Inclusive Financial Services

An estimated two billion working-age adults comprising more than half of the world’s total adult population remain unbanked and dependent on informal channels of credit like family, friends and moneylenders.

India has one of the most extensive financial systems comprised of commercial and cooperative banks, microfinance institutions and self-help groups. To ensure financial inclusion, some of the schemes which Reserve Bank of India (RBI) launched include initiation of no frill accounts, reaching banking services through business correspondents and electronic benefits transfer. Financial inclusion has also been at the heart of successive Union Budgets and schemes of Government of India. Additionally, advances in technology have allowed for expense associated with traditional banking channels and physical cash management to be significantly reduced. India has one of the most extensive financial systems comprised of commercial and cooperative banks, microfinance institutions and self-help groups. To ensure financial inclusion, some of the schemes which Reserve Bank of India (RBI) launched include initiation of no frill accounts, reaching banking services through business correspondents and electronic benefits transfer.

 

Background

During efforts to develop commercially sustainable market led models for promoting livelihoods of the poor, Vijay Mahajan, one of the founding members of PRADAN, realized that access to finance was a major bottleneck. Thus in 1995, Vijay Mahajan and his team at IGS, designed and piloted within Indian Grameen Services (IGS), a parallel set up to the banking system in India to ensure hassle free access to financial services especially for the poor. In 1996, IGS pioneered the joint liability group (JLG) model for lending to farmers. This led to setting up of Bhartiya Samruddhi Finance Limited (BSFL), India’s first micro finance institution (MFI). Next, IGS experimented with the idea of creating financial intermediation models that raise funding resources from financial markets using community resources as leverage. Thus, Sarvodaya Nano Finance Limited (SNFL) and Anik Financial Services Pvt. Ltd. were set up in 1996 as MFIs wholly owned by rural communities. In 2001, IGS set up Krishna Bhima Samruddhi Local Area Bank (KBSLAB) on a saving led model. Following this in 2003, Livelihood and Microfinance Program (LAMP) Fund was created as a fund within IGS to provide financial product for supporting small & nascent organisations. Later in 2010, IGS incubated the business correspondent model and set up Sub-K.

Outreach

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