Many states out of banking net, north-east leads

The government is counting on a plan to pay subsidies directly into the bank accounts of beneficiaries, but its well laid plans may go awry as data has revealed that several parts of the India, especially the north-east, have little access to banks. Mahua Venkatesh reports. Subsidies at risk?

The government is counting on a plan to pay subsidies directly into the bank accounts of beneficiaries, but its well laid plans may go awry as data has revealed that several parts of the India, especially the north-east, have little access to banks.

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Latest finance ministry data showed that in most northeastern states including Manipur, Meghalaya and Nagaland, less than 40% of households avail banking facilities.

The sole silver lining is Tripura, where 70% total households use banking facilities - a proportion shared, interestingly, by the terror-hit state of Jammu and Kashmir.

More than 50% of the households in eastern states - West Bengal, Orissa and Bihar - too are outside the banking net.

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"We would have to chalk out a strategy to ensure that states with low penetration are covered at the earliest," said the chairman of a large public sector bank, who did not wish to be identified. "The issue was discussed by finance minister P Chidambaram in a recent meeting."

The government is also looking at a proposal to make it mandatory for all LPG connection-holders to have bank accounts, so that they can claim the annual subsidy. "Banks would be required to expedite opening of branches to expand the network, and we would closely monitor the progress," a senior finance ministry official said.