Courtesy Tatas, Singur is new El Dorado

KOLKATA: 

Name: Bipin Pyne
Address: Singur
Occupation: Farming
Net worth rise in a day: Rs 12 lakh

Pyne (name changed on request) doesn’t know whether to be sad or happy. On Tuesday, he relinquished ownership of over an acre of land, received an undreamt Rs 12 lakh and, for the first time in his life, opened a savings account with Allahabad Bank.

But after tilling his farm land for the last 30 years, Pyne at 44 does not know what he will do from now on. He may not know it but he is part of the new El Dorado.

But banks, consumer durable companies and auto finance companies sure do know. And they are all heading for Singur, the proposed site of Tata Motors’ small-car project. After all, anything between Rs 60-100 crore is waiting to be mopped up across the sleepy villages covering three panchayats of Singur, now that thousands of Pynes will emerge. The state government has started handing out cheques as compensation for the land acquired for the small-car project since Monday.

Conspicuous consumption, too, is all set to boom in Singur, with villagers expected to splurge on televisions and audios, and little wonder that consumer electronic companies have directed their channel partners in the district headquarter of Hooghly to beef up distribution.

Banks are leading the gold rush. With individual cheques worth Rs 7-12 lakh already distributed to 545 farmers who have handed over their land, banks have every reason to lend a helping hand to many who have never seen the inside of any financial institution.

While Allahabad Bank and United Bank of India (UBI) already have full- fledged branches in the city, others are readying to set up extension counters at Singur.

“Our zonal manager, along with other officials, is camping in the area to facilitate collection of cheques and also to give necessary retail loans,” said A C Mahajan, chairman and managing director, Allahabad Bank.

“While many of the farmers do not have accounts, we are providing   banking facilities on a preferential basis. Apart from offering attractive deposit rates of 8% for over 5 years, funds are being provided for alternative businesses as well,” Mahajan said. Counselling the farmers is catching on fast with banks.

State Bank of India (SBI), which has a considerable presence in West Bengal, has now activated all five branches within close proximity of Singur to collect cheques. In fact, SBI is likely to open a full-fledged branch in Singur, once it receives RBI permission to get up close with farmers.

An SBI official, operating in the Hooghly area, said, “We are camping in the Singur area and opening up zero-balance accounts for villagers. If the need arises, bank officials are visiting homes asking villagers to open accounts.” With the festival around the corner, SBI is also making provisions to lend Rs 5,000-7,000 as cash advance because cheques may not be cleared before Durga Puja holidays.

At the most conservative back-of-envelope calculations, around Rs 60 crore worth of cash will be pumped into Singur by way of compensation of land - this being the multiple of 1,007 acres of land acquired and principal compensation of Rs 6,01,718 per acre of land. Add to that premiums on location, early bird schemes, solatium and the Singur cash pot can swell to Rs 100 crore. The 1,007 acre of land is spread over 6,000 holdings involving around 2,900 families.

This opportunity could also be a bonanza for many banks operating within close proximity to mop up deposits as most of them are on a “CASA drive”. This essentially involves mopping up more current account and savings account (CASA) deposits and getting the farmers within the banking fold.

According to a banker, opportunities are likely to open up for alternative businesses and most banks will be willing to offer credit for small business. This serves the larger issue of “financial inclusion” or getting more people into the banking fold as directed by the Reserve Bank of India.

While the prospects of the banking business in this lucrative hotspot have been on the rise, opportunities for consumer finance are also on the high. Magma Leasing , a noted financial services company, with a large network in the state is betting high on the prospects in the Singur area. In fact, it is in the process of scaling up its network to cash in on the new development.

“The company, through its channel partners, does a lot of refinancing of commercial vehicles like trucks and also new financing of cars in this area. We feel that with this development, there will be a lot of demand for commercial vehicles and hence financing and refinancing activities will increase automatically,” Anindya Dhar, head of business development, Magma Leasing, said.

According to a spokesperson of a multi-national consumer durable manufacturer, which did not want to be identified as a gold digger, said, “It is natural for farmers to spend on aspirational products like televisions and mobile phones, now that they have the means. Our distributors will look into the new market potential.”