Expanding the outreach of financial services / financial inclusion in the difficult terrains of the North Eastern Regions of India

1. IInn tthhee NNoorrtthh EEaasstteerrnn RReeggiioonn
BB SS SSuurraann
GGeenneerraall MMaannaaggeerr
NNAABBAARRDD,,MMuummbbaaii

2.  WHAT : FI is about the process of ensuring access to
appropriate financial products and services
 WHOM : society in general and vulnerable groups such as
weaker sections and low income groups in particular
 HOW: at an affordable cost in a fair and transparent
manner by mainstream institutional players

3.  There is huge demand for micro-credit. however,
penetration rate is low
 Lack of formal outlets of banks + norms too tough ?
 Inaccessibility of villages
 Poor infrastructure (transport, connectivity power)
 Inadequate number of good NGOs: network, weak capacity of
NGOs, low understanding of SHPI staff !
 Lack of mature credit culture – tendency to transact in cash only
 Traditional practices in vogue : important to know the
sensitivity of local people

4. WWhheerree aarree wwee iinn SSHHGG pprroommoottiioonn
SHG savings coverage
Mapping- March 2011
Sikkim
Arunachal
Pradesh
Assam
Meghalaya
Meghalaya
As on 31 March 2011, NER has
3.24 lakh SHGs ?…0.4% of
country’s share. Credit linkage
very low
About 1.74 lakh SHGs have to be
promoted in the next 3 years if
50% rural households have to be
covered.
Limited potential exists ! Most
states have reached their
saturation point ?
Quality & continuance an issue !
Jammu &
Kashmir
Himachal Pradesh
Uttar
Pradesh
Punjab
Haryana
Rajasthan
Goa
Karnataka
Delhi
Andhra
Pradesh
Orissa
Madhya
Pradesh
Gujarat
Maharashtra
Kerala
Tamil
Nadu
Bihar
West
Bengal
Jharkhand
Sikkim
Assam
Nagaland
Manipur
Tripura Mizoram
Chhattisgarh
Green coverage -
good
17
Red < 50 %
coverage
6
Yellow > 50 - 70 % 2
Brown >70 - 90 % 4

5. Assam Meghalay
a
Nagaland Tripura Ar.
Prades
Mizorzm Mainpur Sikkim
SHGs 245120 10653 9866 34312 7079 4592 10306 2811
Rural
popl(%)
49 23 4 69 37 51 29 6
Av saving
Rs
3344 3531 3679 9895 2632 3878 2331 6010
Av loan
Rs
78100 68200 79108 113600 47300 68300 48800 52700
NPA (%) 8.31 8.45 14.26 2.16 6.51 52.06 17.40 31.22
Branches
/ L Sq km
977 580 277 1239 69 289 201

6. SSuuppppllyy IInntteerrvveennttiioonnss
 UUssee ttrraaddiittiioonnaall ssyysstteemmss --lliinnkkaaggeess wwiitthh ffoorrmmaall ssyysstteemmss ––
NNaaggaallaanndd VViillllaaggee DDeevv BBooaarrdd eegg
 LLeevveerraaggee ggoovveerrnnmmeenntt eennaabblleedd ssyysstteemmss :: ffoorr SSHHGG pprroommoottiioonn lliikkee
DDaallbbaannddhhuuss iinn TTrriippuurraa oorr CCoommmmuunniittyy RReessoouurrccee PPeerrssoonnss..
 UUssee ooff NNGGOO aass BBuussiinneessss FFaacciilliittaattoorrss ffoorr sseelleecctt ddiissttrriiccttss ttoo eennssuurree
ccoonnttiinnuuoouuss eessccoorrtt..
 UUssee ooff rreessoouurrccee NNGGOOss –– ffiieelldd NNGGOOss ffoorrmmaattss
 UUssee ooff BBCCss ttoo rreedduuccee ttrraannssaaccttiioonn ccoossttss..
 JLGs to meet larger credit demand.
 EEvvoollvviinngg ssuuiittaabbllee ccrreeddiitt pprroodduuccttss lliikkee ccaasshh ccrreeddiitt ffoorr SSHHGGss,,
vvoolluunnttaarryy ssaavviinnggss eettcc..
 PPrroovviiddee ccoonncceessssiioonnaall llooaannss ??
 CCoonncceessssiioonnaall rreeffiinnaannccee

7. SSuuppppllyy IInntteerrvveennttiioonnss
 Use of Dept of Post : for channelising Fin services delivery ?
 Where land patta is not available, agricultural loans may
be given based on user certificates or letter of comfort
from local bodies.
 Village Development Board / Local bodies may act as
guarantors for agricultural loans where there are no land
documents.
 Village Development Boards can assist in loan recovery.
 JLGs may be promoted to meet the credit demand of
farmers without land documents.
 Special thrust for the promotion of SHGs in NER as this
could bring about Financial Inclusion.

8. DDeemmaanndd IInntteerrvveennttiioonnss
 Capacity building to improve skills and ability to
undertake enterprises (Micro Enterprise Development
Programme). MEDP /MEPA
 Creation of infrastructure/ marketing linkages,
especially through public funds.
 Awareness creation to propagate basics of SHG / JLG.
 Simplification of processes to enhance demand.
 Financial education/ literacy.
 Insurance products.

9.  Literacy is not necessarily a barrier to learning and education
 We can contribute even if we are illiterate (contrary to
normal belief where we see illiteracy as THE barrier to
learning & developing)
 Savings: an important financial service need for the poor
 Savings : there is a need for enabling it and increasing
opportunity for it
 Savings : has the potential to fulfill a part of the lifecycle
needs
 Credit options: needs to be minimal
 Credit steroids: without the commensurate economic
capacities to repay loans… can lead to crisis.

10.  Credit does not work in isolation. It has to be converged.
 Traditional Institutions which needs to be leveraged for
sustainable financial inclusion in the Region
 Marups in Manipur, VDBs in Nagaland, Xonchois of lower
Assam for expanding financial outreach in the state ?- poor
docs, low relation with banks, high ROI,cash flow funding,
reliance on one person, But find a way ….
 Need for link :Traditional Instit. to the Formal Institutions
 mFIs and DOP can also serve the cause for FI !
 But; high interest rate charged by the MFIs could lead to
reverse resource transfer of the primary assets of the poor to
the rich.

11. TThhaannkkss ffoorr yyoouurr ttiimmee
mcidho@gmail.com
mcid@nabard.org
suranmcid@gmail.com