Even as the Nabard has taken up an initiative to spread financial literacy in the State, banking facility is still out of bounds to a large chunk of population.
The State has to go a long way before achieving equitable and inclusive growth as a large section of the society is still deprived of benefits of economic growth,” said a senior Government officer.
Though the State claimed to have achieved higher growth rate than national average during the last six years, the equity component is not visible in the growth. This is primarily because of inequitable distribution of financial services.
A majority of the population is out of reach of banking facilities as the financial institutions are not prepared to take the risk to extend their services to rural people, the sources said.
The growth is not driven by primary sector but by secondary and tertiary sectors, thus keeping majority of the population out of reach of financial institutions, said a senior officer of a commercial bank.
Since more than 70 per cent of the population have no access to banks and financial capital markets, the growth rate in the rural areas is a meagre 2 pc and this belies the claim of the Government of achieving growth rate more than the national average, said an expert.
Financial inclusion is a major challenge for the Government with over 60 pc of the people having no access to banking system.
Under the financial inclusion plan, 1,877 villages, with more than 2,000 population each, had been identified for extension of banking services to them. As on December 31, 2011, banking facilities have been provided in 1,662 villages.
While commercial banks are required to ensure meeting of targets, allotted under different self-employment schemes of the Government, not a single bank has achieved the target so far. Though the State Government is regularly reviewing the performance of financial institutions at State Level Bankers’ Committee (SLBC) meets, there is hardly any improvement in annual credit plan of individual banks, said sources.
What is more galling is that the financial institutions, operating in the State, have failed to assist the Government in making timely payment to workers under MGNREGS, the massive rural job scheme. The business correspondent model is yet to be fully operational in the State due to lack of cooperation of financial institutions, official sources said.