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.

[Photos by]



Birth of the Awami Coperative Bank.

I am glad to know the bank is functioning well. This bank would never have seen the light of the day, had Hidayatullah Khan, a Minister at that time would not have been there. I had regularly attended all the meetings before its conception. We were supposed to collect Rs. 400,000. Nearing Rs. 300,000 it came to a grinding halt. A meeting was called at the residence of Minister Hidayatullah Khan's residence. A report was read. The conclusion drawn was to wind-up the scheme of openning the bank. All the members voted in favour of closing down the effort to establish the bank. It was decided even to payback all the money collected. Mr. Hidayarullah on my request announced that let me be given a last chance to collect the remaining amount requied. There was an opposition to my proposal. One of the member even went on to say bitterly, if we all could not collect in three months how could it be collected now by one individual? Mr. Hidayatullah insisted that last effort should be given a chance. As such it is going to be closed, if this last effort fails we shall eventually close the idea in any way.
Next meeting was also organized at the same venue. Rich people were invited by Mr. Hidayatullah Khan. He kept on imposing certain amount on each who attended that meeting. At the end people objected, saying Sir you have not sanctioned Abdul Sattar any amount, he is richest amongst of us. (He was represented by his son, since A. Sattar was sick.) He said yes I puposely did so. Addressing the son he said the amount not collected to meet the target will be all paid by you, do you agree? He said yes. After the meeting he said, I have done my job, but who is going to collect all these amout listed against each name? I said that is my responsibility. With the help of Mr. Pervaiz (a banker) we collected more money that the bank required, and the bank was born. Next hurdle that we faced was, the name was not approved by the Central cooperative department (Delhi), the reason given was to remove the word "Awami". We resisted, if the bank has to be opened, it will bear the name Bihar AWAMI Cooperative bank. To the great luck of the bank Mr. Khusro the Chairman of Cooperative was in Patna, I met him at Dr. Ahmed Hai's residence on a dinner. I presented the legitimate case of the bank. That we collected and deposited the required amount in the Central cooperative bank, made the required number of share holders about 300 if I correctly remember. They are asking us to remove the word "Awami" from the bank's name. He was angry and uttered few words in anger, and said, "give me the papers and I will see how they dont given the permission." Within weeks permission was granted and here is the bank for you, The Bihar AWAMI Cooperative Bank Patna.
This is the true history.

I had met Mr. Anwar Ahmed few times on my visit to India and give him all the credits to run the bank in great success. The recovery of loans which he made with the help of Almighty God no one could have made it in a place like Patna (Bihar). May Allah give more prosperity to the bank to help the residents of Patna.

S. Imtiyaz Desnavi
2172 Los Ranchitos Road, Chino Hills
California, CA 91709 U.S.A.

I have no objection printing my details anywhere you like.