The study titled, ‘Understanding and Responding to the Savings Behaviour of Poor People in the North East of India’, pointed out that lack of access to formal financial institutions has primarily been responsible for the thriving of various traditional informal systems, catering to the socio-economic needs of the people in the region.

The study was undertaken in four states. The study pointed out that though there has been an increase in the branches of commercial banks, the number of people served by each branch in the region is not proportionate to the increasing bank branches elsewhere in the country. “With the exception in Mizoram and Meghalaya, in all other states of the region bank branches cover a number of people that exceeds the all-India average of 15,539 persons per branch,” the study remarked.

The study revealed, “Almost all the districts in Manipur and Nagaland have a ratio far worse than the all-India average. For example in Mon district of Nagaland one-bank branch covers 86,884 persons. Even in relatively developed Assam, only three districts have better ratios than the national average,” it added.

To make its presence felt in the areas where formal banking is not possible RBI will soon introduce mobile banking in 80 such areas. The RBI is planning to introduce banking facilities in these areas on the weekly market day.

RBI’s Executive Director, G. Gopalakrishna observed, “We are talking with the rural banks for the introduction of mobile banking in these areas. There are around 175 currency chests in the region. We are planning to add another 10 to 15 currency chests in different places. Nearly 80 percent of bank branches in North East India are connected under National Electronics Funds Transfer System (NEFT).” He said that two Forex bank branches have already been opened, one each in the land custom stations (LCS) of Dawki in Meghalaya and Moreh in Manipur. “We will come up with Forex facilities in some other LCS of the region,” he says.

RBI has introduced a new scheme of point of sale (POS). This system is expected to further boost money dispensing in North East India. Presently there are over 4.5 lakh POS in the country.

Presently in North East India only Assam and Mizoram have economic offence wings.

As part of the platinum jubilee celebrations of RBI, an outreach programme is being held at several areas. Already camps are being set up at Assam, Arunachal Pradesh, Tripura, Nagaland and Meghalaya.

During the programme, RBI interacted with students, self help groups, senior citizens and such other target groups to familiarize them with various banking facilities, security features of currency notes, exchanged their soiled and mutilated currency notes and also looked into their complaints with regard to banking facilities.

RBI had in fact put up a stall at the Hornbill festival of Nagaland. The outreach programme in Khonoma village in Nagaland was the fourth outreach camp after Kukurmara village in Assam, Pitra in Tripura and Borum in Arunachal. Khonoma village has a population of around 3000 people living in 435 households. The number of bank accounts opened by the villagers is very low and stands at 170. Almost an equal number of ‘No fills’ accounts/ ‘Zero balance’ accounts are opened by them.

Usha Thorat, Deputy Governor of RBI opined that the business correspondence model is ideal for the Northeastern states. She said that this model is likely to be ideal for many Northeastern states like Tripura, a state of harsh terrain and dispersed population. The bank has adopted a business correspondence model, acting as an agent of a commercial bank to provide banking service to people where there is no banking outlet.

The customers would be provided bio-metric cards and the banks, agents and customers would come under a single connectivity. She said that this would bring banking services to the doorstep of the people, and also bring transparency in providing wages or allowances to eligible people under various government schemes and programmes.

The Assam government is providing two percent transaction cost for disbursal of National Rural Employment Guarantee Act (NREGA) fund to beneficiaries. This amount will go to banking correspondents.

Badal Chowdhury, Tripura’s Finance Minister has urged the RBI to open an office in the state. He said that it was decided in a meeting chaired by the Union Finance Minister held at Shillong in 2001 that the current deposit ratio in the North East region standing at 30 per cent would be increased to bring it at par with the national average of 58 per cent within the next three years. While the current deposit ratio increased to 66 per cent at the national level, it declined to 29 per cent in the region.

RBI, in order to open up additional bank branches, has decided to bridge the viability gap for setting up bank branches in North East India. Under the scheme state government will provide infrastructure and security while RBI will give initial capital for setting up the bank branch. There are around 80 blocks in the region which do not have bank branches. A majority of these are in Manipur, Arunachal Pradesh and Nagaland.

In this scheme, the state government suggests the place where it wants new branches to be set up. Then  the place is offered to 14 public sector banks. After the finalization of the bid, banks are required to start operations.

Tripura Gramin Bank is the first such bank in North East India to get permission for operation of currency chest.

As on March 2008, in Assam there is a network of 1369 branches of 28 commercial banks (CBs). There are about 821 rural, 311 semi-urban and 237 urban branches in the state. The average population per branch in the state is 19, 470 as against the national average of about 16,000.

The Executive Director of RBI, H. R. Khan says, “The Meghalaya government has already proposed eight sites for the setting up of bank branches, at least five have been allotted.” RBI has asked the banks to closely monitor bank accounts. The banks have to report suspicious transactions. RBI has also asked the lead banks to initiate financial literacy and credit counseling in each district. The RBI will soon initiate awareness and publicity campaigns will be launched through the media against forged notes. All the banks are asked to submit financial inclusion plan by March 2010.

Sunaina