Union finance minister Pranab Mukherjee has formed a high-powered panel of bankers to improve banking penetration in north-eastern states, where as many as 60 blocks still remain unbanked despite the government's financial inclusion drive. The region also has 55 districts where banks have skeletal presence.

Allahabad Bank chairman and managing director JP Dua will head the panel of four bankers to review the bottlenecks and suggest ways to come out of it. It is generally felt that the absence of good road connectivity and security assurance has stifled economic and banking development in this remote belt.

In a note sent five weeks ago, the finance ministry told public sector banks to open branches in every unbanked block in the North East by September 2012. Many senior bankers that felt this cannot be achieved unless the government provides a conducive and safe business environment.

"Opening of branches has proven to be difficult in the north-east," Dua told ET. "The panel will find what has been the problem and suggest the way out," he said. Dua said the panel will submit its report within a month. Uco Bank chairman Arun Kaul, United Bank of India chief Bhaskar Sen and State Bank of India chief general manager Suriender Kumar are the members of the panel.

The finance minister held a meeting with top bank executives in Kolkata on Tuesday to review the progress of financial inclusion and branch expansion in West Bengal and eight north-east states, including Sikkim.

After the meeting, Mukherjee told newsmen that banks have collectively achieved 46% of their financial inclusion target in West Bengal and eight north-eastern states and the balance will be covered by March 2012.

Out of 10,721 unbanked villages, those having a population of 2,000 and above have been identified for financial inclusion in the first phase. Banks have covered 4,969 villages, either by opening brick and mortar branches or through business correspondents. A total of 21.32 lakh accounts were opened in these villages, Mukherjee said. He held a review meeting with bank executives in Kolkata on Tuesday.

SBI chairman Pratip Chaudhuri, and chiefs of Allahabad Bank, Uco Bank and United Bank of India were present at the meeting. After the meeting, Mukherjee told the media that out of 91 unbanked blocks in the north east, banks have extended their services to 31 blocks so far.