Finmin Pushes For Financial Inclusion in Northeast India

Mumbai, May 22 : The government is taking measures to ensure that there is an improvement in penetration of banking services in the north-eastern region.

The finance minister has called a joint meeting of chief ministers of north-eastern states and chiefs of government-owned banks in Patna mid June. The finance minister will also review the annual performance of banks for 2009-10 and examine the targets for 2010-11.

Sources from the banking industry said every year, the finance minister reviews performance of the banks in June but this is the first time that bank chiefs will be meeting chief ministers of all north-eastern states under the initiative of the finance minister.

Chief ministers of Assam, Arunachal Pradesh, Bihar, Mizoram, Meghalaya, Jharkhand, West Bengal, Tripura, Sikkim, Orissa, Nagaland and Manipur will attend the meeting in Patna on June 14.

The lower concentration of branches in the North-East has been one of concerns in the ministry. Banks on the other hand have stayed away from these state because of poor connectivity in terms of (internet and telecom) and problems relating to naxalites and terrorism.

Banks have already submitted to the finance ministry their annual target for 2010-11 . This year, the ministry added two new criteria to judge CEOs’ performance. They include a number of branches covered and a number of no-frills accounts added to total bank accounts.

The Reserve Bank of India (RBI) has even drawn a plan that says lead banks should provide banking service either through banking outlet or through technology in every village that has a population of 2000 by March 2011.

Of out six lakh villages, only 30,000 villages have branches. The meeting will enable chief ministers of different states to raise their concerns to banks and vice-versa about banking services in their respective states and territory.

The central bank is keen on achieving 100% financial inclusion and has nudged banks to extend the reach to as many villages. As of now only 40% of India’s population have access to banking facilities. Besides this, sources said the finance minister will also discuss with banks issues related to education loans, agriculture loans and bad loans.