Reaching Remote Areas: A Case for North East India

This paper argues that the key to financial inclusion in the North-Eastern region of India is horizontal expansion combined with vertical growth and provision of a broad product suite for different clients. It states that despite the efforts of government, the North-East region of India is financially excluded due to diversity, market accessibility and risk-averse attitude of the banks. However, despite these conditions, micro and small enterprise thrives in the North-East. The paper states that:

• Microfinance in the region has been characterized by SHGs, but difficulties in accessing banks and the high cost of promotion are disincentives for their growth;
• The diversity of the region means that a one-size-fits-all SHG product would not meet all requirements;
• NGOs/institutions are also active in microfinance in the area, but these have limited knowledge and skills to upgrade their operations.

In order to reach maximum numbers in a sustainable manner, the paper recommends:

• Different strategies for areas with a cash-based economy and other areas with limited cash;
• Serving a wider market segment than the traditional poor microfinance clientele with an initial focus on urban areas;
• Developing a broader product suite for different clients;
• Promoting traditional organizations and financial products, since they offer low cost alternatives;
• Considering e-banking as a viable alternative.