October 15, 2009

About four years ago, the then Reserve Bank of India (RBI) governor Yaga Venugopal Reddy visited four northeastern states - Meghalaya, Assam,Nagaland and Tripura. It wasn't unusual for an RBI governor to do so. But this visit was special. It was the first time that Reddy got a fix on the reasons behind the dismal state of banking in the North East. Something that prompted him to depute a key lieutenant - RBI deputy governor Usha Thorat - to draft a masterplan for financial services development in the region on a war-footing.

Never before had RBI taken such a conscious step to shore up banking penetration in Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura and Sikkim.The challenges are numerous - the difficult terrain, the remote habitation zones, the innumerable logistical cum communication bottlenecks, not to mention the insurgency problem. All have stifled economic and banking development over the years.