Discussion Papers

A Blue Print for Commercial Banks to Viably Deepen Financial Access
While endeavouring to deepen financial access in India, the enormity of the problem, that is, the vast number of financially excluded people to be reached, has been emphasised time and again. The Reserve Bank of India, for instance, has recently notified 292 districts in India as “underbanked”2 with poor microfinance penetration, meagre bank branch network, and a low credit deposit ratio. The Rangarajan Committee on Financial Inclusion (January 2008) estimates that 111.5 million households have no access to formal credit; and 17 million households are in debt trap with money lenders. Data from the 59th Round of NSS (2008) shows that 73% of the 89 million farmer households have no access to formal source of credit. ( 972 KB)

Integrated Insurance & Risk Mitigation Solution for Dairy Farmers
Livestock rearing is central to the livelihood and survival of millions of small and marginal farmers and landless agricultural labour across the country, particularly in the dry land regions of India. As livestock related activities help to maintain a daily inflow of income for these households, livestock economy is a source of self-insurance for farmers. It also provides a diversified source of income and mitigates the uncertainties of seasonal income from their traditional sources like agriculture. ( 528 KB)

The Originate-To-Distribute (OTD) model: a conference brief
Highlights of the deliberations at the conference on `The Originate-To-Distribute model of credit provision and its future in financial system design' organised by IFMR Trust Advocacy Unit (ITAU) along with IFMR Capital and Dun & Bradstreet, on March 13, 2009, at Mumbai. The conference brought together academics, market participants and regulators to debate the methods of strengthening the OTD model, particularly for rural finance, and to review the process of securitisation as a means to scale up Indian financial services.

Mutual funds: a new source of financing for MFIs
A landmark securitisation of a pool of JLG loans originated by an MFI, completed by IFMR Capital, with a combination of several investors including a mutual fund (MF), paves the way for other MFs to invest in micro finance securities.

Expanding financial access: principles for policymakers
A discussion on a report of the Centre for Global Development (CGD), which lays out certain principles for policymakers to expand financial access through regulatory reform.

The inner worlds of rural Indians
Life stories of rural Indians, recorded by InnerWorlds India, a team of researchers, converge on themes of resilience, migration and a sense of self that is familial rather than individualistic or collective.

MFI pricing and evaluation: an analysis of key drivers
Nitin Chaudhary and Suyash Rai analyse the pricing of micro finance institutions in India, using the model of a unit with 20 branches, to understand factors that determine interest rates. Across all scenarios, they find that the range of operating costs is 3.7% to 11.5%-- much lower than prevailing interest rates. This suggests that MFI expansion is being financed through revenues rather than equity.

Finance as Noise-Cancelling Headphones
In this article which appeared in the online Wall Street Journal on June 24, 2009, Nachiket Mor and Bindu Ananth argue that financial tools can be used to give households a smooth and growing net income stream and cancel out the noisy shocks in their daily lives.

Don't reject structured finance
The global financial crisis has put a cloud over the 'originate to distribute' model, a widely practised variation of traditional financial intermediation. In this article, which appeared in livemint.com, Sona Varma and Suyash Rai argue that the model itself is sound, and can play a key role in scaling up financial services delivery in India.

Access to micro-savings for remote rural India: a technical note
SG Anil Kumar and Nitin Chaudhary explain how distribution of products of money market mutual funds in remote rural locations is a feasible way of working towards universal financial inclusion. The authors use the case study of Pudhuaaru Kshetriya Gramin Financial Services (PKGFS), a subsidiary of IFMR Holdings Pvt Ltd.( 309 KB)

Empowering rural households
A presentation by Dr Nachiket Mor, made at Pan-IIT 2008, the alumni conference of all Indian Institutes of Technology, held in Chennai, December 19-21, 2008 (file includes video, requires Flash 9)

Inclusive Financial Systems: Some Design Principles and a Case Study
Empirical evidence shows that inclusive financial systems significantly raise growth, alleviate poverty and expand economic opportunity. This paper, by Nachiket Mor and Bindu Ananth, first published in Economic and Political Weekly (March 31, 2007), spells out several principles
that should be kept in mind when designing such
systems. The argument is supported by a case study of ICICI Bank. ( 416 KB)