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References APMAS, 2005, "A Report on Spandana's Microfinance Activity", Mimeo, APMAS, Hyderabad APMAS, 2006, "Voice of the People on the Lending Practices of Microfinance Institutions in Krishna District of Andhra Pradesh", Mimeo, APMAS, Hyderabad CGAP, 2004, "Interest Rate Ceilings and Microfinance: The Story So Far", Occasional Paper, Washington DC Government of AP, 2005, Department of Rural Development, Annual Report 2005 Rhyne, Elisabeth, 2002, "Microfinance Institutions in Competitive Conditions" in Drake and Rhyne eds, "The Commercialization of Microfinance: Balancing Business and Development", Kumarian Press, CT, USA Roth and Others, 2005, "Microinsurance and Microfinance Institutions: Evidence from India", CGAP Working Group on Microinsurance, Good and Bad Practices, Case Study No. 15, September Sriram, MS, 2005, "Expanding Financial Services Access for the Poor: The Transformation of Spandana", WP No 2005-04-03, IIMA, Ahmedabad 76
Diversifying Microfinancial Services A. Microinsurance CHAPTER 5 This chapter deals with two non-traditional financial services that the microfinance sector is beginning to offer in India. The first, microinsurance, is in rapid flux with the recent arrival on the scene of a number of private insurance companies, who are required to do a certain proportion of their business in the rural and social sectors. Thus there is a new set of incentives for the insurance industry to reach the poor. A great deal of innovation in new product development and service delivery is taking place in partnership with MFIs and others, and the early pioneers such as SEWA and DHAN Foundation have been joined by a host of more recent entrants to the microinsurance sector. However, these are early days yet, and the sector is likely to continue evolving rapidly, especially with growing interest in the broader political environment in improving India's social security record, which like other parts of the social sector has been relatively neglected until recently. There are strong synergies between microinsurance, microcredit and microsavings. Insurance offers protection to assets created under credit programmes, and protects savings from being wiped out by shocks arising out of sickness, death, accidents or asset loss caused by fire, drought, floods, and riots. While both savings and insurance provide protection against such shocks, insurance offers a higher degree of protection, especially when savings have just commenced and are still being built up to provide an adequate cushion on their own. Insurance provides protection not just against one-off losses and calamities, but as important, reduces the on-going uncertainty induced by vulnerability to such shocks, with its debilitating affect on investment in new assets or working capital. Thus there is a new set of incentives for the insurance industry to reach the poor. A great deal of innovation in new product development and service delivery is taking place in partnership with MFIs and others Given these synergies it is gratifying that an increasing number of MFIs are offering insurance. 1 However many of them are still feeling their way in moving beyond the traditional offerings of life insurance (which was provided through group insurance schemes by the former public sector monopoly provider, LIC, for a couple of decades) and loan-financed asset insurance. A great deal depends on the vision and mission of the MFI, and specifically on the degree to which it is minimalist in the sense of focusing primarily on the growth of outreach and sustainability through credit services, or is concerned equally with borrower risk mitigation (as opposed to its own) and livelihood growth as ends in themselves. More than half of the 83 MFIs that responded to the Side-by-Side study (Sa-Dhan 2005) offer insurance, with life insurance being more widespread than non-life insurance. The impact evaluation study of 20 SFMC partners, "The Maturing of Indian Microfinance" (EDA 2005) found that 14 of them offered an insurance product. 11 of these offered life insurance, covering 48 percent of their membership, and 8 of them offered asset insurance, restricted usually to loan-financed assets 77
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Microfinance in India A State of th
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List of Tables Page No Table 2.1 Gr
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Preface and Acknowledgements This r
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Abbreviations ABC ADB BC BF CAR CAG
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CHAPTER 1 Overview and Summary of M
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Overview and Summary of Main Recomm
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Page 27: Overview and Summary of Main Recomm
Page 30 and 31: 1 1a 1b 2 2a 2b 2c 3 3a 3b 3c 4 4a
Page 32 and 33: The Light and Shades Study A major
Page 34 and 35: highest proportion of weak records
Page 36 and 37: their profitability after accountin
Page 38 and 39: allow the programme to grow organic
Page 40 and 41: 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8
Page 42 and 43: Endnotes 1 It is very hard to compa
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Page 46 and 47: linkages", 11 percent 3rd, and 5 pe
Page 48 and 49: References APMAS (AP Mahila Abhivru
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Page 53 and 54: Progress Under the MFI Model is fun
Page 55 and 56: Table 3.4 Comparative performance i
Page 57 and 58: Progress Under the MFI Model on lit
Page 59 and 60: Progress Under the MFI Model 4 Howe
Page 61: Progress Under the MFI Model Refere
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Page 66 and 67: size had actually come down during
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Page 72 and 73: Box 4.1 Continued 4. MFIs will coll
Page 74 and 75: Endnotes 1 There will be many disag
Page 76 and 77: 19 The base suicide rate in AP is 1
Page 80 and 81: (such as cattle and houses), and co
Page 82 and 83: The advantage of the provider model
Page 84 and 85: Some lessons learnt from experience
Page 86 and 87: Box 5.2 VimoSEWA: Synergies between
Page 88 and 89: 86 Table 5.1 Main Feature of Health
Page 90 and 91: Endnotes 1 While the microinsurance
Page 92 and 93: 16 A little less than a fifth of th
Page 94 and 95: 29 The rationale for transfer progr
Page 96 and 97: Roth, James and Vijay Athreye, 2005
Page 98 and 99: Issues and priorities for action re
Page 100 and 101: Endnotes 1 See for instance CGAP (2
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Page 104 and 105: such as Chaitanya who soon became s
Page 106 and 107: money to support operational expens
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Page 110 and 111: Box 6.1 Continued in experts and to
Page 112 and 113: Endnotes 1 In a sense it always was
Page 114 and 115: 16 Examples are Margdarshak in Luck
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Page 118 and 119: Table 7:1 Commercial bank exposure
Page 120 and 121: The main constraints to the expansi
Page 122 and 123: further review, RBI has modified th
Page 124 and 125: 9 Thus ICICI has sold some of its b
Page 126 and 127: B. Equity Investments by the Ventur
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Figure : The Bellwether triangle Lo
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Despite the weaknesses the public s
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Box 7.1 Continued foreign sources o
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Endnotes 1 At this point they will
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References ACCION, 2003, "The Servi
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SIDBI Foundation for Micro Credit (
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categories, depending on the amount
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The distribution of total disbursem
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Endnotes 1 It should be noted that
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B. Donor Participation in Indian Mi
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this has dropped to 8% on the curre
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and poor populations. More directly
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and expansion of available retailer
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11 SDC through various programs for
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154
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1.1 Impact evaluation of Spandana's
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in the loan tenure of 24 months. Th
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There are two main motivations of a
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compensation structures used by Ind
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Endnotes 1 By Annie Duflo, Anvesha
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29 The main components of direct tr
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