Financial Inclusion White Paper - NCR

2.1.2. Rural India
About 70 percent of the population (770 million people) lives in villages, a
fraction lower as compared to the post independence (in 1947) figure of 75
percent. The vast majority of this group – a full 65 percent of the population – is
employed in agriculture. For financial inclusion policy makers, this fact
emphasizes the importance of financial facilities being made available to the
unorganised primary sector, particularly agriculture and agro-based industries.
Small investments such as seeds, fertilizers, pesticides create demand for microcredit
for small and medium sized farmer households.
Non-farming household’s dependent on unskilled activities, including landless
labour, construction workers and farm product processing workers, are also
underserved by formal sources of finance due to low income. “The Report of the
Committee on Financial Inclusion” (January 2008) stated that 72.7 percent of
India’s 89.3 million farmer households are excluded from formal sources of
finance.
Case Study 2S2: Institute of Integrated Resource Management (IIRM)
Rural socio-economic support for north-eastern states
IIRM was set up by Dhattateya Hoshagrar, a native of Karnataka, after
experiencing the difficulties faced by the poor in north-eastern states in accessing
essential financial services.
IIRM took a traditional development approach of relationship-building in each
village to navigate through the region’s communities. This approach was
instrumental in successfully implementing the microfinance project and providing
socio-economic support to rural and urban poor communities.
IIRM currently serves nearly 8,000 clients and has a target to reach out to
157,000 by 2010. With an average loan size of US$80, IIRM serves farmers, tea
plantation workers, and small-scale entrepreneurs. Borrowers use tailored loan
programs to expand their businesses and redirect extra income towards
education, healthcare, and housing facilities for their families. Currently a nongovernmental
organization (NGO), IIRM plans to evolve into a non-banking
financial company (NBFC)
13