Shillong, Oct 9: Minister in-charge Taxation, Zenith Sangma on Monday said that due to inadequate banking facilities especially in rural areas, people often took credit from informal sources with high interest rates.

“This is because many people in the rural areas are still unaware of the benefits of the financial formal banking system,” Zenith said while speaking at the Mudra promotion campaign inaugurated by Union minister of state for defence, Subhash Ramrao Bhamre here.

“People engaging in small business require supplement for long term and most of these units are outside the purview of formal banking system, hence they are forced to borrow from informal sources and use their limited funds,” he said.

Stating that the Mudra loan scheme can go a long way in bridging gap in this regard, he said the Mudra loan has enable many borrowers to avail loans from banks and other financial institutions.

“We aspire to get more loan extended to Meghalaya especially to the youth of first generation entrepreneurs and also to existing small business to help expansion in their activities,” he said.

He informed that the progressive development of banking sector is closely monitored by the government in the quarterly state level bankers committee meeting chaired by the chief secretary.

Highlighting on the banking profile of the state, the minister said there are 36 banks functioning in the state out of which 21 are public sector banks, 10 are private banks, 1 regional rural bank and 4 cooperative banks.

According to him, there are 395 bank branches across the state and only 51 per cent of which is in the rural areas. The rural ATM penetration is just 20 per cent.

“Our Credit Deposit (CD) ratio for quarterly ending June 2017 is only 30.31 per cent which is quite below the national norms at 60 per cent,” Sangma said.

Lauding the Centre for holding such financial inclusion camps across the country, he said the launching of various programmes will definitely be helpful to the people as it will not only cover the unbanked households but also ensure greater penetration of insurance sectors in the economy and provide great social security cover.

Asserting that the banks are also stakeholders in ensuring the economic development of the state and especially in paving the way for self-employment to the youths of the state, he however said this objective can be achieve only if comprehensive enabling network for incubation and development of business is put in place.

The taxation minister further informed that instructions have been issued to branches of each bank in the state to conduct financial literacy camps in each quarter to educate the people about the significance of having accounts and benefits of social security cover.

According to him, during the year 2016-17 only 785 literacy camps were conducted by various banks in collaboration with the state government officials.

Up to quarterly ending June this year, 258 such camps were conducted, he said, adding that enterprise facilitation centres established by the Meghalaya Institute of Entrepreneurship and Meghalaya Basin Development Authority across the state are also involved in the process.