Bihar Awami Bank: serving the community, profitably

By Kashif-ul-Huda,,

Established in 1987 by a group of eminent Muslim personalities of the state, Bihar Awami Co-operative Bank provides a yeoman service to Muslims of Patna. The preamble of the bank states that the it has been established to render social service, financial upliftment of the downtrodden, philanthropy and let’s not forget the main reason for any enterprise – profit making. In recent years the bank under the leadership of its chairman Mr. Anwar Ahmad has managed to serve the population by executing its mission statement.

With a goal of serving the poorest of poor the Bihar Awami Co-operative Bank Ltd was founded by some eminent ex-Civil Service officers: Fahimuddin Ahmad (I.A.S), S. Fazal Ahmad (I.P.S), S.Q. Rizvi (I.P.S.), Col. Mahboob Ahmad (I.F.S.), M.A.M Gilani (I.A.S.), Syed Shahabuddin (I.F.S.), M. Younus (I.A.S.), and Justice Shamimul Hoda, Md. Hidayatullah Khan, ex-Speaker, and S. Shahabuddin Desnavi, educationist, to establish a high quality, customer-centric, service-driven urban co-operative bank.

Like most other community organizations, mismanagement led to serious financial troubles for the bank. The bank had liability of defaulted loans threatening the survival of the bank itself. Anwar Ahmad who was once MLC of Bihar and associated with the bank since 1991 as a director was entrusted with the post of chairman to turn the bank around.

It took few years and cost him some relationships but he succeeded in establishing a reputation for the bank that its loan cannot be defaulted. He went after loan defaulters by aggressively filing lawsuits against them for recovery of the loan. Some of them were his close relatives. The aggressiveness worked and now he is proud to say that this bank has no “Non-Performing Assets.” Having restored the financial health of the bank, Ahmad is busy trying to meet all the objectives of the bank.

A Reserve Bank of India (RBI) study in 2001 found that banks were not sensitive to the needs of the minorities. The Sachar Committee report showed that Muslims on average get smaller loans and their access to credit is lower than expected. RBI has instructed the banks to prioritize banking facility to Muslims but Sachar Committee found that “RBI’s efforts to extend banking and credit facilities under the Prime Minister’s 15-point programme have mainly benefited other minorities, marginalizing Muslims.” Banks like Awami Bank by virtue of being a community bank are more accessible to the Muslims and more tuned to their needs.

Awami Bank has led special drives to promote banking among Muslims especially the women. Women banking campaigns have led to opening of 1800 accounts encouraging savings among the community. “Rozana Bachat Deposit” scheme employs widowed and divorced women who go in the community collecting funds bringing the bank closer to the population while giving livelihood to women in need.

Chariman Anwar Ahmad in his office

A total of 19 employees work in two branches serving 27,000 account holders, 95% of whom are Muslims. Sachar Committee reported that only 7.6% of all deposit accounts are of Muslims, therefore, the service rendered by Bihar Awami Co-operative Bank is valuable in bringing the bank closer to them. It provides friendly service closer to where they live and in the language that they speak. Mr. Anwar Ahmad tells account holders to think of this as their own bank.

Awami Bank has earned community trust by providing valuable service. When a minority scholarship scheme required bank accounts for the students to receive the amount, bank employees worked overtime to open all the accounts in time. It charges no fee for making drafts for Haj fees.

Computerized in 2000, it has given loans from a few thousands to crores of rupees. People to benefit from its loans include Muslims as well as Hindus because the bank only looks at the repaying capacity of the loanee.

Anwar Ahmad draws no salary for his work for the bank. Instead, he depends on his properties and businesses for his livelihood. He is supported by his wife and son who are among the nine directors of the bank. Interestingly enough, none of the directors, Chairman or Deputy Chairman have taken any loan from the bank. This and transparency in bank affairs are probably the reason for the success of this bank.

Account holders are the members of the society that owns the bank and elections to elect the Board of Directors is held every five years.

The Amanat Co-operative Bank in Bangalore, The Charminar Co-operative Bank in Hyderabad, and The Muslim Co-operative Bank Ltd in Mumbai are some other co-operative banking efforts by the Muslims.

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