Traditional Mechanisms of Financial Services -The Xonchois of Lower Assam

Providing financial services in the remote regions like the North East Region is challenging because of its hilly terrain and large diversity. While different delivery mechanisms like IT based solutions or mobile banking has the potential of extending outreach to these areas, it is social capital of these areas which could be leveraged to provide the basic financial services in a sustainable manner. This paper attempts to understand the workings of one such institution in the valley regions of Lower Assam called the Xonchois to see whether it has the potential of serving as a last mile link to the formal financial sector. This paper clearly brings out the extensive use of these institutions by the rural households both for savings and credit services in large areas of Lower Assam. This is because they have the ability to satisfy the needs of the rural households as regards the financial services. The paper brings out the strengths of these institutions vis-à-vis the attributes related to savings. It also highlights some of its weaknesses. Finally, it highlights some of the lessons for banks, microfinance institutions and SHGs.