230
a total of 2,068 branches to 26,439. But after the 1990s, the proportion of
bank branches opened in these regions has steadily declined, and by March
2007, it has declined to 40.6% of the total. No doubt, the branch expansion
programme in totality had received a setback after the 1990s, but interestingly,
even out of the reduced rate of expansion, the proportions obtained by the
underdeveloped regions have suffered more. Interestingly, even after 2007
when, as explained above, banks embraced the spirit of financial inclusion, the
shares of the above three underdeveloped regions in total bank branches has
not improved at all. In fact, between March 2007 and March 2011 the shares
of these three regions fell from 40.6% to 38.8%. We are not stressing this point
beyond a point as it raises the whole question of the absorptive capacity of the
underdeveloped regions beyond a point. We have an occasion to make some
observations on this aspect at a later stage. Suffice it to say for the present,
these underdeveloped regions, whose population share has further increased
to 51.5% have together only 38.8% of bank branches (Table 9.2).
Looking at it differently, it is found that slower growth of bank branches
is reflected in the measure of population per bank office, that is, the average
size of population each bank office serves (Table 9.2). The consistent and rapid
decline in this measure until 1991, got reversed thereafter. At the all-India
level, there has been a fractional correction in the last few years after 2007;
this too has occurred due to a more rapid decline in population per office in
the developed regions. In the three underdeveloped regions of north-eastern,
eastern and central, three occurred significant deterioration between 1991 and
2007, with the population per bank office moving up from 17,000 to 21,000,
from 16,000 to 19,000 and from 16,000 to 20,000, respectively (Table 9.2).
While some improvement has taken place in the latest period after 2007, the
level attained in population coverage per bank office has still remained higher
than that attained in 1991. Amongst the major states, while Bihar and Uttar
Pradesh have this measure above the respective regional averages, Madhya
Pradesh and West Bengal have it below the regional averages.
While on the subject of branch banking in rural areas and the associated
issues of financial exclusion, it is heartening to find that the authorities have
awakened to the adverse consequences of repeated financial exclusion. They
seem to have made the authorities looks inward.
The phenomenon of financial exclusion had been the result of a series
of policy pitfalls after the financial sector reforms began in the 1990s. Reforms
were needed but it was possible to accommodate the reform goals of banking
efficiency, profitability and sustainability of operations, along with the pursuit
