Over 70 per cent of the population of Uttarakhand lives in rural areas (Census of India, 2001). Due to factors such as low productivity of agriculture, pressure on natural resources and lack of employment options in the region, the state exhibits high rates of migration to other states. In Uttarakhand, migration for income generation is largely undertaken by men. Mostly these migrants come to work from districts in the hills through kin and acquaintance networks. Despite the presence of few labour opportunities in the hill regions such as construction of roads and hydroelectric power development projects, locals are not at ease with doing such hard manual work in the source area and these jobs are done by migrants from Nepal and Bihar. Migration to the plains for income generation is perceived to yield better economic returns than working in the source hill area.
The migrants face several challenges at their destinations like difficulty of access to employment, negotiations with employers with respect to work and living conditions, financial management and also in helping their families back in their hometowns in managing their needs during their absence. Among other things, sending money back home is an integral part of their lives. Mostly the migrants take up small, petty jobs in hotels, restaurants, offices, etc. Some of the common methods by which they remit money back home are:
- Migrants keep their savings with their employers. They believe that the chance of money being spent is less and they can carry home lump sum money when they visit their homes. But, this practice is risky since the employer might refuse to hand the money over as no formal agreement exists between the employer and the employee
- Send money through kin and acquaintances
- Formal channels of remittance such as demand drafts through banks and postal money orders through post offices are other popular ways of transferring money. But such channels have their own limitations like lack of bank access as well as high cost of transactions and the huge time involved in such transactions. Postal money orders take 1 week to 30 days to reach, whereas in case of bank drafts the receiver has to wait for postal delivery of the demand draft and then travel to the nearest bank branch to cash it.
- Bank ATMs to withdraw money; however, ATMs are a rare occurrence in the hills and one can spot ATMs only in certain blocks of districts in the hills
- Transport operators which is one of the fastest, informal modes of remitting money in the region, though restricted to certain routes.
While remitting money a customer looks at three key factors: speed, low cost and ease of accessibility. Especially where migrant remittances may be used to cope with sudden needs such as medical emergencies, the ease of access and the speed of transfer may help in reducing the vulnerability of poor households.
Sahastradhara KGFS has recently launched the “Domestic Remittance” product to make remitting money back home for the migrants an easier, safer and faster task. The product has been designed in collaboration with Paymate and Corporation Bank. The product is called “Green money Transfer”. The key features of the product are:
- Offer person to person mobile-based instant money transfer facility in rural India
- Regulated by the Reserve Bank of India
- Sender can perform only one transaction per day and the maximum limit per transaction is Rs 5000.
- Sender must have a Corporation Bank account with mobile banking facility
- Paymate helps the sender in opening a no frills account with Corporation Bank. Having a bank account opened acts as a double incentive for the customer – he gets a bank account and he can remit money with his bank account.
- Paymate has identified and appointed several retailers which are called “Green outlets”. The sender has to approach one of these “Green outlets” when he intends to transfer money back home in Uttarakhand.
- The sender approaches the “Green outlet” and hands over the cash amount to the outlet which is to be transferred. The sender gets a Transfer code for the transaction done. He passes this transfer code to the receiver who then approaches the nearest Sahastradhara Branch with the transfer code. The Wealth Manager on verification of the transfer code hands over physical cash to the receiver. This entire process takes only 5 minutes.
- Currently this service is available only for people who want to send money from Delhi to Uttarakhand (service area of Sahastradhara KGFS). Based on the initial response it will be extended to other cities as well across the country.
Migrant workers, who seek employment opportunities in places far away from home, generally do so to support their families financially. They need a reliable, timely and cost-effective channel for sending money to their families. With a cost-effective and efficient remittance mechanism like the Green Money Transfer product, the risks associated with transferring money are eliminated and it is ensured that migrant workers’ families have convenient and reliable access to finance when they need it the most.