Financial Inclusion-An Overview of Mizoram

8/2/2019 Financial Inclusion-An Overview of Mizoram

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- H.Lalnunmawia

Asst. ProfessorGovt. T.Romana College


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Introduction India is one of the fastest growing countries in the

world but the growth is not inclusive enough to besustainable in the long run.

Recognizing the importance of inclusive growth thestrategy for the Eleventh Plan was envisaged to sustaina development process that is inclusive and broad

based. Financial inclusion is one such strategy that will make

growth broad based and inclusive.


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Financial Inclusion - Meaning Financial inclusion is the delivery of banking services at an

affordablecost to the vast sections of disadvantaged andlow incomegroups (Leeladhar, 2005).

Financial inclusion is the process of ensuring access tofinancial services and timely and adequate credit whereneeded by vulnerable groups....at an affordable cost(Rangarajan, 2008).

The various financial services include savings, loans,insurance, payments, remittance facilities and financialcounseling / advisory services provided by the formalfinancial system.


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Scenario of Financial Exclusion Financial exclusion is not only a national concern, it is

a global problem.

2.5 billion adults i.e. over half of worlds adultpopulation, do not have a savings or credit accountwith formal financial institutions.*

2.2 billion of these unserved adults live in Africa, Asia,

Latin America, and the Middle East.** Findings of Financial Access Initiative, a research consortium based at

New York University in 2009.


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Financial Exclusion in India In India, out of the 6,00,000 habitations, only about 30,000

have a commercial bank branch and just about 40 per centof the population across the country have bank accounts,and this ratio is much lower in the north-eastern states.People having debit cards comprise only 13 per cent andthose having credit cards only a marginal 2 per cent. (RBIMonthly Bulletin, Jan. 2010)

NSS data reveals that, in 2003, out of the 89.3 millionfarmer households in the country, 51 per cent did not seek

credit from either institutional or non institutionalsources. Only 27% of total farm households are indebted toformal sources which in other words mean that 73% offarm households do not have access to formal creditsources.


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Financial Inclusion in MizoramComparison with other North-Eastern states:

According to 2001 Census Report, 31.8% of the householdsin Mizoram availed banking services which is the secondhighest (next to Arunachal Pradesh) in the North-East, butis less than the national percentage of 35.5%.

Mizoram holds the best position in the North-East in termsof the number of population per bank branch at 9405

(based on 2011 provisional census). In terms of number of unbanked villages with population

of more than 2000, Arunachal Pradesh (11) has the leastnumber followed by Mizoram (14).


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Branch Network & Saving Accts. There are 116 bank branches in the state out of which

81 operates in rural areas and 35 in semi urban/urbanareas. As per the 2011 Provisional Census there are 830villages and 23 towns in the state which shows thatmany villages are unbanked.

The total number of saving accounts in the state is

4,33,613, this means the percentage of populationhaving saving bank accounts in the state is around40%. which is lower than the National average of46.23%


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Advances to Priority Sector Regarding advances to priority sector and advances to

weaker sections, all the banks fulfilled the RBI norm of40% and 10% of Net Bank Credit (NBC) respectively.

However, with regards to agricultural advances thesituation is not encouraging, only UBI, PNB, ICICI andMRB have fulfilled the norm of 18% of NBC.

As desired by the RBI a sub-committee was formedunder the chairmanship of the General Manager,NABARD to suggest measures for increasingagricultural credit in the State.


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Advances to Sensitive Sections The total advances to minorities in the state amounted

to `3,973.38lakhs, with 2161 benficiaries, the bulk of theadvances provided by SBI.

There were 28,172 women beneficiaries sharing totaladvances of`42,320.20 lakhs.

Total advances of `118.60 lakhs was made to 82

physically handicapped persons in the state with SBIand PNB the only provider.


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No Frills Account & GCC In 2005, the RBI had advised all banks to make

available a basic banking 'no-frills' saving accounteither with 'nil' or very low minimum balances.

In Mizoram, all banks except Vijaya bank have madeprovisions for opening no-frills account and thenumber of such accounts have reach 1,11,937, with theMRB as the highest contributor.

609 General Credit Cards have been issued in thestate, 560 by MRB, 26 by UCO Bank, 13 by SBI and 10by Syndicate Bank.


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BC Model & SHG-Bank Linkage As on 31st March, 2011 only 2 Business Correspondents

(BCs) have been engage in Mizoram by the SBI, all otherbanks have not introduced the system.

In 2010 the RBI has issued a new list of eligibleindividuals/entities for BC which include retired bankemployees, retired teachers, retired government employeesand ex-servicemen, owners of Fair Price shops, PCOs,

Petrol pumps, as well as NGOs and SHGs, etc. 2854 SHG with total members of 38,461 were credit linked

to banks. The total SHG advances of different bankbranches have reached `3402.16 lakhs.


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100% Financial Inclusion Drive The SLBCs have been advised to identity one or more

districts for 100 per cent financial inclusion.

The SLBC in Mizoram has identified Aizawl District

for 100% financial inclusion. Studies conducted by external agencies through RBI

(2009) shows that though the SLBCs have declaredseveral districts as 100% financially included, the

actual financial inclusion has not been to that extent.Most of the accounts that have been opened as a partof the financial inclusion drive have remainedinoperative.


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Financial Literacy & AwarenessAll scheduled commercial banks have been advised to

give wide publicity to the facility of 'no-frills' accountincluding on their web sites.

The number of blocks in Mizoram in which awarenessor publicity campaigns have been launched is 13 byMRB. Financial Outreach Camps have been organisedin Seling and Sesawng in 2010 and in Serkhan in 2011.

RBI has also advised the convener-bank of each SLBCto set up a Financial Literacy-cum-CounselingCentre(FLCC) in any one district on a pilot basis.


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The Tasks Ahead Banks in the state need to be engaged more in

financial literacy and awareness campaign. If thepublic are not aware of it a good scheme can be buried

away.Any initiative of financial inclusion in the state has to

be technologically driven.

Taking into consideration the topography, culture,

high literacy rate and the widespread network ofNGOs, it is desirable to identify the most suitable andefficient method of providing financial services torural households in the state.


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Documents

Financial Inclusion-An Overview of Mizoram