Imagine paying almost a fifth of your monthly income in interest on a loan that has a higher cost per month than most formal loans have per year? This is Saraswati’s reality. A maid from Chennai, she was forced to borrow from a moneylender when her son fell sick ten months ago. She does not know when, if at all, she will be financially free. Does she have a bank account? Yes, she has a savings account with State Bank of India but she has never cared to use it. And why so? Because she thinks going to bank branches is complicated and she perceives that she does not save “enough” to use her savings account. Does she not save at all? She does save using informal sources; however, it is not an effective saving mechanism. 

Lack of familiarity with a particular system and low level of technological sophistication often poses as obstacles to the promotion of electronic cards and mobile phone banking among the poor, especially people who live in the rural areas.
As a result, the banking correspondent (BC), or doorstep banking model was introduced in India to bring basic banking services to rural people. Clients of BC programs include mainly households with very low incomes and poor access to the formal banking system. At CMF, we have published a paper that explores the uptake of branchless banking in one of the largest BC programs in the world, FINO, which currently has over 48 million activated savings accounts across India. For the full study, click here

While looking at the usual news updates at the CMF E-Library, I happened to come across an article originally posted at the Economic Times some time ago about a new announcement coming from the RBI. Here is the link: Click Here

It would amaze anyone as to why banking in villages and rural areas persay has not been looked at with any kind of importance. It it had been looked at with at least half the importance it is given in urban areas, there would not be a debate or discussion on how financial inclusion can be achieved. We live in an era where we are able to send probes to our neighbouring planets so that we can understand the planets and lifeforms (if any) better. I have nothing against the pursuit in space exploration. But, here we have instances of individuals from rural backgrounds working in cities; these men and women do not have access to any formal financial services. They end up keeping their money in the soil and even give it to a friend or shopkeeper for safekeeping. Read …

“The Seven Steps to Save the Soul of Microfinance”
Mr Larry Reed, Director, Microcredit Summit Campaign started the first session of the day by re-emphasizing the need to view Microfinance as a poverty alleviation tool and listed seven steps, which in his view were important for the future of microfinance: Recognize excellence:Recognizing that clients are the ones who are striving to get out of poverty and microfinance is merely a tool. He spoke of the need to learn from successes (best-case practices) in the sector.Be Transformative: Acknowledging that microfinance is only one tool to eradicate poverty and not the only tool, and needs to combine with other products meeting the clients’ needs.Encouraging SavingsKnowing you clients, understanding their needs and tailoring products accordinglyPromoting Financial LiteracyMonitoring and rewarding social performances, by keeping track of achievements,goals and rewarding successes in different spheresDoing no harm- which can be achieved by ad…

Most of us might have a vague idea of what retirement should be like. Some of us might even have started planning for it. The rest of us are probably waiting for one of our ‘future selves’ to do it.

Economists claim that savings adequacy is considered to be that which makes the ratio between post-retirement income and current income at least 70 percent. It might be relatively easier for economists to make such calculated decisions but for us lesser mortals, we don’t have much clue. Apart from not having the know-how to figure out exactly how much we should be saving, there are several impediments that prevent us from saving at all.

This post is the detailed description of session one of the Financial Inclusion 2012 Conference. The aim of this session was to lay out the distinct features of microfinance that have a positive impact on the lives of its clients. The panel set out to review the lessons learnt from the sector and reflect on its mission. The discussion was moderated byMr. Matthew Titus, Executive Director of Sa-Dhan who expertly steered the discussion as well as involved members of the audience to gain a holistic picture of the challenges and ideals facing the sector.

Financial Inclusion Conference 2012
"The First Mile Walk into the Financial System"
7 - 8 August 2012 Hotel Ashok, New Delhi







The tenth edition of the Financial Inclusion Conference, jointly organised by Sa-Dhan and FICCI opened today in New Delhi. Welcoming the participants, Mr Mathew Titus, Executive Director, Sa-Dhan said that there are challenges in fulfilling the mandate of financial inclusion, which need to be addressed. To view the session plan for Day One, click here.
Mr Amiya Sharma, Chair, Sa-Dhan said that this year’s conference will look at the nuances of the three main streams working in the financial inclusion arena - SHG Bank Linkage, Microfinance Institutions and the BC Model. This conference aims to highlight the dilemmas and challenges of these institutions and the clients they service. Consequently it seeks to deliberate upon the need for appropriate policy interventions to make financial inclusion a reality.

A day ago, I came across this headline, "Bangladesh government prepares to take control of Grameen Bank" from David Roodman's tweet feed and I also read the article, "Cabinet okays amendment to Grameen Bank ordinance". A few minutes ago, Muhammad Yunus' reactions has been posted in his respective website [Click here to read]. Also, read what David has said about the recent turn of events [Link]
I find the turn of events to be rather puzzling. Yes, it does bear a strange an uncanny resemblance to the movies, where the hero after successfully having thwarted all the bad guys has to give in to the Police and other authorities. Where were they in the first place? The Grameen Bank Ordinance now allows the Chairman of the Board to choose the Managing Director of the microcredit firm single-handedly. The Chairman of the Board will be a person appointed by the Government. Is it just me or is democracy getting stifled here?