There is a clear need for enhanced services in the hill states. However, even among the relatively well off districts, it is interesting to note that TN and Andhra seem to have a very high penetration of non institutional loans as compared to institutional loans

On an average, only 16% of Indian households have taken loans from institutional agencies. On the other hand, 22% of the households have taken loans from non institutional agencies. There are two clear indications here – a) the bulk of the population is financially underserved and rely on informal lending and b) the non institutional agencies have together achieved a much higher penetration than the institutional agencies.

If we look at another indicator of financial inclusion, namely percentage of households who hold stocks and debentures, we find that the penetration is just 5%.

There is no doubt that financial inclusion is extremely poor and financial institutions need to focus more on expanding the market rather than flog the existing markets.

Here are the top districts in terms of penetration of institutional loans. These districts have penetrations ranging from 37% to 68%. As many as 14 of these 20 are from Kerala. The districts are Kottayam, Kannur, Idukki, Ernakulam, Pathanamthitta, Kasaragod, Wayanad, Palakkad, Kollam, Thrissur, Kozhikode, Malappuram, Alappuzha and Thiruvananthapuram from Kerala and Mahe, Udupi, Satara, Kolhapur, Wardha, Shajapur (MP).

The bottom twenty districts (all less than 1% penetration) are mainly from the hill districts (Arunachal Pradesh, Manipur, Mehghalaya and J&K - Changlang, East Kameng, Lohit, Lower Subansiri, Tirap, Dhubri, Kupwara, Bishnupur, Chandel, Churachandpur, Senapati, Tamenglong, Thoubal, Ukhrul, East Garo Hills, Jaintia Hills, Ri Bhoi, South Garo Hills, West Garo Hills

The picture changes substantially when one looks at the penetration of non institutional loans. The top 24 districts have penetration ranging from 50-53%. These are - Tiruchirappalli, Nagapattinam, Thiruvarur, Thanjavur, Karur, Pudukkottai and Perambalur from Tamil Nadu, Mahe, Karaikal, Pondicherry, Yanam from Pondicherry, and Prakasam, Srikakulam, West Godavari, Krishna, Nellore, Guntur, Visakhapatnam, Vizianagaram, East Godavari, Chittoor, Cuddapah, Anantapur and Kurnool from Andhra Pradesh indicating a clear geographic pattern.

The bottom districts are again from the hill states. In fact of the bottom 64 (up to 7% penetration) -  2 are from Andaman and Nicobar, 13 are from Arunachal, 14 are from J&K, 7 from Meghalaya, 8 from Mizoram, 4 from Sikkim, 13 from Uttaranchal, and 3 from West Bengal.