New Delhi: A radical overhaul of the banking system in north eastern states has been recommended by an RBI-appointed committee to make the region financially inclusive.
The Committee headed by RBI’s Deputy Governor Usha Thorat made a series of recommendations that include increasing banking penetration and strengthening of Regional Rural banks and Urban Co-operative banks in the region.
It said post offices, traditional institutions and NGOs need to be co-opted by the banking industry so as to encourage economic activities.
In order to access markets in the North East the formal banking industry has to undergo a radical overhaul of their systems, it said.
The findings of the committee were presented at the Special Summit on ‘Banking, Industries and Credit Issues in North Eastern Region´ held here last week.
The committee cited topography, infrastructure, low level of commercialisation and law and order issues as reasons for low level of banking penetration in the region.
Commending role of Micro-Finance Institutions (MFIs) in the region, the report said all institutions desirous of sustainable growth in North East must support initiatives by the MFIs.
The committee also asked banks such as NABARD, SIDBI and NEDFI to review their loan policies and spread their operations as further improvement in banking infrastructure is necessary for improving the economy of the region.
There is a need to take advantage of high literacy, social capital, rich culture and unique geography in the region, the report said.