IVCS extending Financial Services to the Unbanked Areas of Meghalaya

In Meghalaya, the need to ensure access to basic financial services for farming households in rural areas stemmed from a recognition that there existed a thin spread of banking networks and micro-financial institutions across such regions. The penetration of the formal banking sector has always been minimal because of the non-viability of operations in remote areas with difficult topography, limited transportation facilities, and a dearth of communication infrastructure. Residents would often need to travel long distances just for deposits and withdrawals. Even in areas where bank branches are present, clear gaps exist because of the cumbersome processes of banks, language barriers, and poor general knowledge of financial literacy. 

But Megha-LAMP is alleviating the challenge through the Integrated Village Cooperative Societies (IVCS) – home-grown, community-led credit and marketing institutions formally registered as Cooperative Societies under the Meghalaya Cooperative Societies Act, 2015. IVCS not only provide basic financial services like thrift and credit to their members but also undertake other economic business activities like setting up retail outlets for groceries, input supply for agricultural activities, aggregation, and marketing of agricultural produce, among others. Megha-LAMP supports them with regular handholding in areas relating to maintenance of books of accounts, capacity-building and training, and financial literacy. To augment their capital, the project provides a Corpus Fund. 

330 IVCS have been formed across Meghalaya covering about 42,000 households from 942 villages. “By making financial services available to the last mile, our farmers have been able to take up higher and expanded activities,” said Lawrence Malai, Chairman of the Umkon IVCS Ltd. in Ri Bhoi District. The next phase involves tackling the challenge of financial inclusion. Soon, 200 IVCS will provide extension services to their members as Banking Correspondents of MCAB Ltd.  

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