Locked Out of Life: Pensioners, Students, and Women Suffer as KYC Red Tape Freezes Bank Accounts in Rural Jharkhand
While politicians seek votes, Jharkhand's forgotten citizens battle a different crisis: Frozen accounts, lost scholarships and corrupt systems undermining their right to survive
Ranchi: Ashok Parhaiya’s (Uchwabal, Latehar) three children are unable to withdraw their scholarships—their bank accounts are frozen because their KYC is due. Ashok sought help from a CSC operator and paid Rs 150 per child to get the KYC done, but nothing changed. He has given the operator copies of the children’s Aadhaar cards and passbooks, but whenever he enquires, the operator tells him to wait or check with the bank. For now, Ashok has given up.
Sangeeta Devi from Kutmu in Latehar district barely manages to make it through each month. She has two children with her visually impaired husband, whose bank account has been frozen due to KYC issues. Without money to bribe the CSC operator, it is difficult for her children to get Aadhaar cards. She has already paid a heavy bribe of Rs 1,000 to correct a mistake in her Aadhaar card.
Bhola Ram, who lives in Kandra (Lohardaga district), is in a difficult situation. His name is correctly spelled in his bank passbook, but it is misspelled as “Bhoula Ram” on his Aadhaar card. The bank manager informed him that KYC requires a 100% match between his passbook name and Aadhaar name. So far, he has been unable to resolve the issue because none of his identity documents match each other. His account has been frozen for the past three years.
Amid the ongoing election in Jharkhand, the concern for common people is not whom to vote for but how to access their pensions, scholarships, and Maiya Samman Yojna payments, especially in Latehar and Lohardaga, where renowned socio-economic activist Jean Dreze and his team members have conducted surveys.
The survey team found that many people in Jharkhand are unable to withdraw money from their bank accounts because the accounts have been frozen until they complete “KYC” formalities. This is the main finding of recent surveys conducted in Latehar and Lohardaga districts by local NREGA Sahayata Kendras.
The victims of this mass freezing of bank accounts include elderly pensioners who depend on their meager pensions, children who receive scholarships, and women entitled to Rs 1,000 per month under Jharkhand’s new Maiya Samman Yojana.
KYC (Know Your Customer) refers to identity verification formalities in the banking system. These formalities are not easy for poor people to complete. They require biometric verification of the Aadhaar number at a Pragya Kendra, taking the verification certificate to the bank, filling out a form there, and submitting both along with the required documents. After that, the customer is at the mercy of the bank for timely reactivation of the account. This process can take months.
Overcrowding in rural banks worsens the situation. In both survey areas, there were long queues at local banks, largely consisting of people trying to complete KYC or women looking for their Maiya Samman Yojana payments.
The survey teams went door to door in three small villages in Manika Block of Latehar District (Dumbi, Kutmu, and Uchvabal) and four villages in Bhandra and Senha Blocks of Lohardaga District (Booti, Dhanamunji, Kandra, and Palmi). In these seven villages, 60% of the 244 households surveyed had at least one frozen bank account. In some households, all accounts were frozen.
Some cases of frozen bank accounts were truly shocking. For example: (1) Urmila Oraon’s family in Kandra has six bank accounts, but all are frozen. (2) Also in Kandra, Bhola Oraon and Basant Oraon’s accounts have been frozen for years because their names are misspelled as ‘Bhoula Oraon’ and ‘Basant Oraon’ on their Aadhaar cards. (3) Many people have repeatedly applied for KYC without success; some have given up and are opening new accounts. (4) When Sora Oraon of Dhanamunji went to the bank for KYC, she had to stand in line all day just to get a “token” for an appointment on 27 December 2024!
This crisis reflects the growing insistence of banks on periodic KYC, under pressure from the Reserve Bank of India. One local bank manager explained that he had a backlog of 1,500 KYC applications but could process only 30 KYCs per day.
Earlier, at least forty lakh ration cards were deactivated in Jharkhand because they were not linked to Aadhaar cards. For several months, beneficiaries were unable to access their rations, leading to documented cases of hunger deaths across the state. This mass deactivation reveals a pattern of exclusion and hardship inflicted on Jharkhand’s poorest residents, who continue to struggle against systems meant to support them.
