other type of narcotics. It is revealed that due to addiction to alcohol many male

breadwinners of the Paniya households fall prey to death at an early age, ending the life of

their counterparts at the mercy of widow pension. Many have opined that this is a

growing social menace that has been plaguing the life of Paniya tribes in the study area. It

is also cautioned that if this trend continues unabated, the Paniya tribe would be

extinguished from the map of Tribes in Kerala in near future. Adiya tribe, another

backward tribe, however, presents a distinctive picture as far as the subscription to

different pension schemes is concerned. Among the Adiya it is observed from the study

that a relatively more percent appear to have been holding old age pension.

Table 6.35 Pension Scheme: Tribe Wise Distribution

Pension Schemes

Tribal Communities


Old Age Pension 33.30 25.00 23.80 40.00 26.90

Widow Pension 16.70 15.00 32.70 13.30 26.30

Any other Pension 20.80 35.00 18.80 20.00 21.30

Agriculture Labour Pension 29.20 25.00 24.80 26.70 25.60

Total 100 100 100 100 100

Source: Field Survey, 2012. Figures are percentages



6.5 Concluding Observations

In this chapter, the researcher has attempted to examine the extent of financial

exclusion among the tribe communities with regard to banking, credit, insurance, and

pension services besides the analysis of inter-community differences. With regard to

access to banking services, the study enquired into whether the tribe households have any

type of accounts with the formal banks. The study has found that ninety-five percent of

tribe households are ‘banked’, showing that the extent of exclusion from bank accounts is

negligible among the tribe households. Kuruma, a forward tribe, has the largest percent

of ‘banked’ households whereas Paniya, a backward tribe, has the least. Interestingly, the

study has found no significant association between the tribe communities and the status of

having bank accounts. Regarding the type of accounts, the influence of MGNREGS in

compelling the households to open accounts is very evident. More than half of the tribe

households have opened MGNREGS account. Households belonging to the Paniya tribe

hold the largest number of MGNREGS account whereas Kuruma tribe has the least

MGNREGS account holders. The association between the type of accounts and the tribe

communities has been found to be statistically significant. The study has found that most

of the tribe households have opened accounts with the nationalized banks, with RRBs

coming in the second position. As far as the reason for exclusion from having bank

accounts is concerned, self-exclusion has come out to be the prominent reason.

Unsurprisingly, it is among the Paniya tribe that most have suggested self-exclusion to be

the reason for them being ‘unbanked’. To find out the importance of MGNREGS in

making tribes banking included, the study has analyzed the extent of banking inclusion

sans MGNREGS account, and has found that more than half of the tribe household bas

become ‘unbanked’ in the absence of MGNREGS account. Interestingly, Paniya has the

most ‘unbanked’ without MGNREGS and Kuruma has the least. Tribes, it has been

found, do not consider savings bank account as a saving tool, which is evident from the

small sum of money recorded in their passbook as the current balance. The study has

found significant difference among the tribe communities in respect of the current balance

kept in the account. Tribes, it appears, have not benefited from the banking technologies.

More than ninety percent do not have ATM Card and chequebooks. With regard to the

alternative mode of savings, most of tribes prefer to keep money in liquid form.



Unlike exclusion from having bank accounts, exclusion from credit market, both

formal and informal, has been found to be high among the tribe households, which is

evident from the fact that around half of the tribes households have been excluded from

the credit market. Interestingly, Kuruma has the most percent of indebted households

whereas Adiya has the least. The study has revealed that an overwhelming percent of tribe

are indebted to informal sector, and informal indebtedness is high among the Paniya tribe

whereas it is the least among the Kuruma tribe. On the other hand, formal indebtedness is

high among the Kuruma and low among the Adiya. There is significant difference

between the source of indebtedness and the tribe communities. Among the formal sources

of indebtedness, indebtedness to cooperatives appears to be relatively high. Moneylender

is the preferred choice of many households in the case of informal sources of credit. It is

interesting to note that most of the households take credit to meet household current

expenditure, a reason for the persistent debt trap. The study has found significant

difference among tribe communities with regard to the amount of credit availed by the

tribe households. Formal credit indebtedness appears to be in the vicinity of 80 percent. A

little less than sixteen percent of tribes are ‘actively excluded’ from the credit market

whereas 64 percent face ‘passive exclusion’. Fear of refusal has been cited to be the main

reason discouraging households to seek credit from the formal sources.

Insurance, another financial instrument, appears to have eluded tribes largely. The

study has found that nearly forty percent do not have any type of insurance. Kurichya has

the most insured households whereas Adiya has the least. Life insurance and health

insurance have been the main type of insurance that most of the tribes have accessed. LIC

and government are the main insurance service providers in the study area. Government

supplies mainly health insurance to tribes, which they find most helpful. Regarding access

to pension schemes, the study has observed that nearly seventy percent of tribe

households do not have any form of pension. Surprisingly, Paniya has more pension-

receiving households thanks to health insurance promoted by government and widow

pension, whereas Kurichya tribe has the least. Having gone through the financial products

that the tribes hold, our next attempt is to analyze the influence of socio-economic

features of tribes on their financial exclusion. For this, in the next chapter, we shall first

focus on building an index of financial exclusion.



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28. Srivastava, H. C., & Chaturvedi, M. K. (1989). Dependency and Common Property Resources of Tribal and Rural Poor. New Delhi: Commonwealth Publishers.

29. Thingalaya, N. K. (2009, April). 'Financial Inclusion-the effectiveness of no-frill accounts'. Industrial Economist , 22-24.

30. Thorat, U. (2008). Inclusive Growth-The role of banks in Emerging Economies. Colombo: at Central Bank of Sri Lanka.

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EXTENT AND NATURE OF FINANCIAL EXCLUSION OF TRIBES...

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