CHAPTER 4 FINANCIAL INCLUSION IN ASSAM:...

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CHAPTER 4

FINANCIAL INCLUSION IN ASSAM: SUPPLY SIDE PERSPECTIVES

4.1. Introduction

As per the RBI directives, a number of initiatives have been undertaken for furthering

financial inclusion in Assam such as enhancing the bank branch network and increase the

Credit Deposit Ratio (CDR). In addition, efforts were made for increasing the flow of bank

credit to priority sectors. Opening of no-frills accounts, issue of KCC, GCC and SHGs

bank linkages were other remarkable initiatives in this regrad. For making available the

financial services in fur-flung areas, BCs/ BFs were also appointed by various banks

operating in Assam. The various unbanked villages in Assam (having population of more

than 2000) were also allotted to different banks operating in Assam. These were some of

the supply side interventions for furthering financial inclusion in Assam. The details of

various initiatives for the furtherance of financial inclusion at national level have already

been discussed earlier. This chapter focuses on the outreach of the initiatives undertaken by

banks operating in Assam for enhancing financial inclusion.

4.2. Proliferation of banking facilities in NER

North Eastern Region (NER) comprises of Arunachal Pradesh, Assam, Nagaland,

Manipur, Meghalaya, Mizoram, Tripura and Sikkim. Each of these eight states differs

widely in terms of political and socio-economic environment. The rail network is poor and

also concentrated mainly in Assam. Compared to the national average of 73 km of road per

100 square km, the average road length in the region is low, at 53 km, with Arunachal

Pradesh having the least length of roads 12.20 km per 100 sq km. Around 70 percent of the

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region is hilly. The economy of the region is agriculture based engaging almost 75 percent

of the workforce. Other major economic activities include handloom and handicrafts. NER

has a very rich cultural heritage. The heterogeneity of the people in the region is enormous

and therefore group formation becomes very difficult – language, religion, ethnicity all

coming in the way.

The proliferation of banking facilities has been uneven across India

particularly for the disadvantaged section of society. NER falls among the slow progress

region as inclusion of farmer households is lowest with 19.7 percent whereas the national

average is 48.6 percentli. Further, NER have only 21.1 percent institutional inclusion

(Karmakar and Mohapatra, 2009). The new CRISIL Inclusix index on financial inclusion

reveals that Puducherry, Chandigarh and Kerala ranks 1st, 2nd and 3rd from the top whereas

Manipur, Nagaland and Bihar are the bottom three states in terms of their Inclusix score. It

is disheartening to see that out of eight states, five of the NER states occupy positions in

the last ten states in the Index. The report says that just half of Indians have a savings bank

account and the bottom 50 districts have just three banks per 100,000 of population

(CRISIL, 2013).

li Financial access is higher than the National average (48.6 percent) for the Southern Region (72.7 percent), Western Region (53.8

percent) and Northern Region (51.4 percent) and inclusion is lower in case of Eastern Region (39.9 percent) and Central Region (41.7 percent) than the modest National average of 48.6 percent. Source: Karmakar and Mohapatra, 2009, Emerging Issues in Rural Credit, The Microfinance Review: Journal of the Centre for Microfinance Research, Volume 1, Number 1, p 2

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Table-4.1: No. of Commercial Banks & No. of Branches of Scheduled Commercial Banks

and Average Population Per Bank Branch in NER (March 2009)

State

All Commercial Banks Total branches Average population per Bank branch (in thousands)

Assam 36 1377 22

Arunachal Pradesh 14 76 16

Manipur 13 80 33

Meghalaya 23 201 13

Mizoram 13 93 11

Nagaland 16 86 26

Tripura 21 213 17

Sikkim 22 71 8

ALL-INDIA 171 79735 15

Note: No. of branches exclude Adm. offices. Source: RBI, 2009, Branch Banking Statistics, March 2009, Volume 4, pp 1,3

The branch banking statistics reveals that barring Assam, the number of

commercial banks and total branch statistics is having gloomy picture in NER. Out of total

171 commercial banks operating in India, 36 banks are having presence in Assam. Other

NER states like Manipur and Nagaland have presence of only 13 commercial banks.

Assam is covered by 1377 bank branches but other states in NER like Sikkim, Arunachal

Pradesh, Manipur, and Nagaland have comparatively less number of bank branches (Table

- 4.1). The main reasons for lower banking outreach are difficult terrain, low density of

population and cultural reservations.

Note: No. of branches exclude Adm. Offices.

Source: RBI, 2009, Branch Banking Statistics, March 2009, Volume 4, pp 1,3

Population per branch (the basic indicator of penetration of banking services) has

declined over the years in India. However, the regional disparities still persist. As in

northern, southern and western regions it

ranges from 10000 to 14000; whereas in

the central, eastern and north

regions it ranges from 18000 to 19000 as

on 31st March 2010. Further, the

penetration of bank credit, the amount of

credit per capita is lowest in NER

compared to other regions. Nonetheless,

in case of the amount of deposit per ca

other regions (RBI, 2010). If we compare RBI statistics (on March 2009), than the average

Arunachal Pradesh

3%

Manipur

4%

Meghalaya

9%

Mizoram

4%

Nagaland

4%

Figure

Note: No. of branches exclude Adm. Offices.

RBI, 2009, Branch Banking Statistics, March 2009, Volume 4, pp 1,3

per branch (the basic indicator of penetration of banking services) has


northern, southern and western regions it

ranges from 10000 to 14000; whereas in

eastern and north-eastern

regions it ranges from 18000 to 19000 as

March 2010. Further, the

penetration of bank credit, the amount of

credit per capita is lowest in NER

compared to other regions. Nonetheless,

in case of the amount of deposit per capita NER is above the central region but below all


Assam

63%

Arunachal Pradesh

Nagaland

Tripura

10%

Sikkim

3%

Figure - 4.1: Total number of bank branches

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per branch (the basic indicator of penetration of banking services) has


pita NER is above the central region but below all


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population per bank branch in India is 15000 whereas Assam is showing a disappointing

figure of 22000 people per bank branchlii (RBI, 2009). Again, as on March 2013, the

average population per bank branch is 12,100liii. In other NER states like Manipur (33000)

and Nagaland (26000), the scenario is even gloomy. But smaller states like Sikkim (8000)

and Tripura (17000) has a better population per bank branch scenario. It is worthwhile to

mention here that Sikkim being the smallest state in terms of geographical area has 22

commercial banks in operation which reveals good penetration of commercial banks in the

state despite its hilly terrain (Table - 4.1).

4.3. Financial Inclusion in Assam

Assam is the gateway to northeast and it is also considered as financial hub of the

region. Assam figures in the Planning Commission’s (1999-2000) list of India’s five

poorest statesliv along with Orissa, Bihar, Madhya Pradesh and Sikkim. The economy of

Assam is primarily agrarian and around 53 percent of rural labour force is dependent on

agriculture and allied activities as per Population Census, 2001. The total population of

Assam stands at around 3 crore as per Census 2011, which is considerably higher than the

other NER states (censusindia.gov.in). Considering the background of financial exclusion

in the state and the region, RBI initiated a special focus on NER with formulation of the

Committee on Financial Sector Plan (CFSP) for North Eastern Region under the

chairmanship of Smt. Usha Thorat in the year 2006. The main focus of the committee was

to examine the initiatives undertaken so far for extending the banking outreach and

enhancing the flow of credit in NER; to identify the hindrances pertaining to flow of credit

lii Considering the branches of Scheduled Commercial Banks only liii

http://financialservices.gov.in liv Around 36.09 percent of population in Assam living below the poverty line

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and access to financial services in NER and to suggest appropriate measures for

overcoming the same. Further, the committee was also expected to frame state wise action

plans considering the prevailing local conditions and give suitable recommendation for

improving the financial access scenario in the NER states. Accordingly, the committee

constituted ‘State Specific Task Forces’ for every state in the NER to deal with state

specific issues. The recommendations of the Task Force constituted for Assam highlighted

the need for branch expansion in the under banked districts of Assam; improving Credit

Deposit Ratio (CDR) in the state by funding the major infrastructure projects through

banks operating in Assam; strengthening RRBs & Assam State Cooperative Apex bank.

Besides, NABARD and SIDBI also prepared a plan of action for the State. SIDBI’s action

plan envisaged initiatives for NEDFi (RBI, 2006).

RBI’s 100 percent financial inclusion drive was also started in Assam. The total

number of bank branches in Assam increased from 1320 in March 2006 to 1509 in March

2010 in a phased manner. However, the number of bank branches in Assam as on March

2010 was just 0.9 percent of total bank branches (169581lv) in India. The average

population per branch in Assam at end-March 2011 was 20656lvi.

4.3.1. Banking Profile in Assam

District wise data of the number of commercial banks functioning in Assam

exhibits that Kamrup Metropolitan (159), Nagaon (92), Dibrugarh (87), Sonitpur (85) are

lv It is summation of total number of Scheduled Commercial Banks, Public Sector Banks and Nationalised Banks as at end-March 2010 lvi As per the Census Report 2011, the Provisional Population total of Assam is 3,11,69,272.

Computed by dividing Provisional Population total of Assam available at (http://censusindia.gov.in/2011-prov-results/prov_results_index.html) and dividing the same by total number of Bank branches (i.e. Scheduled Commercial Banks, Public Sector Banks and Nationalized Banks) at end-March 2010.

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having highest number of offices and relatively better levels of access to formal banking

services mainly on account of spread of banking habits and a more robust infrastructure.

On the other hand, districts like Chirang (14) , Dhemaji (18), Hailakandi and North Cachar

Hills (19 each), Baksa and Kokrajhar (22 each), have relatively restricted access to banking

services due to less number of bank offices (Table-4.2).

If we take into account the population per bank branch scenario in various districts

of Assam, Kamrup Metropolitan (6684) has the lowest strata of population to be served by

the bank branches followed by North Cachar Hills (9899) and Dibrugarh (13622).

However, districts like Baksa (38607), Kokrajhar (38309) and Dhubri (35637) have very

high population per bank branch. Further, in spite of having good number of bank offices,

the population per bank branch in Sonitpur (19635) and Nagaon (25159) districts is still

high in comparison to districts like Karbi Anglong (16266) which is having only 50 bank

offices and Golaghat (18554) with 51 bank offices (Table-4.2). Since there is no

correlation between number of bank offices and population per bank branch, hence we can

infer that higher number of bank offices always does not lead to better banking.

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Source: 1. RBI, 2009, Branch Banking Statistics, March 2009, Volume 4, p 85 2. Directorate of Census Operation, Assam available in Statistical Hand Book, 2008, Directorate of Economics and Statistics, Guwahati, Government of Assam p 2

If we take into account the banking profile of banks operating in Assam, AGVB

have highest outreach in terms of bank branches and is followed by SBI, UBI, CBI and

UCO Bank. All these banks have above 100 branches in Assam. In terms of rural

penetration, AGVB has highest rural outreach with 298 branches followed by SBI (139),

Table-4.2: District and Population Group-wise no. of branches of Commercial banks functioning

in Assam (March 2009) District Population Group Total

Offices District wise Total Population as per (2001 Census)*

District wise Population per Bank branch (Approx)*

Rural

Semi-urban

Urban Metro-politan

(1) (2) (3) (4) (5) (6) (7) (8) = (7)/(6)

1. Baksa* 22 - - - 22 849352 38607

2. Barpeta* 38 17 - - 55 1408749 25614

3. Bongaigaon* 14 16 - - 30 621136 20705

4. Cachar 48 - 32 - 80 1444921 18062

5. Chirang* 8 6 - - 14 411058 29361

6. Darrang* 16 9 - - 25 792614 31705

7. Dhemaji 13 5 - - 18 571944 31775

8. Dhubri* 25 18 - - 43 1532383 35637

9. Dibrugarh 37 20 30 - 87 1185072 13622

10. Goalpara 22 9 - - 31 822035 26517

11. Golaghat 40 11 - - 51 946279 18554

12. Hailakandi 12 7 - - 19 542872 28572

13. Jorhat 31 42 - - 73 999221 13688

14. Kamrup * 54 10 18 - 82 1308505 15957

15. Kamrup Metropolitan*

14 2 143 - 159 1062771 6684

16. Karbi Anglong 41 9 - - 50 813311 16266

17. Karimganj 33 17 - - 50 1007976 20160

18. Kokrajhar* 14 8 - - 22 842805 38309

19. Lakhimpur 35 12 - - 47 889010 18915

20. Morigaon 20 7 - - 27 776256 28750

21. Nagaon 61 13 18 - 92 2314629 25159

22. Nalbari* 30 7 - - 37 701133 18950

23. North Cachar Hills

4 - - 15 19 188079 9899

24. Sibsagar 43 19 - - 62 1051736 16963

25. Sonitpur* 53 32 - - 85 1668998 19635

26. Tinsukia 33 14 29 - 76 1150062 15132

27. Udalguri* 18 7 - - 25 752621 30105

Note: * Provisional figure for population

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UBI (130), CBI and UCO (57). However, some other banks like ALB and UNI also have

significant presence in Assam as per their bank branch status (Table – 4.3).

Table-4.3: Bank Branch Network in Assam as on 31st March 2011

Sl. No. Banks Rural S/Urban Urban Total

1 ALB 38 17 9 64

2 ANB - 1 3 4

3 BOB 2 7 10 19

4 BOI 4 3 7 14

5 BOM - 1 3 4

6 CAN 6 6 11 23

7 CBI 57 28 25 110

8 DEN - 3 2 5

9 HDFC 4 15 9 28

10 FED* 0 4 2 6

11 ICICI 1 11 10 22

12 IDBI* - - 4 4

13 IND 6 12 9 27

14 INDUS* 0 2 4 6

15 IOB 6 7 8 21

16 OBC - - 7 7

17 PNB 30 17 11 58

18 PSB - 1 6 7

19 SBBJ* - 1 1

20 SBI 139 77 58 274

21 STD* - - - -

22 SYN* 1 1 7 9

23 UBI 130 40 15 185

24 UCO 57 34 13 104

25 UNI 24 17 19 60

26 AXIS* 1 9 7 17

27 VJB* 0 6 8 14

ACB TOTAL 506 319 268 1093

28 AGVB 298 51 13 362

29 LDRB 40 6 - 46

RRB TOTAL 338 57 13 408

30 AAB 18 21 29 68

GR. TOTAL 862 397 310 1569 * Data not received.

Source: SLBC Report March 2011

4.3.2. Credit Deposit Ratio (CDR) in Assam

CDR is an important indicator of deployment of resources of the bank. Credit

expansion should always commensurate with deposit growth as the gap in credit &

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deposits may lead to increase in the real interest rates and excess demand for credit may

further push the economy towards financial exclusion (Mohan, 2006).

Table-4.4: Region-wise Credit-Deposit Ratio

Sr. No.

Region Credit-Deposit Ratio (as on March)

2010 2011 2012

All India 73.3 75.6 78.1

1 Northern region 74.4 82.5 90.1

2 North-eastern region 35.5 33.8 33.8

3 Eastern region 50.8 51.4 50.0

4 Central region 47.3 46.7 47.3

5 Western region 79.1 79.5 83.1

6 Southern region 92.7 94.5 94.8 Note: CD Ratio as per Sanction

Source: Compiled from Report on Trend and Progress of Banking in India 2011-12, p-154, Retrieved from

http://rbidocs.rbi.org.in/rdocs/Publications/PDFs/IV8T_TPA021112L.pdf

The region-wise status of CD ratio revealed that NER has a CD ratio of less than 34

percent as against 95 percent in southern region and CD ratio of NER is the lowest for the

year 2010 to 2012 compared to other regions in the country.

Table-4.5: North-eastern State-wise CD Ratio

2010 2011 2012

All India 73.3 75.6 78.1

Arunachal Pradesh 27.5 23.7 22.5

Assam 37.8 36.5 37.3

Manipur 42.1 34.8 30.1

Meghalaya 25.6 24.4 25.3

Mizoram 53.2 46.0 38.1

Nagaland 30.3 26.1 26.8

Tripura 30.7 32.2 31.3 Note: CD Ratio as per utilization

Source: Compiled from Report on Trend and Progress of Banking in India 2011-12, p-154

CDR of NER states is considerably lower than the national CDR. In the year 2012,

as against India’s figure of around 78 percent, Arunachal Pradesh is having lowest CDR

(22.5 percent) followed by Meghalaya (25.3 percent) and Nagaland (26.8 percent).

Mizoram (38.1 percent) has achieved highest CDR in among the NER states followed by

Assam (37.3 percent) in the year 2012 (Table-4.4 & 4.5)

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It is important to note that lower the CDR, lower the credit extension to the people.

The bankwise CDR in Assam is given below:

Table-4.6: Bank-Wise Business and Credit Deposit Ratio as 31st March 2011 (Rs. In Lacs)

Sl no.

Banks Deposits Advances C: D Ratio

1 ALB** 209416.33 79185.79 37.81

2 ANB** 12696.15 1759.86 13.86

3 BOB** 99667.00 44957.00 45.11

4 BOI 60576.00 14060.00 23.21

5 BOM 3282.22 561.73 17.11

6 CAN 215612.79 39219.65 18.19

7 CBI** 332832.00 64076.00 19.25

8 DEN 7282.87 1300.45 17.86

9 HDFC 52674.11 55753.11 105.85

10 FED* 45702.28 17303.87 37.86

11 ICICI 44528.37 19789.87 44.44

12 IDBI* 41830.00 68689.00 164.21

13 IND** 123850.70 29300.43 23.66

14 INDUS* 9775.91 21542.65 220.36

15 IOB** 68941.76 25792.40 37.41

16 OBC 9510.25 4506.87 47.39

17 PNB 222864.35 101410.23 45.50

18 PSB 15863.01 3385.21 21.34

19 SBBJ*

20 SBI** 2399755.72 928020.25 38.67

21 STD* 0.00

22 SYN* 27514.96 12669.85 46.05

23 UBI 606675.20 276231.10 45.53

24 UCO 396558.14 110832.36 27.95

25 UNI 222589.26 35837.70 16.10

26 AXIS* 89027.00 22407.33 25.17

27 VJB* 71385.63 18258.31 25.58

ACB TOTAL 5390412.01 1996851.02 37.04

28 AGVB 437640.12 207469.29 47.41

29 LDRB 27667.64 15617.99 56.45

RRB TOTAL 465307.76 223087.28 47.94

30 AAB 149393.21 31921.74 21.37

ALL BANKS TOTAL 6005112.98 2251860.04 37.50

31 NEDFI & RIDF 132502.01

GRAND TOTAL 6005112.98 2384362.05 39.71 * Data not received. Dec'10 data repeated. **Figures under Advances also include the following finance done outside for utilisation in Assam:- SBI - 493.35 Cr., Indian Bank - 24.02 Cr., CBI - 29.86 Cr., ALB - 80.27 Cr, BOB - 60.00 Cr, ANB - 11.07Cr & IOB - 34.86 Cr.

Source: SLBC Report March 2011

Even though the statewise status of CD ratio is gloomy but the bankwise status

reveals that some of the banks with above 100 percent CDR includes HDFC, IDBI and

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INDUS Bank. Apart from these three, the other commercial banks in Assam has failed to

attain the national CDR norm of 60 percent. Further, eventhough AGVB have highest

outreach in terms of bank branches and is followed by SBI, UBI, CBI and UCO Bank but

all these banks have poor CDR with AGVB 47.4 percent, SBI 38.7 percent, UBI 45.5

percent, CBI 19.3 percent and UCO 27.9 percent (Table – 4.6). Thus, the banks with

highest outreach in terms of bank branches are failing to mitigate the credit gap in the state

which might be the reason for higher outreach of informal sources in the rural areas in the

state.

Source: SLBC Report for quarter ending March 2011

Table-4.7: District-wise CD Ratio in Assam as on 31st March 2011 (Rs. In crores)

Sl No. Name of the District Deposit Advances CD Ratio

1 Dibrugarh 2,978.48 1,306.00 44

2 Tinsukia* 2,046.36 773.35 38

3 Dhemaji* 288.23 173.54 60

4 Lakhimpur* 590.50 353.28 60

5 Nagaon* 2,301.33 1,085.46 47

6 Dima Hasao 378.79 133.64 35

7 Karimganj 1,169.43 428.95 37

8 Nalbari 899.40 464.83 52

9 Dhubri 1,052.60 426.17 40

10 Goalpara 801.66 322.86 40

11 Sonitpur 2,024.51 318.39 45

12 Bongaigaon 715.18 287.94 40

13 Karbi Anglong 759.45 353.29 47

14 Darrang 659.11 365.94 56

15 Morigaon* 669.61 358.68 54

16 Jorhat 2,443.25 890.98 36

17 Cachar 3,000.77 1,019.15 34

18 Hailakandi 545.30 195.21 36

19 Sibsagar 1,748.64 1,252.56 72

20 Golaghat 1,084.05 508.02 47

21 Barpeta 1,515.02 683.32 45

22 Kamrup Metro* 17,359.50 5,344.65 31

23 Kamrup* 1,107.87 448.53 44

24 Kokrajhar 974.79 399.33 41

25 Udalguri 777.56 391.02 50

26 Baska 295.78 156.95 53

27 Chirang 528.85 288.34 55

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District-wise analysis shows that CDR as on March 2011 of all banks in Assam is

lower than the RBI norm of 60 percent in most of the districts (Table - 4.7) and the district-

wise summary statisticslvii in SLBC report March 2011 shows that the districts with less

than 40 percent CD Ratio includes Kamrup Metro, Cachar, Dimahasao, Jorhat, Hailakandi,

Karimganj and Tinsukia.

Table-4.8: Summary of CD ratio (District wise) as on March 2011

2011

(a) No. of District with CD Ratio 60% and above 3

(b) No. of District with CD Ratio between 40% to 60% 17

(c) No. of District with CD Ratio below 40% 7

Note: March 2011 data compiled from

Source: SLBC Report for quarter ending March 2012, Available at http://slbcne.nic.in/agendaassam.pdf, Retrieved on 15th April 2013

Thus, the bank-wise and district-wise status of CDR is showing an alarming

situation in the state and RBI should take some innovative measures to improve the same.

Enhanced credit flow to agri-sector in the wake of improving the rural economy of the

state might be considered. Renewed focus on financial inclusion initiatives by making

available the banking services at the doorstep of the poor and disadvantaged might also

contribute in improving the CDR in the state which will have a cascading effect on its

economic growth and development.

4.3.3. Flow of Bank Credit in Assam

Recognizing the importance of credit for greater financial inclusion, government

directed banks to increase their lending to priority sector, agriculture and small and

medium enterprises (SMEs). In Assam, the increasing trend can be observed in all the

sectors. As per the RBI guidelines credit to priority sector should be 40 percent of total

lvii District-wise detail statistics are not available in SLBC report March 2012. Only summary of CD Ratio is available

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advances. In Assam, percentage of priority sector advances to total advances increased

from around 43 percent in 2006 to around 54 percent in 2010 which shows that banks are

successful in achieving the target set for domestic banks. The share of Agriculture sector in

total advances has increased from 12.36 percent in 2006 to 18.5 percent in 2010 where as

SMEs increased from around 7 percent to around 10 percent over the same period (Table-

4.9).

Table-4.9: Flow of bank credit in Assam

Sector Position as on March (Rs. in crore)

2006

% of

Total

Advances

2007

% of

Total

Advances

2008 % of

Total

Advances

2009

% of

Total

Advances

2010 % of

Total

Advances

Priority Sector

4248

43.3 6149 (45)

47.34 8322 (35)

51.75 10706 (29)

60.31 11315 (6)

54.11

Agriculture 1213 12.36 1597 (32)

12.29 2159 (35)

13.42 2346 (9)

13.22 3868 (65)

18.50

SME 686

6.99 1018 (48)

7.84 1282 (26)

7.97 1460 (14)

8.23 2054 (41)

9.82

Others 3665 37.35 4226 (15)

32.53 4319 (2)

26.86 3239 (-25)

18.25 3674 (13)

17.57

Total

Advances

9812 100 12990

(32)

100 16082

(24)

100 17751

(10)

100 20911

(18)

100

Note: Figures in parentheses indicate percentage increase over previous year.

Source: Compiled from SLBC reports of March 2006, 2007, 2008, 2009 and 2010 (Assam)

4.3.4. No-Frills accounts in Assam

As per the directives of RBI the scheme for opening of the ‘no frillslviii’ accounts

with small overdraft in such accounts and ‘GCC’ up to Rs 25000 was also initiated in

Assam (RBI, 2006). These two important financial ‘key’ products are regarded as driver

for promoting financial inclusion as there are no requirements of documents regarding

ownership of assets to obtain either an overdraft or a GCC. Further, these products are

lviii In order to achieve desired aim of financial inclusion the banks in India like State Bank of India (SBI), Punjab National Bank

(PNB), Syndicate Bank, United Bank of India, Central Bank of India, Dena Bank and Vijaya Bank has introduced its own customized no-frills accounts under the guidelines of RBI by the name of ‘SBI Tiny’, ‘PNB Mitra’, ‘SyndSamanya Savings Bank Account’, ‘United Basic Savings’, ‘Cent Bachat Khata’, ‘Dena Alpa Bachat Khata’ and ‘Vijaya Saral Savings Account’ respectively. Out of different commercial banks operating in the north-eastern region, in Assam Union Bank of India has opened highest number of no-frill accounts, followed by, State Bank of India, Allhabad Bank, Central Bank of India, United Bank of India, UCO Bank and Punjab National Bank.

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simple and are essentially based on developing a relationship and building track record of

the customer and providing hassle-free financial services (RBI, 2006).

As per SLBC data the total number of no-frills accounts in Assam increased from

7107 in June 2006 to over 54 lakh by March 2012 registering a growth of around 768 times

over the period of seven years from 2006 to 2012 (Table - 4.10).

In Assam, the share of Commercial banks in opening no-frills accounts declined

since 2008 whereas the share of RRBs increased over the same period and the cumulative

number of no-frills accounts by RRBs (over 9 lakhs) in 2010 even surpassed the

cumulative number of no-frills accounts of the commercial banks (less than 9 lakhs). But

the performance of Commercial banks in this regard improved and data as on March 2012

reveals that Commercial Banks opened highest number of no-frills accounts (over 29

lakhs) followed by RRBs (over 25 lakhs). However, the performances of the co-operative

banks have been comparatively dismal. In this regard, it is important to note that the

Annual Policy Statement for 2010-11 recognized the need for better understanding of the

functioning of grass root level rural co-operatives as a potential tool to play an important

role in financial inclusion drive. These include primary agricultural credit societies

(PACS), large adivasi multi-purpose co-operative societies (LAMPS), farmers' service

societies (FSS), as also thrift and credit co-operatives set up under the parallel Self- Reliant

Co-operative Societies Acts in some states. Hence, a detailed study of the working of

selected (about 200) well functioning rural co-operatives across the country would be

carried out by the RBI in association with NABARD and state governments. It aims at

gaining a deeper understanding of these bodies with reference to their membership profile,

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management structure, range of services offered, savings mobilized from members/non-

members, percentage of non-borrower members, credit extended to tenant farmers, oral

lessees, agricultural labourers and women, for availing the benefits of their strength and

use their potentiality as effective channel of financial inclusion (RBI, 2009-10).

Source: Compiled from SLBC reports of March 2006, 2007, 2008, 2009, 2010, 2011 & 2012 (Assam)

Usage is equally important to access and hence, there is need to take appropriate

measures by the banking system to keep these accounts operational. In this regard, banks

have been advised to provide small overdrafts in such accounts for preventing these

accounts to become dormant. Further, in the rural and semi urban areas the banks initiated

pilot projects by tailoring simple deposit and credit products to suit their specific needs.

Table-4.10: Number of No Frills Accounts in Assam

Bank

As on March 31st

2006 2007 2008 2009 2010 2011 2012

Commercial Banks

4105 (57.8)

40077 (62.2)

450886 (82.7)

642440 (61.7)

899078 (49.2)

1158389 (39.1)

2918086 (53.4)

RRBs

2794 (39.3)

24194 (37.5)

89370 (16.3)

371651 (35.7)

908331 (49.5)

1776789 (60)

2516825 (46.1)

Co-operative Bank/ AAB*

208 (2.9)

208 (0.3)

5098 (1)

26620 (2.6)

26620 (1.5)

26758 (0.9)

26990 (0.5)

Total

7107 (100)

64479 (100)

545354 (100)

1040711 (100)

1834029 (100)

2961936 (100)

5461901 (100)

Notes: 1. Figures in parentheses indicate percentage to total. 2. No-Frill Accounts data available since quarter ending June 2006 only. *AAB= Assam Co-operative Apex Bank since the year March 2011-12

131

Table- 4.11: Bank- wise Progress under Financial Inclusion:

Opening of No Frills A/C of Assam in the Year 2012

Sl No. Bank Name Total

1 ANB 325

2 BOB 6228

3 BOI 20520

4 BOM 2045

5 CAN 31376

6 CBI 178613

7 DEN 4157

8 HDFC 0

9 FED 299

10 ICICI 2202

11 IDBI 576

12 IND 18265

13 INDUS 1654

14 IOB 5653

15 PNB 4835

16 PSB 0

17 PSB 0

18 SBI 2218357

19 SYN 4861

20 UBI 229228

21 UCO 164398

22 UNI 21368

23 AXIS 3126

ASCB Total 2918086

1 AGVB 2366995

2 LDRB 149830

RRB Total 2516825

1 AACB 26990

Grand Total 5461901

Source: Compiled from SLBC reports of March 2012 (Assam)

The bank – wise status reveals that out of total number of no – frills accounts as on

March 2012, highest number of no – frills accounts in Assam were opened by AGVB

(around 44 percent) followed by SBI (around 41 percent) and UBI (around 4 percent) and

CBI & UCO bank (around 3 percent each) and the total share of rest of the banks operating

in Assam was merely around 5 percent. Thus, the performance of all other banks was

comparatively marginal in this regard (Table – 4 .11).

132

4.3.5. General Credit Cards (GCCs) in Assam

To take care of the financial needs of the rural folks in a holistic manner, RBI

directed all scheduled commercial banks including RRBs, to launch a GCC scheme akin to

KCC scheme in December 2005 (RBI, 2007-08)lix. Accordingly, more than 1 lakh GCCs

were issued in Assam as on March 31st 2012. These cards were issued without targeting

any specific functional group (like farmers, artisans etc.) to address the credit needs of

persons with small means having some income-generating activity, based on the

assessment of income and cash flow of the household. RRBs have issued largest number of

GCCs over a period of seven years from March 2006 to March 2012 and only 11 percent

of the total cards were issued by Commercial Banks as on March 2012 (Table-4.12). The

borrowers can avail of the credit facilities provided under GCC as per their needs without

any insistence either on security or specification of the purpose/end-use of the credit

(www.cab.org.in).

Source: Compiled from SLBC reports of March- 2006, 2007, 2008, 2009, 2010, 2011, 2012 (Assam)

lixFor providing an incentive to banks for issuing the GCCs, fifty per cent of credit outstanding under GCC up to Rs.25, 000 has been

made eligible for being treated as indirect agricultural finance under the priority sector lending as per the directions of RBI. Further, RBI

directed banks in May 2008 to classify 100 percent of the credit outstanding under GCCs as indirect finance to agriculture sector under

the priority sector with immediate effect. Source: RBI, 2007-08, Annual Report, pp196, 197.

Table-4.12: General Credit Card (GCC): Agency-wise and Year-wise Progress

Banks Cumulative position of number of Cards Issued as on March

2006 2007 2008 2009 2010 2011 2012

Commercial Banks

503 (14)

731 (18.7)

8705 (35.2)

12455 (31)

21125 (35.3)

22688 (30)

11401 (11)

RRBs 3172 (86)

3172 (81.3)

14428 (58.4)

27700 (69)

38703 (64.7)

51925 (70)

62368 (62)

AAB - - - - - - 26990 (27)

Total

3675 (100)

3903 (100)

24717 (100)

40155 (100)

59828 (100)

74613 (100)

100759 (100)

Note: AAB= Assam Co-operative Apex Bank Figures in parenthesis indicate percentage to total.

133

4.3.6. Kisan Credit Cards in Assam

KCC scheme was introduced in the year 1998 to enhance the credit flow for crop

loans by providing adequate, timely, and cost effective and hassle free short-term loans to

farmers. The scope of KCC was broadened by NABARD to cater to various term credit

needs of farmers. In addition to short term credit and term loans for agriculture and allied

activities, a certain component of loan through KCC also covers consumption needs. The

scheme is implemented across India by all public sector commercial banks, RRBs and Co-

operative banks (NABARD, 2008-09).

Source: RBI, 2011-12, Report on Trend and Progress of Banking in India 2011-12, p 165; NABARD

The statistics relating to number of KCCs issued in NER shows that Assam is

leading in terms of issuance of KCCs as at end March 2012 followed by Tripura. In

Assam, as at end March 2012 Commercial banks issued highest numbers of cards followed

by RRBs and co-operatives. However, the performance of other NER states in regard to

issue of KCCs is not that satisfactory. The total amount sanctioned under KCC scheme

over a period of seven years from 2006 to 2012 in India stands at Rs. 916 Crore (RBI,

Table-4.13: Kisan Credit Card--State-wise Progress as on 31 March 2012 (Amount in Rs. Crore and

number of cards issued in ‘000) State

Co-operative Banks

Regional Rural Banks

Commercial Banks

Total

Cards Issued

Amount Sanctioned

Cards

Issued

Amount Sanctioned

Cards

Issued

Amount Sanctioned

Cards

Issued

Amount Sanctioned

ALL INDIA 2,961 10640 1,995 11520 6,804 69510 11,760 91670

North-eastern region 31 30 130 280 236 780 397 1090

Assam 7 10 84 230 160 540 251 780

Arunachal Pradesh # - - - - 7 20 7 20

Meghalaya # 3 3 2 4 20 70 25 77

Mizoram # - 1 1 2 5 30 6 33

Manipur # - - - - 3 10 3 10

Nagaland # - - - - 11 40 11 40

Tripura # 21 20 43 50 28 70 92 140

Sikkim #$ - - - - 2 10 2 10

Notes: '-': Nil/Negligible; # StCB functions as Central Financing Agencies; $ No RRBs in the States; ** Data under reconciliation.

134

2011-12a) and the total amount sanctioned in Assam is Rs. 7.8 crore (Table-4.13). The

trend of growth has been fluctuating in India and even the number of cards issued

registered a negative growth in the year 2008 by 0.5 percent over the previous year, the

number of KCCs issued in Assam registered a positive growth by 17.3 percent in the same

year. This shows that the Agricultural Debt waiver scheme of the government didn’t

impacted Assam figures like the national figure. As on March 2012, out of the total KCC

Cards issued in India (over 1 crore), Assam’s share constitutes 8.2 percent of the same

(Table-4.14).

Table-4.14: Number of KCCs issued by Commercial, RRBs & Co-operative Banks

Year (as on March 31) India Assam

2006 8012251 339750

2007 8511478 (6.2)

359395 (5.8)

2008 8469602 (-)0.5

421555 (17.3)

2009 8592473 (1.5)

480393 (14)

2010 9006123 (4.8)

630070 (31.2)

2011 10169000 (12.9)

793801 (26)

2012 11760000 (15.6)

967220 (21.8)

Note: Figure in bracket indicate percentage growth/ decline over previous year

Sources: 1. Compiled from SLBC reports ending March 2006, 2007, 2008, 2009, 2011 & 2012 (Assam) 2. RBI, 2009-10, Report on Trend and Progress of Banking in India 2009-10,p134 3. RBI, 2010-11, Report on Trend and Progress of Banking in India 2009-10,p192 4. RBI, 2011-12, Report on Trend and Progress of Banking in India 2011-12,p165

With the objective to serve the masses at the bottom of the pyramid, different banks

have resorted to issue of KCCs by different names under the aegis of RBI. SBI introduced

ATM linked KCC i.e. ‘e-KCC’ in Assam for farmers benefit. UBI has issued ‘United

Kisan Card’ scheme for making available hassle free credit to the farmers with simple

terms and conditions for meeting the production and investment credit needs of farmers

135

and ‘United Bhumiheen Kisan Credit Card’ scheme to provide production credits to

landless farmers and oral lessees, tenant farmers, etc, up to Rs. 25000. Further, Syndicate

bank has issued ‘Syndicate Kisan Credit Card’. Some other KCCs from leading banks are:

Allahabad Bank - KCC; Andhra Bank - AB Kisan Green Card; Bank of Baroda – BKCC;

Bank of India - Kisan ; Samadhan Card; Canara Bank – KCC; Corporation Bank – KCC;

Dena Bank – Kisan Gold Credit Card; Oriental Bank of Commerce -Oriental Green Card

(OGC); Punjab National bank - PNB Krishi Card; State Bank of Hyderabad –KCC; SBI–

KCC; Vijaya Bank -Vijaya Kisan Card (www.indg.in).

4.3.7. Self- Help Groups (SHGs) in Assam

The SHGs linkage data for Assam reveals that around 2.4 lakh SHGs were deposit-

linked and around one lakh SHGs were credit linked as on 31st March 2011. In India,

agency-wise analysis reveals that with regard to banks financing under SHGs, commercial

banks accounted for highest percentage of both savings and loans outstanding followed by

RRBs and co-operative banks respectively. In Assam, the RRBs account for the highest

number and amount of both deposit and credit linkages followed by commercial banks and

co-operative banks (Table-4.15).

Source: SLBC reports of March 2012 (Assam)

Table-4.15: Position of Banks Financing under Self-Help Groups in Assam: Agency-wise &Year-Wise

Banks

Cumulative Position (As on 31 March 2011) (Rs. in Crore )

Deposit linkages Credit linkages

No. Amount Under SGSY Direct SHGs Total

No. Amount No. Amount No. Amount

Commercial Banks

84581 72.75 46116 412.17 28513 195.67 74629 607.84

RRBs 134149 27.89 47961 272.61 59962 111.47 107923 384.09

Co-operative Bank

21302 11.31 8089 63.06 3281 13.57 11370 76.63

Total 240032 111.95 102166 747.85 91756 320.71 193922 1068.56

136

The number of SHGs financed in Assam registered enormous amount of growth as

it increased from 94352 in March 2006 to 193922 in March 2011. The credit extended

increased phenomenally from around Rs. 383.92 crore to Rs. 1068.56 crore during the

same period (Table-4.16).

Table-4.16: Financing of Self-Help Groups in Assam (Credit Linkage)

Banks

Cumulative Position as on (Rs. In crore)

31.03.2006 31.03.2007 31.03.2008 31.03.2009 31.03.2010 31.03.2011

No. Amt No. Amt No.

Amt No.

Amt No.

Amt No.

Amt

Commercial Banks

46566 273.39 57397 397.75 66727

453.73

58206 443.79 65000 499.71 74629 607.84

RRBs 46486 106.55 46950 121.70 58172

161.89

71802 219.38 89114 285.36 107923 384.09

Co-operative Bank

1300 3.99 5081 8.34 6002

15.40

8384 35.63 9741 50.94 11370 76.63

Total 94352 383.92 109428 527.79 130901

631.02

138392 698.80 163855 836.01 193922 1068.56

Amt-Amount; No.-Number

Source: Compiled from SLBC reports of March 2006, 2007, 2008, 2009, 2010 & 2011 (Assam)

4.3.8. Priority Sector Lending in Assam

In Assam, the percentage of priority sector advances to total advances increased

from 43.3 percent in March 2006 to 55.5 percent in March 2011 and was highest in the

year 2009 with 60.3 percent. All the banks including commercial banks, RRBs and co-

operative banks achieved the target of 40 percent advances to priority sector as prescribed

by RBI. The SLBC data revealed that advances to priority sector by RRBs and co-

operative banks was around 80 percent and 76 percent respectively of their total advances

as on end March 2011 (Table - 4.17).

137

Table-4.17: Priority sector Lending in Assam As on 31st March (Rs. in Crore)

Banks 2006 2007 2008 2009 2010 2011

Amt Amt Amt Amt Amt Amt

Commercial 3499.63

(40.8)

4852.64

(43.2)

6524.60

(47.2)

8399.45

(56.2)

8563.50

(48.5)

9887.68

(49.5)

RRBs 595.62

(65.2)

782.03

(69.7)

952.51

(72.4)

1122.59

(74.3)

1349.42

(77)

1788.21

(80.1)

Co-operative 152.96

(48.3)

167.99

(59.4)

185.87

(64.4)

212.36

(68.4)

233.28

(71.9)

241.68

(75.7)

NEDFi & RIDF

- 346.04

(100)

659.27

(100)

971.11

(100)

1168.73

(100)

1325.02

(100)

Total Priority

sector lending

4248.21

(43.3)

6148.70

(47.3)

8322.25

(51.8)

10705.51

(60.3)

11314.93

(54.1)

13242.59

(55.5)

Note: 1. Figure in parentheses are percentages of the Priority sector advances to Total advances

2. The target for aggregate advances to the priority sector was 40.0 per cent of the net bank credit for domestic banks and

32.0 per cent of net bank credit for the foreign banks. The targets have been linked to ANBC or credit equivalent of OBE,

whichever is higher, with effect from April 30, 2007 (RBI Annual Report 2008-2009, p213).

3. The domestic SCBs, which fail to achieve the priority sector/agriculture lending targets/sub-targets, are mandated to

deposit into the RIDF such Amts as may be assigned by the Reserve Bank. The Fund has so far completed fifteen years of

operation. The Union Budget for 2010-11 had announced that RIDF XVI (corpus of `16,000 crore), MSME (Refinance)

Fund (corpus of `4,000 crore) and Rural Housing Fund (corpus of `2,000 crore) would be set with NABARD, SIDBI and

NHB, respectively, during the year (RBI Annual Report 2009-10, p 90-91)

Source: Compiled from SLBC reports of March 2006, 2007, 2008, 2009 and 2010 (Assam)

Recognizing the need of targeting the small and mid size agriculturist, self

employed personnel, entrepreneur; not only as a measure of poverty alleviation but also as

a measure of productivity/ efficiency building machinery to support the all round

development of the region, on-lending to the "needy" for taking up productive activities

was started by NEDFi with an objective of developing & supporting NGOs/ Voluntary

Agencies (VA) possessing a good track record (www.nedfi.com). As revealed by SLBC

138

reports, 100 percent of the lending by NEDFi & RIDFlx has been taken as Priority Sector

Advances since 2007.

Source: India figure Compiled from RBI Annual Reports of 2007-08, 2008-09, 2009-10, 2010-11, 2011-12b Assam figures Compiled from SLBC reports of March 2006, 2007, 2008, 2009, 2010, 2011

The trend of growth rate in terms of priority sector lending in India shows a

negative trend in the year 2008 which can be attributed to government’s Debt Waiver and

Debt Relief Schemelxi for farmers launched in 2008-09. However, trend of growth in

Assam has also declined from 44.8 percent in 2007 to 5.7 percent in 2010. It again

registered a growth rate of 17 percent in the year March 2011 over the previous year.

However, the total amount of priority sector advances has increased by around three times

lx NEDFi : North Eastern Development Finance Corporation Ltd. (NEDFi) was incorporated under the Companies Act (1956) in the

year 1995. NEDFi aims to be a dynamic and responsive organization to catalyze economic development in the North-East by identifying financing and nurturing eco-friendly and commercially viable industrial and infrastructure projects in the region. The Corporation offers various products to the entrepreneurs in a quick and hassle free manner. The products are: Project Term Loan, Equipment Finance, Equity Participation (for innovative & highly promising projects), North-East Equity Fund (for small local entrepreneurs), Merchant Banking Services, Assist in Entrepreneur Development and Development of Market for NE Products, Assist Techno-Economic Feasibility Studies for National and International Funding. Source: http://finmin.nic.in/the_ministry/dept_eco_affairs/budget/annual_report/9900ea2.PDF

lxi Guidelines for implementation of the scheme have since been received from Reserve Bank of India vide their Circular letter No.

RPCD.No.PLFS.BC..72/05.04.02/2007-08 dated 23rd May 2008.

Table-4.18: Total Priority Sector Advances (Amount in Rupees crore)

Year India Assam

2006 3560234 4248

2007 4449025

(25)

6149

(44.8)

2008 824772

(-)81.5

8322

(35.3)

2009 965773

(17.1)

10706

(28.6)

2010 1138406

(17.9)

11315

(5.7)

2011 1337300

(17.5)

13243

(17) Note: 1. Figure in bracket indicate percentage growth over previous year 2. In case of India, the priority sector advance includes the amount extended by Public Sector, Private sector and Foreign Banks 3. In case of Assam, the priority sector advance includes the amount extended by Commercial, RRBs, Co-operative Banks and NEDFi &RIDF

139

in Assam over the period of six years, whereas at the national level it registered a decline

by around 62 percent over the same period (Table - 4.18).

4.3.9. Business Correspondents and Business Facilitators in Assam

SLBC data for Assam reveals that as on 31st March 2009, there were 611 farmer’s

clubs working in state playing a significant role in formation of SHGs/ JLGs and as BC/

BF and coordinating with banks to ensure credit flow among its members and forge better

bank borrower relationship (Table-4.19). The Lead Bank in Assam urges that ideally each

branch should promote at least one farmers club for better credit disbursement and credit

management.

Table-4.19: Agency-wise position of Farmer’s Club in Assam (As on 31st March, 2009)

Sl. No. Agency No. of clubs No. of rural and semi urban branches

1. Assam Cooperative Apex Bank 10 39

2. RRBs

a) AGVB 410 343

b) LDRB 16 42

3. Commercial Banks 175 741

Total 611 1165

Source: Compiled from SLBC reports of March 2010 (Assam)

Asomi an MFI has been appointed as BC by various commercial banks in Assam.

For UCO Bank, United Bank of India Asomi Finance Pvt. Ltd (AFPL) is acting as

recovery agent for the old Non Performing Assets.

140

Table-4.20: District wise data on number of BC/BF accounts opened as on March ending

Sr no. District 2006 2007 2008 2009 2010 2011 2012 TOTAL

1 Barpeta NIL NIL NIL 10 2 40 8 60

2 Bongaigaon NIL NIL NIL 3 5 15 14 37

3 Cachar NIL NIL NIL 2 NIL 18 5 25

4 Darrang NIL NIL NIL 14 10 3 7 34

5 Dhubri NIL NIL NIL NIL NIL NIL 2 2

6 Dibrugarh NIL NIL NIL 15 22 26 11 74

7 Goalpara NIL NIL NIL 9 10 10 21 50

8 Golaghat NIL NIL NIL 31 18 32 4 85

9 Hailakandi NIL NIL NIL NIL NIL 3 10 13

10 Jorhat NIL NIL NIL 5 20 32 46 103

11 Kamrup NIL NIL NIL 22 9 23 4 58

12 Kamrup (m) NIL NIL NIL NIL NIL 3 3 6

13 Karbi angling NIL NIL NIL NIL NIL 19 16 35

14 Karimganj NIL NIL NIL NIL NIL 5 13 18

15 Kokarajhar NIL NIL NIL 9 10 13 NIL 32

16 Lakhimpur NIL NIL NIL 15 1 2 NIL 18

17 Morigaon NIL NIL NIL 2 2 2 3 9

18 Nagaon NIL NIL NIL 41 31 33 52 157

19 Nalbari NIL NIL NIL NIL NIL 17 4 21

20 Sibsagar NIL NIL NIL 10 11 35 7 63

21 Sonitpur NIL NIL NIL 45 17 30 6 98

22 Tinsukia NIL NIL NIL 7 24 9 3 43

TOTAL 240 192 370 239 1041 Note: Information obtained under Right to information Act

Source: SLBC Convenor Bank, SBI Guwahati (Dispur) Local Head Office, Assam

Banks have appointed various NGOs as BC/ BF which are engaged in opening no-

frills accounts of the members of SHGs to extend credit facilities through these accounts,

there by contributing towards increasing the outreach of banking system. The district wise

distribution of number of BC/ BF appointed as on March 2012 revealed that highest

number of BC/ BF were appointed in Nagaon followed by Jorhat, Sonitpur and Golaghat

whereas it was marginal in certain districts namely Hailakandi, Morigaon, Kamrup metro

and Dhubri (Table - 4.20). Again, no BC/ BF were appointed in some other districts

namely Chirang, Dhemaji, Dima Hasao, Udalguri, and Baksa till March 2012.

141

4.4. Progress in Assam under the Financial Inclusion Plan

On April 28, 2006, the RBI advised the convenor banks of the SLBC/UTLBC in all

States/ Union Territories to identify at least one suitable district in each State/Union

Territory for achieving 100 per cent financial inclusion by providing a “no-frills” account

and issue of GCC. They were also advised that on the basis of experience gained, the scope

for providing 100 per cent financial inclusion may be extended to cover other

areas/districts. The SLBCs/ UTLBCs were further advised to allocate villages to the

various banks operating in the State for ensuring 100 per cent financial inclusion and also

to monitor the progress under financial inclusion in the meetings of the SLBC/UTLBC

from September 2006 onwards (RBI, 2007- 08). In Assam, Sonitpur was the first district to

be identified for 100 percent financial inclusion and subsequently the Lead Bank of

Sonitpur (UCO Bank) declared the achievement of 100 percent financial inclusion of the

households in the districtlxii. The 11 more districts identified for 100 percent financial

inclusion includes Bongaigaon, KarbiAnglong, N C Hills, Chirang, Baksa, Udalguri,

Barpeta, Goalpara, Lakhimpur, Golaghat and Nagaon (The status as on March 2010 is

given in Annexure – ii).

Further, the Union Budget for 2009-10 stated that the SLBCs will identify the

under-banked or unbanked areas in their respective States/ UTs and devise an action plan

for extending banking facilities to all these areas within the next three years. The Budget

proposed to set aside a one-time grant-in-aid of Rs.100 crore to ensure provision of at least

one centre/ POS for banking services in each of the unbanked blocks in the country (RBI,

2009a). RBI advised all banks to draw a roadmap to extend banking facilities to every lxii State Level Bankers Committee, Assam, 2007, Quarterly Meeting For June, 2007, p 4

142

village having a population of over 2000 by March 2012, not necessarily through a brick

and mortar branch but through any of the various forms of ICT-based models including

BCs. Around 73,000 villages have been allocated to various banks for the provision of

banking facilities in villages having population of more than 2000 as at end June 2010.

Accordingly the SLBC Assam has identified 2260 number of villages having population of

over 2000 but unbanked (SLBC report of March 2010) and SBI, UBI, PNB, AGVB,

Langpi Dehangi Rural Bank (LDRB) has proposed an action plan to provide banking

facility through BC mode, in the unbanked villages allotted. Further, in January 2010, RBI

advised domestic commercial banks both in the public and private sectors to draw up

specific Board approved FIPs for rolling them out over the next three years. Banks were

advised to devise FIPs matching with their business strategy and to include the FIPs as an

integral part of their corporate plans. No uniform model is imposed and each bank is

allowed to build its own strategy in line with its business model and comparative

advantage (RBI, 2010).

143

Table-4.21: Bank-wise status up to March’2011 regarding provision of Banking Services in

every villages having population of over 2000 by March 2012 in Assam

Name of Banks No. of villages allotted for 2010-11 No. of Villages covered

AGVB 210 227

Central Bank 10 0

Punjab National Bank 10 0

State Bank of India 324 332

Syndicate Bank 2 0

U CO Bank 49 0

Union Bank 13 0

Vijaya Bank 1 0

Allahabad Bank 9 0

Bank of Baroda 0 0

AXIS Bank 0 0

Dena Bank 0 0

Federal Bank 0 0

United Bank of India 199 0

ICICI BANK 0 0

Indusind Bank 0 0

Indian Bank 0 0

Bank of India 1 0

Indian Overseas Bank 2 0

LDRB 12 0

Total 842 559 Source: SLBC, 2011 “SLBC Roadmap for providing banking facilities to villages with population on of over 2000” for the Quarter ending March; p-p 11-13; available at:http://slbcne.nic.in/data/FI_Roadmap_assam.pdf

Accordingly villages were allotted in Assam to different banks operating in the

state. The Bank-wise status up to March 2011 regarding provision of Banking Services in

every villages having population of over 2000 by March 2012 is presented in Table - 4.22.

144

Table-4.22: District wise SLBC Roadmap for providing banking facilities to villages with

population on of over 2000 in Assam

Districts Names of the banks allotted to cover the unbanked villages in the district

1. Baksa AGVB, SBI, UCO, PNB, CBI, UNI, SYN

2. Barpeta AGVB, SBI, UCO, PNB, CBI, UNI, SYN, VJB, PNB

3. Bongaigaon AGVB, SBI, UCO, PNB, CBI, UBI, ALB

4. Cachar AGVB, BOB, UNI, UBI, PNB, CBI, CBI, ALB, UCO, AXIS, ICICI, VJB

5. Chirang SBI, AGVB, UCO, CBI, UNI

6. Darrang AGVB, UCO, CBI, UBI, BOB, IOB

7. Dhemaji SBI

8. Dhubri AGVB, UCO, SBI, CBI, UBI, UNI, ALB

9. Dibrugarh SBI, UCO, AGVB, ALB, UBI, CBI, UCO

10. Goalpara UCO, AGVB, CBI, SBI, UBI, UCO

11. Golaghat AGVB, SBI, IND, UBI, ALB, CBI

12. Hailakandi AGVB, CBI, UBI, UCO, SBI, UNI

13. Jorhat UBI, AGVB, UCO, ALB, SBI, CBI, PNB, IND, UNI

14. Kamrup AGVB, SBI, UCO, UNI, PNB, UBI, ALB, CBI

15. Kamrup Metropolitan

AGVB, IOB, UBI, BOI, SBI, UCO, CBI

16. Karbi Anglong LDRB, SBI

17. Karimganj UBI, CBI, AGVB, UCO, SBI, ALB

18. Kokrajhar AGVB, UCO, ALB, SBI, UNI, CBI, PNB

19. Lakhimpur UBI, AGVB, ALB, SBI, UBI, UCO

20. Morigaon UNI, SBI, AGVB, UBI, BOB, IOB

21. Nagaon AGVB, UBI, SBI, PNB, UBI, UNI, IND, CBI, UCO

22. Nalbari ALB, AGVB, BOI, CBI, PNB, SBI, UNI, UCO

23. Sibsagar UBI, AGVB, CBI, SBI

24. Sonitpur AGVB, SBI, UCO, PNB, BOB, VJB, IND, ALB, UBI

25. Tinsukia SBI, UBI, BOI, IND, PNB, DB, CBI, UCO

26. Udalguri CBI, AGVB, BOI, UCO, SBI

Source: Compiled from SLBC Roadmap for providing banking facilities to villages with population of over 2000; available at: http://slbcne.nic.in/data/FI_Roadmap_Assam.pdf

Out of total 842 unbanked villages (having population over 2000) allotted to be

covered under FIP in 2010-2011, around 66 percent of villages i.e. 559 villages are

covered up by SBI and AGVB upto March 2011 (Table - 4.23). Thus, in Assam SBI and

AGVB were the only banks which covered 332 and 227 unbanked villages respectively

and no other bank covered any unbanked village in Assam till March 2011 (Table - 4.22)

despite allotment to many banks in same districts during same period.

District wise allotment of villages and number of villages covered by SBI and

AGVB (having population of over 2000) up to March 2011 under the FIP has been uneven

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in Assam (Table - 4.23). Again, many districts are not getting the benefit of FIP because of

lack of operation of banks in this regard. Except SBI and AGVB none of the banks covered

the unbanked villages having population of over 2000 till March 2011. It is important to

note that the proposed action plan by all these banks for covering the allotted unbanked

village with population of more than 2000 is through BCs.

Table-4.23: District wise allotment of villages and no. of villages covered by SBI and AGVB (having population of

over 2000) up to March 2011 under the FIP

SL.

No.

District wise

allotment of

Villages

No. of Villages

allotted for 2010-11

No. of villages

covered upto Mar’

2011by SBI

No. of villages covered

upto Mar’2011by AGVB

Total

1 Baksa 72 8 1 9

2 Barpeta 44 14 14

3 Bongaigaon 18 6 4 10

4 Cachar 76 15 27 42

5 Darrang 13 3 29 32

6 Dhemaji 4 0

7 Dhubri 150 49 40 89

8 Dibrugarh 16 10 3 13

9 Goalpara 28 5 1 6

10 Golaghat 39 10 10

11 Hailakandi 10 8 2 10

12 Jorhat 62 23 23

13 Kamrup 1 21 5 26

14 Kamrup Metro 8 3 1 4

15 Karbi Anglong 14 2 2

16 Karimganj 18 17 17

17 Kokrajhar 0 5 5 10

18 Lakhimpur 9 7 26 33

19 Sonitpur 13 13 19 32

20 Tinsukia 28 11 11

21 Udalguri 0 4 4

22 Morigaon 13 3 12 15

23 Nagaon 91 41 13 54

24 Sibsagar 58 39 32 71

25 Nalbari 53 9 7 16

26 Chirang 4 6 6

Total 842 332 227 559

Note: The district wise detailed lists of villages covered by SBI and AGVB are given in Annexure-iii and Annexure – iv Source: SLBC, 2011 “SLBC Roadmap for providing banking facilities to villages with population on of over 2000” for the Quarter ending March; p 13; available at:http://slbcne.nic.in/data/FI_Roadmap_assam.pdf

146

Thus, it can be inferred that SBI and AGVB were the biggest players in the

financial inclusion drive in the state and these were the only banks providing banking

services and covering the unbanked villages in Assam during the study period (Table -

4.22) (Annexure – iii and iv).

The main problems faced by AGVB in the financial inclusion drive were lack of

technology partners, illiteracy and lack of adequate number of manpower. It did not start

Electronic Fund transfer and remittance facilities and could not expand ATM network but

both the services were in process of being started during the period of survey.

4.5. Conclusion and suggestions

Data collected and analysed from RBI, NABARD at national level and information

from SLBC reports reveals that Assam is having presence of highest number of

commercial banks and bank branches compared to other NER states. However, the

population per bank branch (i.e. 22,000 people per bank branch) is considerably higher

than the national average of 15,000 people per bank branch. Further, district-wise data in

these regard reveals wide-disparity. As per the banking profile of banks operating in

Assam, AGVB followed by SBI, UBI, CBI and UCO banks have the highest number of

bank branches in Assam but these banks have failed to achieve the national CDR norm of

60 percent. However, after the government directives for increasing the flow of credit to

priority sector, agriculture and SMEs, banks have exceeded the national norm of ‘40

percent of total advances to priority sector’ advances in Assam. The financial inclusion

drive since its launch in 2006 has also shown remarkable progress with opening over 54

lakhs no-frills accounts in Assam till March 2012. This growth is mostly attributed to

147

increased number of BCs/ BFs in the year 2011 & 2012 across various districts of Assam

as the highest number of BC/ BF i.e. 370 & 239 were appointed in 2011 and 2012

respectively. Further, progress has also been observed in the numbers of issue of KCCs

and GCCs. However, the progress is not evenly distributed among the various districts of

Assam. AGVB and SBI are the only banks which have covered unbanked villages in

Assam. Other banks did not start their operation under FIP till March 2011 in the districts

allotted, hence the district wise progress is not upto the mark.

The deposit and credit linkages of SHGs have increased significantly with a

cumulative growth of more than 100 percent since 2006 till 2011. For greater financial

inclusion, various banks operating in Assam have also started appointing BCs and BFs in

unbanked areas.

Thus, as revealed by supply side data the level of financial inclusion is not very

satisfactory in Assam. Bank wise status regarding provision of banking services in every

village having population of over 2000 revealed that even though the target for the year

2010-11 was to cover 842 villages by March 2012, only 559 villages were covered. Again,

SLBC data revealed that total 2327 villages with population of over 2000 were unbanked

as on March 2011(http://slbcne.nic.in).

Further, we have to agree to the fact that merely multiplied number of no-frills

accounts; issue of KCCs and GCCs is not a criterion of financial inclusion. To what extent

the financial facilities are being used by the beneficiaries is of more importance to judge

the efficiency of the financial inclusion drive. Hence, there is a requirement for

148

undertaking primary level research to substantiate the claim of the supply side players as

successful financial inclusion initiatives.

In this regard the next chapter pertains to an examination of partnerships and

collaborative efforts of the major banks functioning in Assam having large number of bank

branches and outreach.

149

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