The Reserve Bank of India said low credit-deposit ratio in the Northeast is due to the lack of entrepreneurship among people of the region even as it recommends alternate banking models to push for financial inclusion.
"If CD ratio of the Northeastern states is to be raised, then entrepreneurship activity in this area should be improved and encouraged," RBI Dy Governor K C Chakrabarty said. "CD ratio depends on big industries, but here we do not have much of those big industrial projects because of a variety of reasons," he said.
The RBI official maintained that in such a case, financial literacy should be taken on a war footing to increase the number of those who wants credits from banks. Putting a word of caution, the RBI official said many people in NE did not need credit, they needed money in the forms of subsidies, grants etc.
Notwithstanding the backwardness of the region in terms of financial exclusion, the RBI Dy Governor said that banks and state governments have to work towards achieving overall growth. "There is no inclusive growth without financial inclusion, which is linking everybody with banks," Chakrabarty explained.
Financial inclusion in Meghalaya, with 291 bank branches, is about 37 percent, lower than the national average, state Chief Secretary W M S Pariat said. Cautioning 12 commercial banks whose CD ratio is less than 20 percent, Pariat said these banks needed to improve their performance.
Congratulating the RBI for setting up an office in the state, Pariat said, "This would go a long way in facilitating the expansion of the banking and financial services sector, so much needed by our people."
The chief secretary said the government has initiated an Electronic Benefit Transfer mechanism for routing government payments to beneficiaries under MGNREGS by using biometric smart cards.