CAB-CMF Conference Proceedings 2009

CAB-CMF MICRO FINANCE CONFERENCE January 16 and 17, 2009

Summary of Proceedings

Contents Foreword

3

Programme Description

4

Research Summaries

5

Conference Proceedings

18

Programme Schedule

27

Profiles of Key Speakers

29

List of Participants

33

Foreword

the form of outreach. Yet there are still a large number of households with no access to financial services. This situation poses two sets of distinct questions: How do we cater to the successful clients, who are now demanding larger loans, especially in the face of the emerging competition among MFIs? At the same time, how should we fill the “white space� where there is no micro finance activity, let alone a formal banking network?

Critical gaps remain in our understanding of how micro finance can be best used to fight poverty and promote development of small and cottage industries. Does micro-credit help small businesses grow, or does it have an impact primarily on areas such as women empowerment? Which financial products have the most impact on the lives of those who take them up? Can the impact of micro finance be enhanced by the addition of non-financial programmes such as business training? How can we ensure that the poorest are not left out of the micro finance revolution?

Forward-thinking practitioners experiment with their programmes and models to address some of these gaps and improve their services. Academic researchers, working closely with practitioners, have attempted to document some of these innovations in order to provide the sector with information on best practices. Such research can help practitioners improve and develop their programmes further. In order to foster an environment where practice and policy is informed by rigorous research, and research questions are guided by insights from practitioners, it is essential to bring together academics, micro finance practitioners, bankers and policy makers on a common platform and to encourage interaction among these players.

To this end, the Reserve Bank of India College of Agricultural Banking, together with the Centre for Micro Finance at the Institute for Financial Management and Research, held a national conference on micro finance in January 2009 in Pune.

The objective was to provide insights from on-the-ground research and highlight their policy implications, and to draw lessons from the innovations of leading practitioners. The conference also aimed at identifying challenges and emerging issues in the sector and areas for future research and experimentation that would be relevant to both practitioners and policy makers.

These proceedings showcase brief write-ups based on presentations from the conference and session summaries1. They address issues such as the impact of micro credit, evaluation of current financial inclusion efforts in India, and emerging issues within micro finance, such as the impact of the current global financial slowdown. Issues of particular interest for policy makers and regulators were also discussed, such as competition among MFIs and clients’ understanding and perception of interest rates.

While the presentations and discussions raised as many questions as they answered, the conference showed that rigorous research can provide important insights for policy and practice. The conference encouraged us to further facilitate such dialogues and interaction between academics, micro finance practitioners, bankers, regulators and policy makers, and, we view this as an on-going effort and an opportunity for continuous collaboration between CAB and CMF. The conference would not have been a success without help from many people and we warmly thank all those who organized the conference, especially faculty at CAB and CMF researchers, and all the speakers. Finally, we thank all the participants for attending and actively participating in the conference.

Sandip Ghose (Principal, College of Agricultural Banking-RBI, Pune) Justin Oliver (Executive Director, Centre for Micro Finance at IFMR, Chennai)

_______________________ The views expressed in the document are those of the authors and presenters and do not necessarily reflect the views of the institutions with which they are affiliated.

1

3

Foreword

T he rapid growth of micro finance in India over the last ten years has several implications for micro finance institutions as well as governance of the sector. Since the sector is still in its nascent stages, MFIs have largely focussed on growth in

Programme Description

T he objective of the conference is to facilitate interaction between prominent micro finance practitioners, bankers and policy makers, and researchers who are conducting field experiments in micro finance. Panelists will share results from experiments they have conducted that have led or could lead to improvements in micro finance programmes or policies. The Conference is organised into five technical sessions with the following themes i) Enhancing the impact of micro credit ii) Financial Inclusion

Programme Description

iii) Financial Literacy iv) Optimizing micro finance distribution channels v) Emerging issues in the micro finance sector About the Hosts:

Centre for Micro Finance:

Despite the tremendous growth of micro finance in India, critical gaps remain in our

knowledge of how to most efficiently deliver micro finance services and how micro finance

can best be used as a tool to fight poverty. The Centre for Micro Finance (CMF) was established in 2005 to help fill these gaps. The mission of the Centre is to improve the lives of the poor by maximizing both the access to financial services and their impact through rigorous research, knowledge dissemination and evidencebased policy outreach. To achieve these objectives the Centre works in partnership with various MFIs in India, as well as banks, investors, and academic institutions in India and abroad, including Massachusetts Institute of Technology (MIT), Yale, Harvard, New York University (NYU) and Indian School of Business (ISB).

The Centre undertakes qualitative and quantitative research in four broad areas: (1) impact evaluation of credit and savings products, (2) micro finance “plus� (how to combine effectively micro finance with other development interventions and non financial services), (3) insurance and innovative products, and (4) sector wide and policy issues, such as micro finance regulation or the impact of competition. For more on their work please visit http://ifmr.ac.in/cmf.

College of Agricultural Banking: The Reserve Bank’s College of Agricultural Banking (CAB) was set up in 1969 for capacity building in the rural and cooperative sector. While continuing to play a significant role in accordance with its mandate, the College has broadened its scope to provide training in areas relating to Information Technology, Human Resource Management and General Banking to meet the emerging needs of the Indian Financial spectrum. The Vision of CAB is to be a premier centre of excellence for capacity building in development banking and finance in general, and rural and cooperative banking in particular.

CAB, besides designing and delivering regular programmes and organizing conferences/seminars (both national & international), also conducts customized programmes for its clientele. It also has collaborations with reputed international institutions for organising programmes of topical relevance. At CAB, we are committed to building and enhancing capabilities in the financial sector in tune with the changing times.

4

Impact Evaluation of Urban Micro Credit Principal Investigators: Abhijit V. Banerjee (MIT) and Esther Duflo (MIT) Research Associate: Aparna Dasika (CMF)

S

pandana is a Non Banking Finance Company (NBFC) committed to strengthening significantly the socio-economic status of poor women in rural and urban areas by providing technical and financial services on a continued basis for establishing their identity and self-image. In the decade since it began operations, Spandana has expanded its operations to eight states in the country: Andhra Pradesh, Karnataka, Tamilnadu, Orissa, Maharashtra, Chattisgarh, Madhya Pradesh and Rajasthan and has a client base of over two million.

Programme Description While there is much anecdotal evidence on the impact of microfinance, there have been few rigorous assessments of the extent to which microfinance has improved the lives of beneficiaries. To avoid issues of non-comparability between microfinance clients and non-clients, this project uses a randomized design to examine the impact of Spandana’s microfinance programme in Hyderabad, Andhra Pradesh on income, consumption, financial services usage, asset ownership, business scale and profitability, and intra-household decision-making. This study provides an understanding of the effects of a microfinance programme at the household level and the usage of financial services in particular, which could lead to better financial services product design and the development of complementary non-financial services interventions at the household level. The final aim, of course, is to maximise the impact of microfinance. One hundred and twenty slums, where Spandana was planning to expand its microcredit programme, were selected for the study.

Key Findings from Baseline Data The baseline results revealed many impartant details about the loans received by households in slums around Hyderabad before the entry of Spandana. 60 percent of surveyed households have at least one outstanding loan, and 46 percent of the households have more than one outstanding loan. The average loan size was Rs 20,000 (median was Rs. 10,000) and the average interest rate was about 80 percent a year.

Loans received in these slums rarely came from commercial banks or MFIs, and instead mainly came from the following sources: • Moneylenders (49%) • Friends or neighbors (28%) • Family members (13%) When people were asked why they took the loans, business creation or expansion were both not near the top of the list.

People took loans for other pressing needs, as the numbers below indicate: • • • • • • •

Health expenses (17%) Marriage (13%) Temporary difficulty (10%) Home construction (10%) Consumption (10%) Start a new business (7%) Business expansion (1.33%)

It is possible that credit is acting partly as a substitute for insurance. Virtually none of the households have health insurance, and 40 percent needed to spend Rs 500 or more on health in the last year. Moreover, the average health expense was Rs 7,500 (median Rs 3,000) per year, and about 60 percent of households with a sick member needed to borrow money to pay for related health expenses.

Endline Results Forthcoming The end-line survey was completed in the fall of 2008 and data analysis is currently being conducted. We are expecting the full results to be finished by the end of May 2009 but plan on sharing some early results during this conference.

5

Research Summaries

Spandana uses the joint liability model to deliver microfinance services. In addition to the joint liability products, it also offers consumption loans and recently started offering individual loans with daily repayment. Basic group loans start at Rs 7,000 with a one year repayment period. Early repayment is possible, and an additional Rs 2,000 is available after six months. Spandana began urban operations in Hyderabad in 2005.

Cost – Benefit and Usage Behaviour Analysis of No-Frills Accounts: A Study Report on Cuddalore District S. Thyagarajan (CAB) and Jayaram Venkatesan (CMF)

F inancial inclusion is the delivery of financial services at an affordable cost to the vast sections of disadvantaged and low-income groups of people who have until now been excluded. In the Mid Term Review of the Policy (2005-06), the RBI Research Summaries

exhorted banks to make basic no -rills savings accounts, with nil or minimum balances, widely available to a vast section of the population in a transparent manner.

By November 2008, of the 342 districts identified by State Level Bankers Committee, 155 districts were declared to have achieved 100 percent financial inclusion and by the end of March 2008 15,788,919 no-frills accounts had been opened.1 At this juncture, it was considered important to look at the status of the project for financial inclusion covering all aspects of no-frills accounts. Therefore, the College of Agricultural Banking (CAB) - RBI, Pune and the Centre for Micro Finance at IFMR, Chennai decided to study the Cuddalore district of Tamil Nadu that had been declared 100 percent financially included in 2007. This study was designed to analyse the results of the financial inclusion project in terms of coverage by geographical and other parameters, cost involved in opening of accounts and maintenance, as well as the transactional usage behaviour, which would allow us to calculate the break-even point after which banks would begin to earn revenue.

DISTRIBUTION OF HOUSEHOLDS 4.4 25.3

41.9

28.3 Households not found during survey Households having bank account already Households willing and no-frills account opened Unwilling households still left out of the banking net

Financial Inclusion Project Results:2After completion of the project, 25.3 percent of households remained outside the banking net in the garb of “unwillingness�; in other words, people are not willing to open bank accounts. This accounts for around 47 percent of the households which did not have bank accounts prior to implementation of the project. There were large variations in terms of reporting willingness and unwillingness by the banks, indicating the seriousness, or lack thereof, with which different banks participated in the household survey work. Other than reasons such as distance from banks, one of the main reasons given for unwillingness was improper administration of the household surveys, such as incorrect or incomplete recording of the survey forms and inadvertently omitting households that had expressed willingness but were not taken into account while consolidating. According to the branch managers who were interviewed by the study team, banks that adhered to the following procedures achieved 100 percent willingness: 1. Making announcements to villagers prior to arrival of bank staff for the household survey and account opening formalities.

2. Deployment of full-time special officers from outside the branch who gave undivided attention to the project work.

3. Involvement of the panchayat presidents and Municipal Chairman. _______________________ 2 3

Report on Trend and Progress on Banking, 2007-08, Reserve Bank of India Indian Bank, Booklet on Financial Inclusion Project in Cuddalore District

6

Account Usage Behaviour: The real success of the financial inclusion project would be measured by the actual quantity and quality of usage of the newly opened no-frills accounts. Perusal of the sample accounts revealed that 72 percent of the accounts had zero or minimum balance even after one year of opening. Only 15 per cent of the accounts had a balance of more than Rs. 100, leaving 85 percent of the new no-frills accounts inoperative. One of the most important reasons for inoperation seemed to be lack of awareness among households about savings and about the uses of no-frills accounts.

Surprisingly, many account holders were not aware of the purpose of opening the bank account and obtaining the passbook. They were under the impression that having the bank passbook might enable them to receive some assistance through government schemes or result in obtaining a loan from the bank at a later stage.

AVERAGE BALANCE AMONGST OPERATIVE ACCOUNTS Balance per account

Research Summaries

1400 1200 1000 800 600 400 1

2

3

4

5

6

7

8

9

10

11

12

13

Age

Among the 15 percent of operative accounts in the sample, the average balance per account (with balance less than Rs. 30,000) had increased from Rs. 533 when opened to Rs. 1195 after one year. The percentage of account holders with balance less than Rs. 500 decreased from 78 percent to 46 percent indicating that a substantial number of the operating customers had increased their savings over one year. The average number of transactions in a sample of operative accounts was found to be 4.4.

Cost and Break-even of No-Frills Accounts: Based on the inputs provided by the branch managers at Cuddalore, the cost of opening a no-frills account (excluding the fixed cost at the branch) was estimated to be Rs. 50.45. The cost of maintenance of a no-frills account or the cost of transaction in such accounts was estimated to be Rs. 13.40. At current levels of transaction and average balance, it was found that the banks would break-even only the maintenance costs, that is, if accounts are used, but not if accounts are opened but not operated. The percentage of accounts operating has to improve significantly for no-frills accounts to break-even on the total costs.

Recommendations: Some recommendations of the study include: • Financial awareness on opening and operating bank accounts must precede as well as happen simultaneously with opening accounts.

• A tolerance limit for unwillingness may be fixed as an acceptable criterion for declaring a district as 100 percent financially included.

• Some of the best practices employed by banks and branches that achieved 100 percent willingness should be documented by banks and disseminated.

• This study should just be viewed as a starting point in reviewing these costs. Banks should conduct more intensive studies to examine the costs of both opening and maintaining accounts and break-even scenarios.

7

Financial Inclusion in Gulbarga: Finding Usage in Access Minakshi Ramji (CMF)

I

Research Summaries

n 2005, the Reserve Bank of India (RBI) announced a national drive for financial inclusion, to be initiated in one district of every state in India, whereby every ‘unbanked’ household in the target district would be provided with a savings account. Since the announcement of this drive, many states have announced the drive in more than one district with some states like Himachal Pradesh and Karnataka declaring 100 percent financial inclusion by 2007. In 2008, the Committee for Financial Inclusion, chaired by Dr. C. Rangarajan, recommended that each semi-urban/rural branch open about 250 bank accounts annually, which would lead to the creation of roughly 11.5 million accounts across the country.

Given the time and resources devoted to this effort, it would pertinent to appraise the drive. The Centre for Micro Finance (CMF) carried out a study in order to gauge whether or not ‘unbanked’ households received new bank accounts.

The study was conducted in Gulbarga district in Karnataka, one of first locations claimed to have achieved 100 percent financial inclusion. This research study concentrates on three broad areas: the process of financial inclusion, how households experience financial inclusion and the role of financial inclusion in changing financial behaviour.

Financial inclusion can be defined as timely delivery of financial services to disadvantaged sections of society. As such, financial inclusion is closely correlated with outreach or breadth of financial services in an economy. While it refers to access to a range of services, typically, financial inclusion is measured by the percentage of adults having access to a bank account. In India, 59 percent of the adult population is said to have access to a bank account (Leeladhar, 2005).

Research Methodology The site for the study was set in Gulbarga district in North Karnataka. This district is one of the most backward districts in Karnataka, ranked 26 among 27 districts in the Karnataka Human Development Report 20053. Gulbarga has a vast population of 3.1 million and covers about 9 percent of the Karnataka’s total area. The financial inclusion drive was implemented in this district from August 2006 to January 2007. A total of four lakh no-frills Accounts with zero balance were opened (Deccan Herald, January 19, 2007). ‘Unbanked’ households were identified as being those households where no member had access to a savings account. Thus, for instance, if a household had a member whose Self-Help Group (SHG) had a bank account, that household would not be considered to be ‘unbanked.’ In Gulbarga, the drive for financial inclusion was implemented about six months after the roll-out of the National Rural Employment Guarantee Programme (NREGP). NREGP wages are distributed through savings accounts in Gulbarga. Thus, simultaneous to the drive banks were also opening bank accounts for NREGP beneficiaries who did not have accounts through the village panchayat. While prior to the drive these accounts were not always no-frills, once the drive began, all NREGP accounts opened were also ‘no-frills accounts’.

The data for this study was collected through household surveys of Below Poverty Line (BPL) households who were identified through state-issued ration cards. The survey was conducted in twenty-five villages in each of Shorapur and Gulbarga blocks of Gulbarga district since these blocks have the highest proportion of BPL households in Gulbarga district. Twenty BPL households in each village were interviewed. A total of nine hundred and ninety nine respondents were surveyed in the study.

Findings A profile of our respondents reveals that 88 percent of the households interviewed report that not a single adult in that household has ever attended school. Over 50 percent of our sample is either Scheduled Caste or Scheduled Tribe. 58 percent of the households own some land and the average landholding was approximately 3 acres. Given that Gulbarga is exceedingly dry and that irrigation is largely rain-fed, land value, both in terms of actual value and in terms of agricultural output, is low. Almost all the households are dependent on agriculture for their livelihood and their earnings are predominantly weekly or seasonal. To give a sense of earnings in this region, men earn about Rs. 50 for a day’s worth of agricultural labour, while women earn Rs. 30 for the same duration. By comparison, a day’s wages under NREGP scheme is worth about Rs. 80.

Overview of Accounts Opened The table below demonstrates that encouragingly, the number of people with bank accounts more than doubled over the duration of drive, going from 12 percent to 29 percent of households surveyed. However, at the end of the drive over a third of our respondents had no access to any kind of formal or semi-formal savings mechanism.

Additionally, of the 172 who opened bank accounts, only 64 reported opening zero-minimum balance accounts.

Finally, only half of those who reported opening zero-minimum balance accounts were financially excluded. _______________________ 4 Karnataka’s HDR Index is 0.650. The all-India HDI is 0.621 and Gulbarga HDI is 0.564.

8

Bank Accounts - Before, During and After the Drive % of HH

BEFORE THE DRIVE HH with bank accounts DURING THE DRIVE HH who opened a bank accounts during the drive HH who did not have access to any other form of savings before opening a bank account

% of HH who do not have access to any kind of formal/semi-formal savings account (1) Savings Accounts refers to any one of the following: Bank Accounts, Post Office Accounts, SHG Accounts, Neighbourhood Groups, Chit Funds, Savings with MFIs

17% 8% 6% 3% 29% 36%

Financial Inclusion and NREGP Beneficiaries The second striking discovery of our study was that the strong link between the NREGP and the opening of bank accounts. The level of knowledge regarding the drive was low, as revealed by the fact that only 10 percent of the population knew that banks were opening zero-minimum balance accounts. An overwhelmingly 87 percent learned of zero-minimum balance accounts through the village panchayat. Since panchayats coordinated the opening of NREGP accounts, this shows that most of the people who had knowledge of the drive obtained this knowledge because they were recipients of NREGP assistance. This hypothesis receives further credence from the fact that 84 percent of those who received help in opening the account were helped by village panchayat members. Close to 70 percent claimed that one of the primary reasons to open the account was to receive NREGP payments. Further, of the 10 percent who knew about no-frills accounts, 71 percent were NREGP beneficiaries and of the 17 percent who opened accounts between July 2006 and July 2007, 78 percent were NREGP beneficiaries.

Are you aware that banks are opening zero minimum balance accounts for everyone?

Yes No

What were the reasons that your household opened the account?

10% 90%

How did you find out that banks were opening zero Bank Officials 2% SHG Members 0% NGOs 2% Neighbours 4% Village Panchayat Members 87% Farmer Clubs 0% Posters 0% Newspaper Advertisements 0% Village Meetings 0% Other 4%

Receive govt. payments from NREGP Receive govt. payments from schemes other than NREGP For receiving remittances For saving money To request a loan

68% 23% 5% 4% 3%

Did someone help you open the account?

Yes No

76% 24%

Who helped you open the account?

Village Panchayat Officials Neighbour Bank Officials Relative

84% 6% 4% 2%

Access and Usage The next table provides data regarding the usage of the three most common formal and semi-formal savings mechanisms. It corroborates the finding that new bank accounts were primarily opened to receive government assistance.

SHGs are much more consistently used for savings. Over half the newly opened bank accounts have not seen any deposits at all. There are several possible reasons for low usage. Firstly, that access to banks entails transaction costs that are high. For instance the cost of travelling to a bank in this region is about Rs. 20, which is almost half what a daily agricultural labourer would make and twice what an SHG member saves on a weekly basis. Secondly, there is a strong belief, revealed during unstructured discussions that bank accounts are meant for larger amounts. As a example of this, about 56 percent of our sample said that they did not have sufficient income for savings. Yet when asked whether or not they save, 96 percent of those who felt their incomes were too low for bank savings reported saving on a regular basis.

9

Research Summaries

HH who opened a bank account during the drive + reported 0 minimum balance HH who did not have access to any other form of savings before opening a bank account AFTER THE DRIVE % of HH with bank accounts

12%

Research Summaries

Savings Account Usage

Bank Accounts Accounts 1yr & less Rs. 189

Post Office Accounts All Accounts Accounts 1yr & less Rs. 234 Rs. 92

SHG Accounts All Accounts Accounts 1yr & less Rs. 2438 Rs. 1682

Average Balance % of respondents making regular deposits Frequency of deposits (as a % of those making regular deposits) Amount of last deposit % of hh who never made a deposit

5%

6%

2%

99%

92%

36% No fixed schedule/ weekly

67% Monthly

-

57% monthly 42% weekly

54% weekly 44% monthly

Rs. 474

Rs. 118

Rs. 94

Rs. 50

Rs. 50

57%

71%

56%

0%

0%

Top reason for not making regular deposits

56% Use account 78% Use account 64% Use account 83% make 100% make only to receive only to receive only to receive regular deposits regular deposits govt. assistance govt. assistance govt. assistance in other accounts in other accounts

% of hh who make regular withdrawals Frequency of withdrawals (as a % of those making regular withdrawals) Typical withdrawal

51%

19%

31%

53%

50%

55% As and when 61% As and when 73% As and when govt. assistance is govt. assistance is govt. assistance is 86% As required 85% As required deposited deposited deposited 78% Irregular Amounts

83% Irregular Amounts

100% Irregular Amounts

50% Iregular Amounts

42% Irregular Amounts

Conclusion Thus, the financial inclusion drive in Gulbarga has failed to open accounts for a significant proportion (36%) of the ‘unbanked’ population. It also appears that of the accounts opened, a majority of them have been opened under the NREGP scheme. The first possibility, if we accept these results, is that the drive has failed to target its beneficiaries appropriately. The second possibility is that accountholders do not recall having opened these accounts since the accounts were opened without any stated purpose. This would also explain why NREGP accounts are recalled in a majority of the cases since the beneficiaries are compelled to use these accounts as they must when they collect their wages from the bank as often as they work.

Furthermore, our study found that knowledge regarding the financial inclusion drive was quite minimal on the ground, whereas the level of knowledge about the NREGP was higher. Thus, there is a clear need for greater marketing and education of the drive itself. Additionally, there is a need for greater education about the need for savings and alternative ways to save.

To conclude, the drive for financial inclusion in Gulbarga did not improve savings behaviour for most of the account holders. In fact, many of the individuals who qualified for a no-frills account did not receive one. However, no-frills accounts which were coupled with government assistance have provided an important facility for the beneficiaries and have shown usage. Thus, the drive for financial inclusion when coupled with other policy measures can be beneficial for disadvantaged communities.

Bibliography Leeladhar, V (2005). “Taking Banking Services to the Common Man – Financial Inclusion” Commemorative Lecture by Deputy Governor Reserve bank of India at the Fedbank Hormis Memorial Foundation at Ernakulam on December 2, 2005 “Here, every family has a bank account” Deccan Herald, 19 January 2007. Retrieved from: http://deccanherald.com/Archives/ jan192007/index27502007119.asp Karnataka Human Development Report 2005, Department of Planning and Statistics, Government of Karnataka, Retrieved from: http://planning.kar.nic.in/khdr2005/eindex.htm

10

Addressing Rainfall Risk through Microinsurance Principal Investigators: Raghabendra Chattopadhyay (IIM-Calcutta), Shawn Cole (Harvard), Jeremy Tobacman (Wharton), and Petia Topalova (IMF) Research Associate: Nilesh Fernando (CMF)

Recent innovations in the insurance sector have led to the development of rainfall insurance, which may dramatically improve the livelihoods of the rural poor (both farmers and landless laborers) by substantially reducing their vulnerability to adverse weather conditions. However, a substantial barrier to the success of rainfall insurance is the limited experience rural poor have with financial services. The concept of an insurance policy, based on a weather station they do not observe, which provides payouts only in some states of the world, is a difficult one, and individuals may be reluctant to purchase products with which they have limited familiarity. So-called “behavioral biases” (such as inconsistent time-preferences or limited math skills) may exacerbate this problem.

This project aims to: (a) evaluate the potential of rainfall insurance to improve the livelihood and well-being of the rural poor in Gujarat, India (b) understand how behavioral biases and risk aversion influence decision making at the household level and (c) evaluate the effectiveness of different marketing and communication strategies in encouraging take up of the product.

Programme Description Historically, high transactions costs have limited the scope for micro-insurance products such as crop-insurance. However, a new model in which NGOs cooperate with insurance providers has led to the emergence of micro-insurance products. This innovative delivery mechanism allows providing insurance against adverse events, with premiums low enough to be accessible to poor populations.

A recent innovation in the insurance sector, insurance against adverse rainfall (rather than output) allows claims settlement to be both fast, and more importantly, free of moral hazard or adverse selection problems that have plagued crop insurance schemes. ICICI-Lombard, IFFCO-Tokio and other insurers have recently begun to offer such rainfall insurance to farmers.

Taking advantage of these developments, the Self Employed Women’s Association (SEWA) developed, in collaboration with ICICI-Lombard, an insurance product to insure against risks arising out of deficit and excess rainfall. While the insurance product offered by ICICI-Lombard has gone through several cycles elsewhere in India, the product requires customization to local agro-climatic settings. In particular, there is very little data on rural income, which would be very useful in setting optimal payout policies. A well-designed product would pay the poor precisely when they need income the most. A product innovation with this project is that by selling in units as opposed to being based on acres of land, the product is now made available to landless laborers as well, indeed to anyone whose income varies with the weather.

Research Design and Analysis This project aims to evaluate the impact of rainfall insurance in mitigating risks and vulnerabilities that households are exposed to. More specifically, the study seeks to answer questions such as: how effective is rainfall insurance in reducing the negative effects of unfavorable weather? How will it affect local risk-sharing? Will policy-holders undertake more projects with a higher return (such as sowing more crops)? Will there be any affect on the local price of goods, or on wage rates? A careful evaluation of the efficacy of the program will provide great insight into how to reduce the vulnerability of poor households, and demonstrate the benefits of secure income.

Moreover, a large literature in psychology and marketing suggests that the manner in which risk is framed can have substantial impact on buyers’ perceptions of the value of insurance. This study also tests the efficacy of the following message framing techniques: positive vs. negative framing; attribute framing; and goal framing. Marketing content is delivered via movies (shown on portable media devices in the village) and flyers.

For the purposes of rolling out the insurance product, 100 villages have been identified that are within 30 km of an IMDrecognized weather station in 3 districts - Ahmedabad, Anand and Patan. Since SEWA initially offered weather insurance to only a limited number of villages, 33 villages were selected at random, where insurance wias offered. In the second year, this was expanded to a group of 50 villages.

11

Research Summaries

Project Background and Significance Individuals and households in rural India are vulnerable to substantial risks. Among the most severe is the risk that drought or excessive rain can cause crop failure, leading to substantial hardship. Economic activity in many rural areas is very sensitive to the quality of the monsoon. Because a negative weather shock affects virtually all households in a region, many of the coping mechanisms (informal insurance, credit, increasing labor supply) are of limited value.

While local insurance has limited ability to insure against local shocks, larger financial markets can, in theory, provide complete insurance.

Before the product was rolled out and before the randomization was done, a baseline survey of 1500 households across the 100 study villages was completed in May 2006 to collect data on household characteristics including income, consumption and economic activity. Marketing followed the surveying using flyers and village meetings. Following the kharif season, a follow-up survey was conducted during November-December 2006. These surveys collected information on household characteristics, factors that affect household decision making, existing risk coping mechanisms, risk aversion and factors that affect take up of insurance. A unique aspect of this study is that cognitive tests were administered as well.

Research Summaries

While no surveying was done in 2007, new marketing techniques were adopted, including the use of portable media devices to display videos about rainfall insurance (in addition to flyers), discount coupons to the value of Rs. 5, Rs. 15, or Rs. 30 and a slew of situational cues. A new round of baseline surveying began in March/April 2008, with the intention of evaluating the impact of rainfall insurance on savings, informal risk sharing, and agricultural practices and decisions.

At the individual level, it measured the impact of insurance on consumption smoothing and food adequacy, and food prices, commodity prices and wage rates at the macrolevel.

Contribution While micro-insurance is a very promising mechanism for reducing risks faced by households, it has a relatively short track record in India (and very little elsewhere in the world as well). Several important questions need resolution before it can be scaled up to reach large segments of the rural population. While we know from experience and research that poor households in rural India are vulnerable to risk, it is still not clear how well a rainfall insurance program will reduce this risk and modify households’ investment behavior, and whether the cost of implementing such a programme is worth the benefits it will result in. This research project attempts to answer this question. The study will also provide useful inputs in terms of awareness creation and marketing to other organizations willing to introduce such insurance products.

To our knowledge there is only one paper that studies the effects of weather insurance (Gine, Lilleor, Townsend, and Vickrey (2005)). This study attempts to minimize overlap with theirs: we focus on marketing techniques; we are studying a product designed for landless laborers; we include tests for cognitive ability and financial literacy; we include a module on risk-sharing. Methodological differences include the use of randomized evaluation to estimate impact and a larger sample (100 villages, rather than 38) in our study.

Results In 2006 a total of 908 policies were sold to 826 households, which included to non-surveyed purchasers who received no treatment marketing. Of the roughly 500 households in the treatment group that were offered insurance, approximately 20 percent purchased policies. Take-up was positively correlated with household wealth and education, but not correlated with individuals’ expectations of monsoon quality in the coming year. Probability skill and risk aversion is highly correlated with take-up. Also, experience with an integrated SEWA insurance product also predicted take up of rainfall insurance.

The rate of take-up remained roughly constant in 2007. Marketing results from 2007 show that 29.3 percent of households who received video treatment purchased rainfall insurance, while 25.9 percent of households that received flyer treatments purchased insurance. This difference is statistically significant. However, subtle psychological manipulations have no statistically significant effect: the impact of Sewa Branding, Peer Endorsement, Payout Framing, or Positive / Negative frame in affecting take-up are not statistically different from zero at conventional significance levels. Those households that were surveyed are 15-17 percent more likely to purchase insurance than those who were not part of the survey. The price elasticity of demand is highest in Ahmedabad and Anand, at 0.83, and 0.875, respectively, and lowest in Patan, at 0.66.

Results from the 2008 round of household surveys are currently pending, however, in the absence of payouts an impact evaluation looking at asset accumulation and well-being more broadly will not be possible.

Future Plans In 2009, weather insurance will be marketed to almost 1500 households. Sales will also be expanded to three previously uncovered blocks within Ahmedabad, Anand, and Patan. Additionally, optimal marketing treatments are being developed using the accumulated evidence on the efficacy of the variety of treatments that have been employed over the past three years. Moreover, an intensive financial literacy training will be implemented to teach farmers and agricultural laborers more about the concept of insurance, and, in particular, the nature of risk coverage, consumption smoothing and how these concepts can be leveraged to the benefit of farmers and agricultural laborers.

Additionally, there are plans to implement insurance policies that make payouts at the block (taluka) level, and that split the monsoon in to three phases so as to provide coverage against variation in rainfall within the monsoon period.

The baseline surveying will begin in mid-March and an endline survey is expected to take place in October/November 2009.

12

Fighting Malaria with Micro finance Brian Blackburn (Stanford), Aprajit Mahajan (Stanford), Alessandro Tarozzi (Duke), Joanne Yoong (RAND) Research Associate: Daniel Kopf (CMF)

W

Increasing the use of insecticide treated nets (ITNs) among the rural poor could be a cheap and simple way of bettering health and economic outcomes for the rural poor.4 The use of ITN for prevention of malaria has been advocated by several international bodies, and multiple studies have shown that ITNs significantly reduce malaria-related morbidity and mortality. Yet despite their simplicity, relatively low cost and numerous efforts by various advocacy groups and governments to promote net use, the adoption rate of ITNs in many malaria-endemic areas remains low.

The explanations for continued low coverage of ITNs include the logistical difficulties associated with distribution, social acceptance, and cost. Although untreated nets are available in the market for less than 100 rupees, in areas such as highly malarious Orissa, one of India’s poorest state, even this nominal cost can be prohibitive. It is possible that the lack of cheap sources of credit, in order to borrow to purchase ITNs, is another important inhibiter to ITN use. The direct and indirect expenses associated with these cases of malaria are also reasons why micro finance clients may not be able to repay their loan or increase their debt capacity.

Considering these causes of low ITN coverage and the need to protect Orissa’s rural population from malaria, CMF and the Bharat Integrated Social Welfare Agency (BISWA) are currently conducting a randomized evaluation of BISWA’s malaria bed net program. This is a pilot program intended to see if the use of BISWA’s micro finance distribution channel to distribute ITNs can be a sustainable and high impact intervention.

One hundred and fifty villages across five districts of Western Orissa in which BISWA operates were chosen for the pilot program and evaluation. After conducting a baseline survey of the households of 15 SHG members in each of the 150 villages, the villages were randomly divided into three groups. One third of the villages received only an information campaign, which consisted of an hour-long session on the causes and effects of malaria and the use of bed nets as a preventive measure. Another third was given the same information campaign as well as enough free ITNs to cover all or most household members, with emphasis placed on covering pregnant women and all children under the age of five.

The third group of villages was exposed to the information campaign and then offered the opportunity to purchase bed nets from BISWA either on credit or in cash. In addition, the third group was offered two different purchasing contracts, one that was inclusive of two additional re-treatments, to be done 6 and 12 months after the sale of the nets, and another that was exclusive of retreatment. The diagram below demonstrates different interventions for each of the three groups.

Group 1

Group 2

• Information Campaign • Free ITNs

• Information Campaign

Group 3 • Information Campaign • ITNs with cost (cash or credit)

with the option of: 1. inclusive retreatment costs or 2. exclusive retreatment costs

_______________________ 5 Dipping bed nets in insecticide greatly increase their effectiveness because the insecticide will kill mosquitoes and thus not only protect the person sleeping under the net but also reduce the general mosquito population in the village.

13

Research Summaries

ith an estimated 80 million cases of malaria in India annually, the disease is one of the country’s most pervasive and challenging health issues (Korenromp 2005). Malaria is not only a health issue, but also a major deterrent to economic development (Sachs and Malaney 2002). Money spent on treatment, lost days of work and lowered efficiency are all contributors to poor household’s inability to improve their economic status. Survey data collected by the Centre for Micro Finance (CMF) show that in Western Orissa, families report a cost of Rs. 1500 per malaria episode for any member of household, with 70% of households reporting at least one case of malaria in the last 6 months. Blood tests found 12 percent current infection among the sample populace, of which 90 percent were “brain malaria,” possibly the most fatal form of the disease.

Members of Group 2 received 4,078 nets, while 1,128 nets were purchased by members in Group 3. The households in Group 3 were offered two separate opportunities to purchase nets that were at least a month apart. The second visit did lead to approximately 25 percent increase in net sales.

Sixty percent of households in Group 3 chose to purchase at least one net, with an average of 1.24 nets purchased per household. The substantial number of nets purchased also suggests that the sale of ITNs on micro-credit very well could be a powerful tool for sustainably increasing ITN coverage and health outcomes. Ninety seven percent of nets purchased were bought on credit, leading to the conclusion that households value the opportunity to borrow to purchase an ITN.

Research Summaries

Fifty percent of nets purchased were purchased on the contract that was inclusive of two additional insecticide treatments. Utilizing the baseline data, the researchers were unable to find any beliefs or household characteristics that indicated whether a household was more likely to purchase nets including re-treatments. This may mean that offering only contracts that are inclusive of re-treatments would be simpler, better clients, and unlikely to affect take up.

During the summer of 2008, 8 months after the original distribution of nets, a short study was conducted in 12 villages to understand if the offer of ITNs, through free distribution or sale, affected the behavior of the SHG members’ social contacts.5 Preliminary data shows that the use of bed nets has increased among these social contacts. If through further investigation this proves to be true, it indicates that the introduction of ITNs into SHGs improves outcomes for not just those the intervention is targeted towards. This could lead to an enhanced reputation of the MFI and a larger client base for the MFI because of the improved health and economic status of those who are not currently members, but could be in the future.

Bibliography: Korenromp, E. (2005). Malaria incidence estimates at country level for the year 2004. Proposed estimates and draft report.

Technical report, Roll Back Malaria, World Health Organization, Geneva, Switzerland.

Sachs, J. and P. Malaney (2002). The Economic and Social Cost of Malaria. Nature 415, 680–685.

_______________________ Social contacts are those that a member of the household reported speaking to about “health”, “money”, “malaria” or other “important” matters.

6

14

Financial literacy: What is an Informed Consumer?

Sendhil Mullainathan (Harvard) and Minakshi Ramji (CMF)

I

n recent years, discussions on micro finance policy and regulation in India have tended to be centred on the extent to which small borrowers understand their loans and the financial liability implicated therein. Lack of financial awareness can lead to over-indebtedness and greater economic vulnerability for the very clients that micro finance seeks to help. Indeed, the voluntary code of conduct developed by Sa-dhan after the Andhra Pradesh crisis in 2005 recommends that MFIs be fully transparent in the communication of loan details, interest rates and the calculation thereof. Thus, financial literacy has become a key policy focus in micro finance.

Methodology For this study, two hundred first-time borrowers were randomly surveyed on their understanding of their loan contract from two micro finance institutions in two locations in India, one in the north and one in the south. A few more rounds of surveying will be conducted based on the results from the preliminary round.

Findings a) What clients already know: What is the amount of your loan?

What is the weekly instalment that you must pay on this loan?

(% of respondents)

Right Answer

96%

Wrong Answer

4%

What is the duration of your loan? (% of respondents)

Right Answer Wrong Answer

92% 8%

(% of respondents)

Right Answer Wrong Answer Does Not Know Blank

As written in the loan contract

Adjusting for savings in BSS

Within 10% of weekly amount

41% 53% 3% 3%

57% 37% 3% 3%

83% 11% 3% 3%

An overwhelming majority of respondents were able to state correctly the size of the loan and duration of the loan. At first glance, the numbers seem to indicate that only 43 percent of the respondents were able to state their weekly repayment amounts accurately. This is, in fact, misleading. One of the MFIs in this study collects Rs. 12 from its clients over and above the loan payment, Rs. 10 as member savings and Rs. 2 as an insurance premium. When this amount is added to the weekly interest payment, the total number of respondents able to state their weekly loan payment correctly rises to 66 percent.

About 85 percent of the respondents are within the 10 percent range of the correct weekly repayment amount they owe. b) What clients do not know: As suggested by the graph and table below, clients are not able to accurately state the interest on the loan either as a percentage or as a Rupee amount.

100 80 60 40 20 0

What is the total interest payment that you are required to pay over the time of this loan? (% of respondents)

-999 -444 5 6 9 10 12 15 17 17.5 20 23 25 30 33 50 60 84 100 120 125 140 150 175 188 196 200 250 400 700 1500

Frequency

ANNUALISED INTEREST PER Rs. 1,000 OF LOANS, AS REPORTED BY RESPONDENTS

Interest per Rs. 1,000 of loan

Right Answer Within 10% of the Right Answer Wrong Answer Tried but does not know Did not try and does not know Blank

11% 39% 50% 18% 20% 1%

-999 Did Not Try and Does Not Know -444 Tried But Does Not Know

15

Research Summaries

The Loan Contract Information Study aims to understand how MFI clients understand their loan contract and exactly what it means for an MFI client to be informed. This study goes beyond assessing whether an MFI client knows the terms of his loan. Rather, this study explores which aspects of their loan terms are important to MFI clients and what are the implications thereof for regulation.

They are also not able to correctly recall the total interest paid on the loan. In spite of this, almost 47% of the respondents say that the low interest rate was the reason why this source of credit was picked over others. In the North study site, in answer to the question on annualized interest rates, 48% of the respondents gave the answer as 1.5% which is the monthly non-declining interest rate on the loan. c) Client perspectives on collection practices S. No. I

Research Summaries

II III

IV

Hypothetical Scenario Given to Respondents In case Lakshmi is not able to pay her loan and the centre manager insists on holding the meeting outside her house.

What do you think about the centre manager's action?

If Lakshmi doesn't repay her loan in your group, do you think it is appropriate to extend the meeting for 30 minutes to enforce repayment?

If Lakshmi doesn't repay their loan in your group, do you think its appropriate to extend the meeting for three hours to enforce repayment?

Let's say that Lakshmi is not able to repay her loan. Would it be okay for the MFI to take any of her assets such as for instance, any cows she owns, her house, her land or the machinery she uses for work?

Most Popular Answer (% response) Yes, It's alright

2nd Most Popular Answer (% response) It's wrong and he should not do so (42%) (29%) Yes, It's alright It's wrong and he should not do so (42%) (32%) It's wrong and he should Yes It's alright not do so (36%) (33%) Yes, It's alright It's wrong and he should not do so (53%) (22%)

The table above shows reactions from respondents to four hypothetical situations where MFI staff use coercive collection practices to enforce repayment. Interestingly, in all except the third scenario, the most popular answer choice was ‘Yes, it’s all right.’

Policy Implications While this data may come as no surprise, this data provides us with some interesting leads to answer the question of what it means for a client to be informed. In this instance, small borrowers are able to identify the size and duration of the loan and their weekly installment on their loan. Many of the borrowers also recognize that non-repayment can have potentially harmful consequences. However, they know very little about the interest rate and total interest expense on the loan.

Implications of the Study The results suggest that financial institutions should provide information to clients, which they are able to understand and use. The data here shows that clients are able to understand the liability on their loan in terms of weekly repayments, rather than in terms of interest rates. A majority of the clients seem to find what is commonly viewed as coercive collection practices to be acceptable.

In conclusion, the results of this survey would indicate that the way we currently think about how clients understand the loans may not be reflective of ground realities. Firstly, clients think about their loans not in terms of interest rates and interest expense but rather in terms of how much they actually owe on a weekly basis. Secondly, it is both unreasonable and unrealistic to expect small borrowers to have a deeper understanding of their loans than borrowers who have greater access to information and finance. Thus, top-down regulation which works on the assumption that borrowers should be able to calculate and understand their interest rates, would not succeed in protecting small borrowers.

Finally, this study, while useful for preliminary understanding of how small borrowers think of their loans, is limited in scope. While this study indicates a limited understanding of their loan contract, further research may demonstrate that a survey of middle-class borrowers would elicit a similar level of financial literacy. As such, there is much greater research which is required in this area examining in greater depth how small borrowers understand their loans and how they use this understanding to make financial decisions.

16

Proposal for New Class of Banking Agent for Delivery of Financial Services Doug Johnson (CMF)

I

nternational experience has shown that agent-based banking has the potential to dramatically increase financial inclusion.7 In 2006, in response to the success of agent-based banking in other countries, the RBI created the “business correspondent” model of agent-based banking in India. Yet to date, take up of the business correspondent model remains limited due to restrictions on the types of organisations that may serve as banking agents. Despite pressure from the government and independent observers, the RBI remains reluctant to relax these restrictions due to concern over allowing certain types of organisations, especially Non-Banking Finance Companies (NBFCs), to handle savings.8

Recent successful examples in which third party agents have successfully used the business correspondent model to deliver government benefits on behalf of banks have shown that utilizing such agents to deliver government benefits has the potential to increase convenience for end-beneficiaries while reducing corruption and being an attractive business proposition in itself. Yet, current restrictions to the business correspondent model limit expansion of the use of these agents to deliver government benefits. The RBI should consider creating a new class of banking agent – “payment processors” –authorized to disburse government benefits but not to handle savings or perform other types of banking transactions. As the regulatory risks of allowing organisations to process payments are modest in comparison to the risks associated with allowing organisations to handle savings, the RBI could allow a broader range of organisations, including NBFCs, to act as payment processors. This move would greatly increase the proportion of government payments that are channeled through the formal financial system, resulting in greater convenience for beneficiaries and reduced corruption. Further, the RBI could adopt a wait-and-see approach to the new class of banking agents, gradually relaxing restrictions on the types of transactions they are permitted to perform, if and when the RBI deems it prudent.

_______________________ See, for example, “The Early Experience with Branchless Banking” by Gautam Ivatury and Ignacio Mas available at http://collab2.cgap.org/gm/document-1.9.2640/FocusNote_46.pdf 7

Both the Committee for Financial Inclusion and the Committee for Financial Sector Reform have recommended that NBFCs be allowed to act as business correspondents. Due, presumably, to a long history of scandals involving NBFCs and savings, the RBI remains suspicious of NBFCs in general and especially any proposals which involve allowing NBFCs to handle savings.

8

17

Research Summaries

While progress on agent-based banking remains mired over this issue, the greatest need for such banking in India lies not in providing savings but in delivering government benefits. Between NREGA, the national old-age pension scheme, and Indira Awas Yojana, the government of India disburses nearly 40,000 crore rupees worth of benefits directly to individuals each year. Most of these payments continue to be made via Gram Panchayat officials or post offices due to the limited bank branch network, which often results in siphoning of funds.

Conference Proceedings

O

ver five sessions, original research findings from CMF and other leading researchers in India were presented on 1) impact of credit; 2) financial inclusion efforts in India; 3) optimizing micro finance distribution channels; 4) financial literacy and, 5) emerging issues in the micro finance sector (e.g., competition). Following is a summary of the major issues/recommendations that emerged from the discussions and presentations.

Inaugural Session Welcome Address

Mr. Sandip Ghose, Principal, College of Agricultural Banking, Reserve Bank of India, Pune

Special Address

Mr. Justin Oliver, Executive Director, Centre for Micro Finance

In his welcome address, Mr. Ghose expressed his satisfaction with the CAB-CMF collaboration and hoped that this second annual conference would succeed in encouraging more interaction between academics, micro finance practitioners, bankers and policy makers. He then expressed his desire for more micro finance research in areas not currently focused on, including 1) corporate governance, 2) staffing, and 3) training. Such research would be useful for practitioners and also help inform regulatory decisions and support. Mr. Ghose then concluded by stressing the importance of strong corporate governance for the continued growth and success of the micro finance industry.

Then, Mr. Oliver continued by discussing some key areas within micro finance that we still know little about, and where research could be useful. These key questions included: • Do we know how well micro finance works as a poverty alleviation tool? What are the impacts of micro finance, in which situations do they occur, and for which populations?

• How effective are our efforts to financially include the poor, and what are the tangible benefits of such inclusion?

•How well does formal micro finance perform at delivering other types of services (health, advisory services), relative to other possible service providers?

• What is the role of competition? Will increased competition lower interest rates or have other effects?

• Is multiple borrowing a normal consequence to be expected from keeping the poor credit constrained, or does it indicate extreme over-indebtedness?

• Are loans used for consumption necessarily worse as a poverty-alleviation tool than loans for productive purposes?

• How do the poor understand interest rates?

• What alternatives for credit, savings, and insurance are available to the poor?

• Are financial literacy and business trainings worth the investment required?

• What’s the future of the SHG model?

• Why don’t micro-enterprises grow?

• How can the business correspondent model be made to work to increase access?

• What businesses exhibit the highest returns? What types of people invest in high-return businesses, and how do we identify them?

• How should staff incentives be structured at MFIs? What are successful retention strategies?

Mr. Oliver concluded by stressing that research can help answer these questions that are critical to policymaker and practitioner decision-making. Each of these constituencies has a key role to play. Researchers need to answer these critical questions, policy makers should use such research to help enable practitioners to successfully reach and serve the poor, and practitioners must reach the poor with well-structured services.

18

Conference Proceedings

Conference Proceedings

Mr. Oliver, in his special address, focused on the importance of research for the micro finance sector. Mr. Oliver first briefly mentioned a few facts about micro finance that we already know, including that the poor are credit constrained and have low access to financial services, but find many creative ways to make up for the lack of formal financial services, and that providing financial services to the poor can be a profitable business venture.

Technical Session I Theme : The Impact of Micro credit Chair: Mr. Stephen Rasmussen, Micro finance Lead Specialist, CGAP The impacts of micro finance – A ran- Mr. Justin Oliver, Executive Director of CMF domized evaluation of Spandana’s program Responses

Mrs. Frances Sinha, Director of EDA Rural Systems Mr. Samit Ghosh, CEO of Ujjivan Financial Services

Impact of Micro credit: Early results from Spandana Study CMF Executive Director Justin Oliver drew upon early results from a CMF research project in Hyderabad slums that focuses on evaluating the impact of micro-credit on households, which is the first rigorous field experiment examining the impacts of credit in the world. Spandana began operations in 52 slums around Hyderabad, selected randomly from 104 slums they would consider entering. This allowed an excellent comparison between the slums where Spandana entered and those they did not enter. In total, 7200 households were included in this study.

In addition, Mr. Oliver also reported that the availability of credit also resulted in increased household spending on durable goods for businesses or for the home, and a corresponding decrease in investment in alcohol, cigarettes, tea, paan, and festivals. Study results show that purchasing of durable goods increased by Rs 1200 per household on average, whether or not the household had borrowed from Spandana. Mr. Oliver suggested this indicates that the mere presence of an additional source of credit has a major impact in the decisions households make, resulting in what might be considered “smarter” investment in durables rather than quickly-consumed “temptation goods.”

Panelist and Chairman Comments

Integrating social impact into strategy, operations and reporting Ms. Frances Sinha of EDA Rural Systems spoke about the impressive financial numbers that Indian MFIs have been making lately, and that the numbers provided do not get to impact of borrowing on clients’ livelihoods. She mentioned that the Spandana study presented by Mr. Oliver was rigorous and useful, and raised a few questions. First of all, it seemed as though micro finance was already in the areas that Spandana entered, and wondered if there could be negative affects of competition. She also considered how long it can take to create sustainable change. The study looks at changes in consumption and livelihood indicators over three years; practitioners usually say it takes five years to see impact and Yunus often speaks about the microfinance’s impact on children of clients, which is a generation away.

Ms. Sinha suggested that creating and measuring impact should also become the responsibility of MFIs, and that creating social impact should be an integral of managerial strategy. She noted that to create social impact requires real time and effort. MFIs should incorporate social impact into strategy, which will affect operations, and then track performance.

Ms. Sinha mentioned several new tools that are available to help MFIs measure performance that derive from the social performance task force (SPTF). She concluded by arguing that now is the time put the ‘social’ into management and reporting, and to use these new available tools to work towards this goal.

Need to understand poor’s borrowing and consumption needs first Mr. Samit Ghosh, the CEO of Ujjivan, explained that when Ujjivan began its operations, they knew very little about the poor’s consumption habits and income generating activities, particularly with the urban poor. Over time, Ujjivan has learned more about its customers and has begun offering types of products to different client segments (e.g., a business loan for income generation to a housemaid). Mr. Ghosh argued that it is very important to know what people are borrowing for. Often, the urban poor in Bangalore borrow for 1) children’s education, 2) housing, and 3) healthcare.

That said, the first Ujjivan loan is typically used to repay existing debt, as clients typically borrow heavily from informal sources (e.g., moneylenders, chit fund, pawn brokers etc.). Moreover, Mr. Ghosh agreed with Ms. Sinha that MFIs typically do not measure impact, especially in the first few years.

Ujjivan is a relatively new MFI—only five years old—which spent its first three years just focusing on staying afloat. Only recently has Ujjivan been able to think about measuring its effect on customers. Thus, it has started to use a customerfocused survey to evaluate whether their services are effective.

19

Conference Proceedings

Conference Proceedings

The additional presence of Spandana in a slum resulted in large overall differences relative to the slums where they did not operate. Specifically, borrowing increased significantly where Spandana entered, and borrowing amounts increased by an average of Rs. 1260 per household in these slums. This borrowing and the availability of credit resulted in new business creation: on average, the slums Spandana entered exhibited 30% more new businesses created – or 1.6 new businesses for every 100 households.

Need to understand poor’s borrowing and consumption needs first Mr. Rasmussen stressed that the impact of micro finance needs to be measured over longer periods of time. He spoke about how practitioners, including Mohammed Yunus, have now begun to advocate measuring the impact of micro finance institutions in generations rather than in years, as has been the norm so far.

Question and Answer Session 1) How does MFI entry affect local moneylenders, if at all?

Samit Ghosh: Moneylenders do not see Ujjivan as competition because the two operate in different areas. Moneylenders operate where people live, where Ujjivan tends to focus on areas where people work.

2) How does savings affect repayment rates?

Stephen Rasmussen: India is behind on savings, and the regulation needs to be changed here.

Samit Ghosh: Clients need savings even more than they need loans. If RBI wants to more effectively address financial inclusion challenges, they should focus on this issue.

Technical Session II Theme : Financial Inclusion Chair: Shyamal Acharya, Chief General Manager, State Bank of India Results from CMF studies on Financial Inclusion

Ms. Minakshi Ramji and Mr. Jayaram Venkatesan, CMF

Initiatives of State Bank of India

Mr. V. Ramkumar, Deputy General Manager of SBI Mr. Vipin Sharma, CEO of ACCESS Development Mr. Sanjay Bhargava, Chairman of Eko Financial Services

Financial inclusion: Taking a closer look at no-frills accounts in Gulbarga district Ms. Ramji presented findings from a recent CMF study that takes an in-depth look at the effects of the Reserve Bank of India’s (RBI) financial inclusion drive. She explained that the study looks at one specific district, Gulburga (Karnataka), to learn more about poor households’ awareness of the drive and take-up/use of bank accounts. Before the no-frills accounts drive 12 percent of households possessed bank accounts. This number jumped to 29 percent as 17 percent of households opened a bank account during the drive. As Ms. Ramji detailed, of the 17 percent who opened accounts between July 2006 and July 2007, 78 percent were National Rural Employment Guarantee Programme (NREGP) beneficaries. Moreover, of the households that were aware of the no-frills accounts, 87 percent of them had learned about the accounts from village Panchayat officials. Given the involvement of Panchayat officials (compared to bank officials) and the increase in NREGP accounts, it seems as though the majority of people opened accounts to receive government payments/assistance.

Ms. Ramji concluded that the drive more than doubled access to accounts (12% to 29%). Yet, significant numbers of households remain excluded without access to savings, about 36 percent according to the study. Moreover, access does not always lead to usage of bank accounts, as over half of the opened accounts never had deposits (i.e., accounts not used for savings). To this point, she argued that government programmes, such as NREGP (which pays people for work done at the panchayat work directly to bank accounts), are one of the best ways in India to reach BPL households. Accordingly, coupling government assistance with the formal banking system may increase financial inclusion compared to other initiatives that offer people to open bank accunts but relax Know-Your-Customer (KYC) norms.

No-frills account drive from the Bank Perspective: A report from Cuddalore District Mr. Venkatesan began by explaining that Cuddalore District in Tamil Nadu was one of 155 districts across India to be proclaimed as 100 percent financially included. The purpose of this study was to determine results of the financial inclusion drive by evaluating the gap between the schemes objective and what occurred on the ground. The study focused on three main areas: 1) Coverage of the drive by geography and other categories; 2) Usage by clients of no-frills accounts, and 3) Cost involved for the banks in opening and maintaining accounts.

As Mr. Venkatesan explained, the Cuddalore district drive started in July 2006, and public sector, private sector, cooperative and regional rural banks all participated. Each branch was allotted a set of villages based on a service area concept.

Then, all households were surveyed by branch employees and no-frills accounts were opened for all willing persons. The drive was completed in September 2006, and the district was deemed 100 percent financially included.

20

Conference Proceedings

Conference Proceedings

Responses

Pertaining to the coverage, 28.3 percent of households (about 145,000) opened no-frills accounts, while about 25 percent were unwilling to open accounts. With regards to usage, Mr. Venkatesan detailed that 85 to 90 percent of the accounts were inoperative. Only 7 percent of accounts had a balance greater than Rs. 500. During the CMF study, surveys showed that many households did not know that the no-frills passbooks could be used to save money and that villagers opened the accounts because they thought it would help them receive a loan or benefit from a government scheme. That said, the 10-15 percent of account holders that actively used their account more than doubled their savings in the 12 months after opening the account (Rs. 533 to Rs. 1195).

When concluding, Mr. Venkatesan stressed that 25 percent of households still fall outside the banking system and that only 15 percent of those that opened accounts used them. To address these problems, financial literacy training, particularly around savings, could be very useful as lack of financial literacy seems to one of the main reasons for low usage.

Then, Mr. Venkatesan explained that among the operative accounts, there is an overall positive trend with respect to balance per account. Therefore, educating poor households on how to use no-frills accounts, and the benefits, could be beneficial.

State Bank of India

Mr. V. Ramkumar discussed the State Bank of India’s (SBI) financial inclusion efforts, particularly focusing on the bank’s efforts within the RBI’s no-frills account drive. Mr. Ramkumar also discussed the expansion of SBI’s use of the business correspondent model, in which the bank uses agents to help deliver SBI financial services in rural areas, to reach poorer rural households.

Panelist Comments Need to leverage technology to create universal financial accesss Mr. Sanjay Bhargava began by outlining the ambitious goal of creating universal financial access with negative use of public money by 2013 for which practitioners and researchers must seek and support innovation. He exemplifed the case of rapid growth of mobile phone usage in India despite wide-spread scepticism about thee ability of the people to use technology. Mr. Bhargava concluded by encouraging researchers and practitioners to use technology innovatively and to address the difficult obstacles within financial services that contribute to the entrenchment of poverty in India.

Need to leverage technology to create universal financial accesss Mr. Vipin Sharma commented on the study Mr. Venkatesan presented on financial inclusion in Cuddalore district. He cautioned that with no-frills accounts, bank officers open accounts and provide services but that it may not be cost efficient because as accounts get used more, transaction costs at the branch level will only increase. Therefore, banks should seek technologies that are available to deliver specialised financial products and services because these technologies have mininmal transaction costs.

Technical Session III Theme : Optimizing Micro finance Distribution Channels Chair: Mr. Bazil Sheikh, Chief General Manager, RBI Results from CMF weather insurance study

Professor Raghabendra Chattopadhyay, IIM-Calcutta

Results from treated bed nets study

Mr. Dan Kopf, Research Associate, CMF Mr. Paul Breloff, VP of Business Development, SKS

Responses

Dr. Sankar Datta, Managing Director of Livelihoods School, BASIX

Results from Rainfall Insurance Studies in Gujarat and Andhra Pradesh Professor Raghabendra Chattopadhyay presented results from two randomized experiments – one conducted with BASIX, an MFI, in Andhra Pradesh and another with SEWA, an NGO, in Gujarat – that attempt to understand factors that drive household insurance demand. 80 percent of respondent households in the study cite weather shocks as the major risk faced by the household and access to rainfall insurance might help households mitigate the risk of a major income shock.

At the same time, such policies might encourage them to explore costlier but more efficient agricultural practices (for e.g. investment in high-yield varieties of seed and fertilizer).

While the key benefits of rainfall insurance stem from divisibility (unit sale) and faster claim settlement, Professor Chattopadhyay explained how the complexity of the product, cost and expected frequency of payouts may act as deterrent factors. The results from Gujarat marketing experiments revealed that households are significantly price sensitive (Rs 30 discount led to approximately a 13 percentage points increase in take-up) and the Andhra Pradesh study revealed that cash-in-hand was the single most important determinant of take-up. A potential role for MFIs here is to ease the credit/ liquidity constraints by offering micro-loans for premium payment. As Professor Chattopadhyay discussed, something that continues to puzzle the researchers is the unit demand for the product – 90 percent of the households purchased

21

Conference Proceedings

Conference Proceedings

only one policy – and in the near future, the Gujarat study will continue to look at these take-up issues and attempt to offer crop-specific and/or taluka-level (block) policies.

Fighting Malaria with Micro finance Mr. Dan Kopf spoke about preliminary results and on-going implementation challenges from the study ‘Fighting Malaria with Micro finance: Impact on Health, Productivity and Willingness to Pay’ being conducted in the state of Orissa in partnership with BISWA, an MFI. Insecticide Treated Nets (ITNs) have proven effective in significantly reducing the risk of malaria, particularly for children and pregnant women. However, adoption rates remain low in many countries.

The study seeks to understand whether alternate mechanisms – distributing nets for free or bundling with a microcredit loan and spreading costs over time – increases take-up and improves health outcomes. Another issue is the effect these ITNs can have on repayments and debt absorbing capacity of clients. Preliminary results from the baseline survey conducted for BISWA SHG households in 150 villages across 5 districts of Orissa revealed that 12 percent of the population was currently infected with malaria and 70 percent of the household reported at least one case of malaria in the last 6 months. However, less than 14 percent of those surveyed in the households had slept under a net the previous night.

Mr. Kopf spoke about how the non-integration of the loan for nets with existing processes for loan collection proved to be one of the biggest challenges faced by BISWA and the researchers. He suggested that institutions should hence consider bundling such loans with the existing/new mainstream loan product. Also, while loan officers may have a role to play in promoting the product, it is important to determine whether they have sufficient time, skill sets and incentives to do so. Otherwise, a parallel structure may have to be established or additional training and incentives system be put in place.

Panelist Comments Research needs to address operational details to facilitate practitioner implementation Speaking about the role of research, Mr. Paul Breloff of SKS said that MFIs often consider the robustness and profitability of the business model but not just the impact of the intervention, and that researchers have to address this factor.

Also, institutions are constantly looking for guidance on how to better understand client needs and how the design of contract structures (mandatory down payments, tenure etc.) impacts take-up.

SKS currently facilitates the sale of mobile phones, solar lamps, water purifiers and insurance products. In selecting partners, Mr. Breloff explained that SKS evaluates the financial viability, logistical ease and ability of the partner to provide after-sales service, and end-client usage i.e. whether it would be used for production or consumption purposes, will it require a push or pull strategy, and nature of use. For example, SKS rejected a product that could be corroded by saltwater and may not have considered ITNs because the product value is less than Rs 1000 per unit.

While provision of such services can increase customer retention and loyalty, can positively impact the communities SKS works in, and help diversify revenue streams, there a number of challenges to overcome. First, having expertise in cash handling and customer interaction does not translate into expertise in planning the logistics or inventory management.

Second, loan officers are frequently untrained in marketing strategies to sell products and customers may have limited ability to understand additional new products. Finally, MFIs with foreign direct investment (FDI) are not permitted to retail products under the current regulations. Mr. Breloff also spoke about the risk that these products may pose for the MFI portfolio: when a mobile phone breaks down or medical reimbursements are delayed, customers direct their annoyance at SKS. Hence, institutions need to look at ways to separate the distribution channel and financial operations.

Mr. Bazil Sheikh pointed out that one of the main steps in provision of micro-insurance would be customer education.

Do not violate basic micro finance principles when using distribution channel Mr. Sankar Datta of BASIX Livelihoods School explained that while BASIX believes in utilizing its micro finance channel for the delivery of services such as agricultural inputs, they also ensure that such services do not violate basic micro finance principles. First, a scenario in which a group leader alone is the beneficiary of incentives disrupts the group functioning. BASIX’s experience suggests that the group will eventually alienate the leader and may even break-up. Second, while self-help and joint liability groups can act as a demand aggregator and can benefit from distribution mark-ups while acting as the wholesaler, a separation of such services from micro finance, and communication to explain the same, is essential.

Speaking about feasibility, Mr. Datta described how the cost of setting-up a distribution channel, the risk of failure and its potential effect on micro finance portfolio, and, the design of the incentive system for players involved will ultimately determine whether an MFI is interested in being a channel for any particular product or service. He also observed, like Mr. Breloff, that researchers do not adequately consider the cost component and that documenting this would shed light on whether MFIs would consider selling products such as insecticide treated nets (ITNs).

Responding to concerns expressed by the panelists about transaction costs, Mr. Sanjay Bhargava (CEO, EKO) spoke about the role technology can play. For example, in the case of electronic transactions, the scale economy principle will not apply. However, as Mr. Datta pointed out, technology does involve high upfront investment costs and the risk of obsolescence.

22

Conference Proceedings

Conference Proceedings

Technical Session IV Theme : Financial Literacy Chair: Sanjay Sinha, Managing Director, Micro-Credit Ratings International Limited Results from How Do Micro finance Clients Understand their Ms. Minakshi Ramji, Research Associate, CMF Loans?

Punjab National Bank financial literacy initiatives

S.P. Singh, Chief Manager, Punjab National Bank

Union Bank of India financial literacy initiatives

Dr. K. Ravindranath, Chief Manager, Union Bank of India

Responses

Mrs. Vijaylakshmi Das, CEO, Friends of Women’s World Banking

Borrowers understand weekly repayment amounts, not interest rates

She explained that a random survey of two hundred first-time borrowers in Uttar Pradesh (Sonata Finance) and Karnataka (BSS Micro finance) revealed that borrowers typically understand weekly repayment amounts and the loan duration but not interest rates. Specifically, 83 percent of respondents accurately reported their weekly repayment amounts and 89 percent accurately reported the duration of their loan. At the same time, only 13 percent of borrowers accurately stated their interest rates, although 47 percent of clients did say that low interest rates were part of their reason for taking the loan. Ms. Ramji argued that these results show that although interest rates may be relatively important to borrowers, when it comes to MFI disclosure of loan terms, weekly repayment amounts and loan duration may be more useful to micro finance clients.

Training with a friend positively impacts client savings behavior Ms. Ramji then transitioned to discuss a study on the effects of business training on savings and credit behavior, which CMF conducted in conjunction with SEWA Bank in Ahmedabad. Over 400 randomly sampled SEWA women clients were invited to the training. Another group of 200 women were included in the sample as the study’s control group but were not invited to the training. All of the women in the sample needed to be either business owners, piece-rate workers or self-employed to be included in the sample. As Ms. Ramji described, the training course, which SEWA developed to supplement its financial literacy training, teaches business skills such as marketing, cost reduction, investment and customer service.

She explained that for each session 12 women were invited from the random sample, among which half were invited with a friend and half were invited alone. Through analysis of SEWA Bank’s transaction database, CMF finds that compared to the control group, those trained with a peer increased their monthly savings by Rs.217. Those trained individually actually decreased monthly savings by a relatively small amount of Rs.15 compared to the control group.

Ms. Ramji concluded by stating that CMF is not exactly sure why training with a peer positively influences the savings behavior of clients. It may be positive peer pressure or a commitment device; the trainees learn about the importance of savings during their course, friends commit to saving a certain amount, and then friends remind one another of the lessons learned. Or the real reason may be different from the proposed options above. Regardless, Ms. Ramji argued that if training with a friend can help improve financial outcomes, finding out the underlying reasons is worth further exploration.

Learning more about financial literacy initiatives at Punjab National Bank and Union Bank Mr. S.P. Singh started by discussing Punjab National Bank’s financial inclusion initiatives, which included expanded use of the business correspondent model, to open up banks accounts for poor rural households. Thereon, Mr. Singh detailed how bank branch employees aimed to help inform clients about the different financial products offered to them, and how the clients could best utilize these services.

Dr. K. Ravindranath spoke about Union Bank of India’s financial literacy initiatives. Union Bank branch managers use discussions with clients as an opportunity to detail difficult-to-understand products, such as insurance or savings accounts.

In conjuction with Union Bank of India’s financial inclusion efforts, Dr. Ravindranath was hopeful that these educational efforts would benefit poorer customers.

23

Conference Proceedings

Conference Proceedings

Ms. Minakshi Ramji discussed two recent CMF studies that relate to financial literacy. She started a study which aims to understand how MFI clients understand their loan contracts and exactly what it means for an MFI client to be informed.

She explained that the study tries to go beyond assessing whether a client understands the terms of the loan to explore which aspects of loan terms are important to MFI clients. Such understanding could help inform the types of policies regulators create with regards to MFI disclosure of loan contract terms.

Panelist Comments Financial literacy efforts are critical, but must be done right

Mrs. Vijaylakhshmi Das used the two CMF studies as a springboard to discuss the importance of well-structured financial literacy efforts. She argued that training in itself is not good enough. Training modules or programmes need to be customized for a given audience (e.g., language, comprehension levels etc.) for financial literacy efforts to have their intended positive impacts.

Public sector banks programs have potential, but could be better targeted Mr. Sanjay Sinha discussed the large potential of public sector banks’ financial literacy efforts, particularly because of their branches’ reach into rural districts. To fulfill this potential, Mr. Sinha hoped that bank efforts would be more targeted to the needs and comprehensions of poor, less educated households.

Special Address Financial crisis brings risk and opportunity to the micro finance sector

Shifting attention to the micro finance sector, Mr. Sheikh asked whether the sector is decoupled from the larger market.

With liquidity slowing down across sectors, Mr. Sheikh predicted funding would also be harder to find for micro finance institutions. An increased possibility of the poor being adversely affected by the crisis and therefore having a harder time repaying loans are two aspects Mr. Sheikh identified as risks the sector may face. First of all, he noted that when MFIs struggle with their basic bottom line, the idea of social impact and responsibility (i.e., the triple bottomline) could recede into the background. Other emerging issues Mr. Sheikh identified include 1) quality of portfolios, 2) risk management processes, 3) corporate governance, 4) funding struggles and 5) possible regulatory overreaction to sector struggles.

Although these risks are real, Mr. Sheikh hoped MFIs would use the slowdown as an opportunity to bolster their internal operations and therefore be more attractive to available funding sources. He encouraged MFIs to focus on improving infrastructure, enterprise risk management processes, internal controls and strengthening management capabilities through better training and recruitment.

Technical Session V Theme: Emerging Issues in Micro finance Chair: B P Vijayendra, CGM, RBI, RPCD, CO Framing emerging issues

Mr. Justin Oliver, Executive Director, CMF

A new banking agency model

Mr. Doug Johnson, Research Associate, CMF

Micro finance in India: Small, ostensibly rigid and safe

Professor Rajalaxshmi Kamath, IIM Bangalore

Savings

Mrs. Chetna Sinha, President, Mann Deshi Bank

The Future of SHG-Bank Linkage Programme

Mr. Sukhbir Singh, CGM, NABARDSuk

Innovations in product offerings and customization will occur in the near future Mr. Justin Oliver spoke about issues within the micro finance industry that he expected to arise across the next several years. He started by discussing the huge increase in access across the past five years in Indian micro finance, as the number of clients has more than doubled to over 40 million over the past few years. With this boom in access to credit, several issues are beginning to arise. One possible problem could be the recycling of debt; micro finance institutions should not overburden borrowers with credit. To do this, management information systems will need to improve, and a credit information system could help provide a fuller picture of where borrowers have taken out loans.

On the positive side, with the growing competition, Mr. Oliver predicted there would be continued product and service innovations as MFIs will cater more to client needs. This increased competition may also affect pricing, but will likely have

24

Conference Proceedings

Conference Proceedings

Mr. Bazil Sheikh began the second day of the conference by discussing how financial crisis can impact the economy as a whole. The current global financial crisis has brought a slowdown to the Indian economy, in which gross domestic product (GDP) growth is now growing but at a decreasing rate. This situation is very different from a contraction of the economy in which the GDP actually decreases. He noted that financial crises are inherent in capitalism and that they have occurred several times in history, from the South Sea bubble in the 1720s to the Bombay share market collapse in the 1860s to the Great Depression in the 1930s. The present crisis, Mr. Sheikh explained, stems from asset bubbles that led to positive carry. Basically people borrowed at a certain rate and then invested this money expecting to create wealth (e.g., borrow at 10%, expect 20% returns). From the NIFTY in India, which was up 400 percent in the last four years, to the American housing market, returns started to fall below the borrowing rates, which underlies the present crisis. Moreover, Mr. Sheikh argued, while the crisis may have stemmed from problems in the United States it has repercussions globally.

more impact on product customization and convenience. Mr. Oliver explained that additional products that could be useful to clients could come out of the industry, such as savings, remittances, micropensions and insurance. Some of these new products would require changes in regulations, such as savings and remittances, which could occur as the sector matures.

Mr. Oliver also argued that there is space for micro finance institutions to help develop supply chains and focus more holistically on livelihoods, and predicted that some MFIs and SHGs would help fill this need.

NBFCs could efficiently provide government benefits to households Mr. Doug Johnson spoke about a new banking agency model in which non-banking financial companies (NBFCs) could provide government benefits. He started by introducing branchless banking and discussing its potential to reach poor households that currently do not have access to formal savings accounts. He then discussed the limitations of India’s current branchless banking approach, the business correspondent model. These limitations included the fact that commissions for prospective business correspondents do not seem to be high enough to spark adequate participation by potential correspondents, that government benefits are not distributed through the scheme, and that NBFCs, which have done a good job of reaching the unbanked, are not allowed to be business correspondents.

With regards to NBFC exclusion, Mr. Johnson understood the hesitation of RBI, which may stem from incidents in the early 1990s where several NBFCs opened up deposit accounts and then closed up shop, thereby taking poor people’s savings.

Accordingly, Mr. Johnson proposed that RBI take advantage of NBFCs’ reach into unbanked populations, but reduce risks by only allowing NBFCs to provide government benefits, such as NREGA and pension payments. FINO, a technology provider, has been providing government benefits to government scheme participants, which has made it easier for scheme participants to receive benefits and has saved the government money in disbursing benefits. Mr. Johnson explained that NBFCs could play a similar role in dispensing government benefits, and RBI could more easily oversee the provision than it could with deposit accounts. After seeing how well NBFCs provide government benefits to households, Mr. Johnson argued that RBI could make a more informed decision on whether NBFCs would be able to offer savings products to clients in the future.

Multiple borrowing a real concern

There is room for MFIs and SHG systems to peacefully coexist Mr. Sukhbir Singh started his presentation by describing the Indian self-help group (SHG) system and explaining how individual SHGs function. From there, Mr. Singh discussed the successes of the SHG-bank linkages in providing liquidity to self-help groups which help women improve their families’ livelihoods. He then discussed how the SHG and MFI systems currently coexist and serve needs of different women in India. He concluded by predicting that both micro finance systems would continue to thrive.

Savings products must meet the client needs Mrs. Chetna Sinha started her presentation by showing videos of Mann Deshi’s business training programme, which helps provide women with new skills and teaches them about business essentials, such as accounting and marketing. She then shifted to discuss the challenges in providing formal savings to poorer clients. The transaction costs related to saving at a bank are quite high for poorer women. Mrs. Sinha explained that bank branches are often very far from a women’s home, and therefore take time and money to reach. Moreover, female customers like to keep how much they save private, and going to a bank makes the fact that they are able to save very public.

Mann Deshi addresses these challenges by having bank employees go door-to-door to provide daily savings options to clients. This practice reduces the transaction costs for clients and also provides more privacy to individual customers. For the bank, Mrs. Sinha explained, this option is difficult to provide in a sustainable manner. Going door-to-door is expensive and saving deposits are often small. That said, the product is flexible and meets clients’ needs, which is key to the success of a savings product for poorer rural households.

25

Conference Proceedings

Professor Rajalaxshmi Kamath presented findings from a financial diary study she conducted in a district outside of Bangalore. Through the study, Professor Kamath found that many of the 20 borrowers that participated received credit from multiple sources, both formal and informal. Some borrowers were members of more than three MFIs and there was evidence of debt recycling, in which a new loan was used to pay off an old loan. Professor Kamath concluded by stating that multiple borrowing will continue to happen if loan sizes are too small to meet client needs and if coordination between MFIs to limit multiple borrowing does not improve.

Valedictory Session Learnings from the conference and future research needed

Mr. Justin Oliver, Executive Director, CMF

Special address

Mr. B.P. Vijayendra, CGM, RBI, RPCD, CO

Concluding remarks & vote of thanks

Mr. Sandip Ghose, Principal, CAB

Learnings from the conference and future research needed In summarizing the discussions, Mr. Oliver spoke about how useful it was for researchers, practitioners and policy makers to come together in this type of forum. He spoke about how regulator and practitioner presentations and questions will influence future CMF research. Mr. Oliver also spoke about the need for more understanding of the basic impact of micro finance on its clients, and beyond that, the impact of different micro finance products (e.g., different loan sizes).

He concluded by encouraging practitioners to participate in the evaluation process.

Learnings from the conference In his concluding remarks, Mr. Ghose discussed areas of possible collaboration between practitioners, researchers and policy makers. Specifically, he spoke about regulators’ receptivity to learning about how to improve the business correspondent model. Mr. Ghose also spoke about the need for MFIs to improve their human resources practices. With the continuing growth of the sector, it was important for the sector grow ethically. As loan officers are the MFI employees most often interacting with clients, Mr. Ghose thought that the improvement of HR policies for this group was of the utmost importance. Lastly, Mr. Ghose cautioned the audience not to make too much of the phenomenon of multiple borrowing, as he himself and surely others in the audience are also multiple borrowers with multiple credit cards and other sources of credit.

Conference Proceedings

Thoughts on future of micro finance - Regulator perspective Mr. B.P. Viyayendra spoke about microfinance’s exciting potential, but also from a regulator’s perspective, concerns that have arisen with regard to the industry. One concern was interest rates, as Mr. Viyayendra mentioned that their could be future regulation in this area. He also discussed the problem of evergreening, in which an MFI give an additional to help clients pay off an existing loan with this same MFI. Such a practice improves repayment rates, but masks clients’ difficulty repaying loans.

Question and Answers

26

Conference on Micro finance January 16 & 17, 2009 Theme: Micro finance – From Research to practice Organised by College of Agricultural Banking, Reserve Bank of India, Pune and Centre for Micro Finance, Institute for Financial Management and Research, Chennai PROGRAMME SCHEDULE Registration: 09.15 - 09.45 hrs.

Inaugural Session: 09.45 to 10.45 hrs.

Opening remarks

Mr. Sandip Ghose, Principal, College of Agricultural Banking, Reserve Bank of India, Pune

Special Address

Mr. Justin Oliver, Executive Director, Centre for Micro Finance

Tea break (10.45 - 11.00 hrs)

Technical Session I: 11.00 to 12.30 hrs.

Theme : Enhancing the Impact of Micro credit Chairman : Mr. Stephen Rasmussen, Lead Micro finance Specialist, CGAP

Ms. Frances Sinha, Director of EDA Rural Systems

Responses:

Mr. Samit Ghosh, CEO of Ujjivan Financial Services

Technical Session II : 12.30 to 14.00 hrs.

Theme : Financial Inclusion Chair: Shyamal Acharya, Chief General Manager, State Bank of India

Programme Schedule

Programme Schedule

Results from study on impact of Spandana’s mi- Mr. Justin Oliver, Executive Director, CMF cro credit programme

Results from CMF Studies on Financial Inclu- Ms. Minakshi Ramji, Research Associate, CMF sion Mr. Jayaram Venkatesan, Research Consultant CMF Initiatives of State Bank of India

Mr. V. Ramkumar, Deputy General Manager Mr. Vipin Sharma, CEO of ACCESS Development

Responses:

Mr. Sanjay Bhargava, Chairman of Eko Financial Services

Lunch: (14.00 to 15.00 hrs)

Technical Session III: 15.00 to 16.30 hrs.

Theme: Optimizing Micro finance Distribution Channels Chairman: Mr. Bazil Sheikh, Chief General Manager, RBI Results from CMF weather insurance study

Professor Raghabendra Chattopadhyay, IIM-Calcutta

Competition in micro finance

Mr. Dan Kopf, Research Associate, CMF

Micro finance and the market

Mr. Paul Breloff, VP of Business Development, SKS Dr. Sankar Datta, Managing Director of Livelihoods School, BASIX

27

Tea break (16.30 - 16.45 hrs)

Technical Session IV: 16.45 - 18.15 hrs.

Theme: Financial Literacy Chair: Sanjay Sinha, Managing Director, Micro-Credit Ratings International Limited Results from How Do Micro finance Clients Understand Ms. Minakshi Ramji, Research Associate, CMF their Loans?

Punjab National Bank financial literacy initiatives

Mr. S.P. Singh, Chief Manager, Punjab National Bank

Union Bank of India financial literacy initiatives

Dr. K. Ravindranath, Chief Manager, Union Bank of India

Responses

Mrs. Vijaylakshmi Das, CEO, Friends of Women’s World Banking

Day 2, January 17, 2009 Special Address: 09:45-10:15hrs The Current Financial Crisis – How it Affects the Sector

Bazil Sheikh, CGM, RBI

Technical Session V: 10:15-12:30 hrs (Including Tea Break : 11.15 – 11.30 hrs) Theme: Emerging Issues in Micro finance Chair: B P Vijayendra, CGM, RBI, RPCD, CO Framing the Emerging Issues

Justin Oliver, Executive Director, CMF

A New Banking Agency Model

Doug Johnson, Research Associate, CMF

Micro finance in India: Small, Ostensibly Rigid and Safe

Professor Rajalaxshmi Kamath, IIM Bangalore

The Future of SHG-Bank Linkage Programme

Mr. Sukhbir Singh, CGM, NABARD

Savings

Mrs. Chetna Sinha, Founder, Mann Deshi Bank

Programme Schedule

VALEDICTORY SESSION : 12.30 to 13.30 hrs.

Learning from the conference and future research need- Justin Oliver, Executive Director, CMF ed Special address

B P Vijayendra, CGM, RBI, RPCD, CO

Concluding remarks & vote of thanks

Mr. Sandip Ghose, Principal, CAB

28

Programme Schedule

Tea break (16.30 -16.45 hrs)

Profiles of Key Speakers Sanjay Bhargava Executive Chairman, Eko Financial Services Prior to helping launch Eko Financial Services in 2007, which aims to increase the reach of lending organizations to low income people with the help of technology, Sanjay first worked with Citibank where he helped create a corporate cash management business in India that had 95 percent market share and moved 5 percent of India’s GDP. This was followed by a custodial services business in Thailand that became a market leader with 36 percent market share. Sanjay joined PayPal as a member of the management team (VP, Payments). He was one of the first few employees and was the main architect of the PayPal back end.

Sanjay holds a B.Tech degree in Mechanical Engineering from IIT, Mumbai and postgraduate diploma in business administration from IIM, Ahmedabad. He is a Reuters Digital Vision fellow from Stanford University.

Paul Breloff VP Business Development, SKS Micro finance Paul has spent several years as a management consultant and advertising account executive, and has practiced corporate and real estate law for two years. He has served on the leadership team of a startup community development bank and has provided legal advisory services to a range of micro finance organizations. Paul holds a BA degree from Amherst College and a JD from Yale Law School.

Raghabendra Chattopadhyay

Profiles of key speakers

Professor, IIM Calcutta Raghabendra Chattopadhyay is a professor of business environment at the IIM, Calcutta. He has also been a visiting fellow at the National Graduate School of Management, the Australian National University and a visiting scholar in the Institute for Economic Development, Boston University. Raghabendra has a MA in economics from Calcutta University and a PhD in Economics from Australian National University. His research interests include self government and empowerment of women; development and the state’s role in the social sector, particularly adult and elementary education in India; and poverty eradication through self-sustaining economic programmes.

Raghabendra, along with Harvard Professor Shawn Cole, is working with the Centre for Micro Finance to assess the impact of providing weather insurance to farmers in Gujarat.

Sankar Datta Managing Director, Indian Grameen Services, BASIX Sankar Datta is Managing Director of Indian Grameen Services, the research and development unit of the BASIX group, and is also the Dean of The Livelihood School established by BASIX. Dr Datta has been involved for two decades in providing professional services for rural development activities, especially working with micro-enterprises on livelihood promotion. He previously worked in the MP Oilseeds Co-op Federation, PRADAN and Indian Institute of Management in Ahmedabad before taking a position in the faculty of the Institute of Rural Management, Anand, Gujarat.

Dr Datta has a BA degree in Agriculture and Animal Husbandry from the GB Pant Agricultural University, Pantnagar, Uttar Pradesh, and a postgraduate diploma in Rural Management from the Institute of Rural Management. He has a PhD. in Economics from Sardar Patel University, Gujarat.

Profiles of key speakers

29

Vijayalakshmi Das Chief Executive Officer, Friends of Women’s World Banking Ms.Vijayalakshmi Das is the CEO of Friends of Women’s World Banking (FWWB), India since 1989. She has post graduate degrees in Economics and in Urban & Regional Planning. FWWB was established in 1982 to promote direct participation of poor women in the economy through access to financial services. It is committed to building a society based on equality and social justice where women are the leaders of social change. Operating as a whole sale service provider since 1989, FWWB extends credit and capacity building support to nearly one hundred Micro Finance Institutions (MFIs).

Ms.Das is also one of the founding Trustees of the newly established Indian School of Micro finance for Women, an institution set up to address the capacity building needs of the micro finance sector, women members and leaders.

Sandip Ghose College of Agricultural Banking, RBI Sandip Ghose is Chief General Manager and Principal, College of Agricultural Banking, RBI, Pune. Prior to this, he served as Chief General Manager-in-Charge of Human Resources & Strategic Planning, RBI as also Principal, Bankers Training College, Mumbai, for a period of four years, overseeing recruitment, training, performance, compensation and industrial relations. His responsibilities also included formulation and monitoring of the Strategic Action Plan (SAP) for the RBI, and capacity building for top management of public sector commercial banks in India.

Mr. Ghose has also served as Chief of Staff to three successive Governors (Dr. C Rangarajan, Dr. Bimal Jalan and Dr. Y.V.Reddy) over a period of nine years, viz. 1996-2004. He was instrumental in the setting up of the Human Resources Development Department in the RBI in 1995 and continues to be a part of Asia-Pacific and World HRD Congress.

Samit Ghosh Chief Executive Officer and Managing Director, UJJIVAN

Samit is a graduate of Jadavpur University, Kolkata. He completed a Masters of Business Administration at Wharton Business School, Philadelphia.

Doug Johnson Research Associate, Centre for Micro Finance Doug holds a BA degree in Political Science from Rice University and a Masters in International Development from Harvard University’s Kennedy School of Government (US). Prior to joining IFMR, Doug worked as a process consultant for Accenture, where he was responsible for the implementation and management of large-scale IT systems for companies such as eBay, Dell, and Ericsson. Doug is currently working on projects in the areas of technology and micro finance, the potential of post offices to increase financial inclusion, and the impact of competition in the micro finance sector.

Profiles of key speakers

Rajalaxmi Kamath Professor, IIM Bangalore Professor Rajalaxmi Kamath has a Ph.D. (in Economics) from Michigan State University. Before joining IIM Bangalore, she taught Public Economics at the Grand Valley State University in Grand Rapids, Michigan and at the Indira Gandhi Institute of Development Research (IGIDR) in Mumbai. Prior to completing her Ph.D, Professor Kamath worked for the Indian Revenue Services (IRS) as an Assistant Commissioner of Income Tax and for the Indian Economic Services (IES).

Her Ph.D. thesis dealt with Public Interventions and the Credit Market. Her research interests include issues in public finance and the credit policy.

30

Profiles of key speakers

Samit Ghosh is Founder & Chief Executive Officer of Ujjivan Financial Services, a micro finance institution. Ujjivan is a Grameen Bank replicator and plans to grow nationally across India with a goal of two million customers in the next six years. Samit’s career as a banker spans over 30 years and he has worked both in South Asia & Middle East. He led the launch of Retail Banking in South Asia & Middle East for Standard Chartered Bank during 1993-96. In 1996 as Executive Director of HDFC Bank he initiated their Retail Banking business. His last banking assignment was as Chief Executive of Bank Muscat in India from 1998 to 2003.

Dan Kopf Research Associate, Centre for Micro Finance Dan graduated from New York University with B.A. in Economics. Following graduation, he received a fellowship from Princeton in Asia to teach English at a community college in the Mekong Delta followed by work at an investment bank in Ho Chi Minh City. He then worked as a research associate for the micro finance consultancy Lipam International, where he assisted various micro finance equity funds. He is also an editor and author of “Privatization in Transition Economies: The Ongoing Story,” a collection of articles on privatization in the 1990’s. He is currently working on a project in collaboration with BISMA and Stanford analyzing the effects of selling insecticide treated bed nets through micro finance.

Justin Oliver Executive Director, Centre for Micro Finance Justin is the Executive Director of the Centre for Micro Finance. He joined CMF in July 2008. He was previously the Ghana Country Director for Innovations for Poverty Action, a non-profit organization that applies academic research techniques to develop and test innovative solutions to real-world problems faced by the poor. Prior to this, he worked at the Brookings Institution as a Foreign Policy Research Analyst and at Investor Group Services with Ernst & Young. He also spent two years in Mauritania as a small enterprise development specialist for United States Peace Corps.

Justin has a Masters of Public Policy from the Harvard University Kennedy School of Government.

Minakshi Ramji

Profiles of key speakers

Research Associate, Centre for Micro Finance Minakshi has a BA from Bryn Mawr College, USA and a Masters in Economic Development from London School of Economics. Her Masters dissertation examined the experiences of women and Scheduled Caste with respect to technology in the context of the rural tele-centres in Pondicherry. Prior to joining CMF, Minakshi worked as a Financial Analyst at Merrill Lynch’s Derivative Solutions Group, where she developed interest rate risk hedging solutions for American corporates. Minakshi joined CMF in 2007, and she works on issues pertaining to the policy environment for micro finance and other sector-wide issues.

Stephen Rasmussen Micro finance Lead Specialist, CGAP Stephen Rasmussen has been involved in development work for the past 25 years, primarily in South Asia and Central Asia. Before joining the World Bank, from 1994 to 2003 he was the CEO of the Aga Khan Rural Support Programme in Pakistan and helped establish First MicroFinanceBank, a transformation of AKRSP’s micro finance program into the first private-sector micro finance bank in Pakistan. He is also the CEO of the Pakistan Micro finance Network and the IFC’s nominee director on the boards of micro finance banks in Afghanistan and Pakistan.

Sri Umesh Chandra Sarangi Chairman, NABARD Prior to becoming Chairman of NABARD in December 2007, Mr. U.C. Sarangi served as Principal Secretary to the Chief Minister of Maharashtra. A Gold Medalist in MSc. (Botany), Shri Sarangi joined the Indian Administrative Service in 1977, and has led a distinguished career for the last thirty years.

31

Profiles of key speakers

Shri Sarangi has rich administrative experience and deep understanding of the agriculture issues in general and cooperation in particular, having served as Director, Agriculture (1991-94), Secretary, Animal Husbandry, Dairy Development and Fisheries (1999-2000), Commissioner (Cooperation) & Registrar of Cooperative Societies (2003-05). An acknowledged expert in disaster management, he has successfully coped with the extraordinary situation post Latur Earthquake, Orissa super cyclone, Gujarat Earthquake, Mumbai floods etc. He also handled sensitive issues of procurement of Soybean, Cotton and Onion and crushing of surplus sugarcane. Mr Sarangi was part of the task force on Revival of Rural Cooperative Credit. Institutions, also known as the Vaidyanathan Committee.

Chetna Sinha President and Founder, Mann Deshi Mahila Sahakari Bank Chetna founded and is currently the president of the Mann Deshi Mahila micro-enterprise development bank and Mann Vikas Samajik Sanstha NGO, which strive to enhance the economic empowerment and advancement of rural women through savings and lending, education, property rights, and social security initiatives. Through the initiatives of the Bank and NGO, Chetna has promoted a holistic approach to helping women in rural areas – one that combines economic activity with the educational tools and health care which are necessary for leading a productive life.

Chetna has been honored with the 2005 Jankidevi Bajaj Puraskar award for rural entrepreneurship. She has also been awarded lifetime membership with Ashoka Innovators for the Public, and was selected for the first class of Yale University’s World Fellows program.

Frances Sinha Director, EDA Rural Systems Frances Sinha is a co-founding Director of EDA Rural Systems, established in 1983 to provide research and capacity building support for micro finance and enterprise development. At EDA, Ms. Sinha has also explored several alternative approaches to development impact assessment. Her work in this area has been published in several leading journals and books on micro finance.

Sanjay Sinha Managing Director, Micro-Credit Ratings International Ltd.

Vipin Sharma CEO and Founder, ACCESS Development Services Vipin Sharma is the founder and CEO of ACCESS Development Services. With CARE-India, he was a Programme Director in micro finance as the head of CASHE, CARE’s largest micro finance programme worldwide. With CARE, Vipina also set up the South Asia Research Team for providing institution building and livelihoods support to CARE’s NGO-MFI partners in the region. Vipin also worked as the Executive Director of the Rajasthan’s Rural Non Farm Development Agency from 1996 – 2000.

Jayaram Venkatesan

Profiles of key speakers

Research Consultant, Centre for Micro Finance Jayaram Venkatesan holds a Masters degree in Electrical Engineering from University of Cincinnati, USA where his research focus was on prediction of postural stability of human body through pattern recognition methods. His prior experience includes working for Countrywide Securities Corporation in their fixed income research division on prediction of prepayment for mortgage backed securities for two years. He then worked with Scope-Standard Chartered, Chennai for a year on portfolio analytics. He also has keen interest in sustainable development, improving quality of public schools and policy analysis. Jayaram joined CMF as a consultant in April 2008 and his current focus at CMF are building needs assessment tool for MFIs and analyzing the costs and benefits of no-frills account.

32

Profiles of key speakers

Sanjay Sinha is Managing Director of Micro-Credit Ratings International Limited (M-CRIL), which professionally assesses micro finance institutions and provides other services designed to promote the flow of investments into the micro finance sector. Sanjay has over twenty five years of development consulting experience in South and Southeast Asia, specialising in livelihoods sector activities, microenterprise promotion, agriculture and livestock production as well as forestry, in addition to micro finance. In 1983, he co-founded EDA Rural Systems, which is now one of the premier development consulting companies in South Asia. Sanjay also has an MPhil degree in Economics from Oxford University.

List of Participants Mr. Vipin Sharma

Mr. Raghavendra Heroor

C.E.O.

Manager

Access Development Services

Indian Bank

28, Hauz Khas Village, New Delhi - 110016

Microsate Branch, 1st Floor, Progress House,

Ph 011-26510915

Shivaji Nagar, Pune - 411 005 (M) 09823304145

vipin@accessdev.org

Ph 020-65287802 microsatepune@indianbank.co.in

Mr. N. Sankara Raman

Mr. Govind Singh

Assistant General Manager

Business Head

City Union Bank Limited

ICICI Bank Ltd.

149, TSR Big Street, Kumbakonam - 612 001

ICICI Bank Towers, Bandra Kurla Complex

Ph 0435-2432322 (M) 9381737719, 9382889313

Bandra (E), Mumbai - 400 051

sankararaman@cityunionbank.com

Ph 022-26536486 Fax 26531126 (M) 9967577778

List of participants

govind.singh@icicibank.com Mr. Chandra Shekhar Ghosh

Mr. Arjun P. Ghugal

Executive Director

Dy. General Manager

Bandhan Financial Services Pvt. Ltd.

Bank of India

AB-48, Sector 1, Salt Lake City, Kolkata 700064

Head Office Star House, C-5, ‘G’ Block,

Ph 033-23347602, Fax 23343015

4th Floor, Bandra Kurla Complex, Bandra (E),

csghosh@bandhanmf.com

Mumbai - 400 051, Ph 022-66684648 Fax 66684649 (M) 9833060820 apghugal@bankofindia.co.in

Mr. M. Lakshminarayana

Mr. L. Ram Mohan Rao

Chief Regional Manager

Assistant General Manager

Indian Overseas Bank

Krishna Bhima Samruddhi Local Area Bank Ltd.

Regional Office, Salgaonkar Centre, Rna De Owram, Panjim 403 001 Goa (M) 09422059320

HO P.C. Towers, Venkateshwara Colony

Ph 0832-2430641 Fax 243007 mln14153@yahoo.com

Mahabubnagar - 509 002 (A.P.) Ph 08542-27338 rammohanrao.l@basixindia.com Mr. N.V. Ignatius

Assistant General Manager

General Manager

Reserve Bank of India

South Indian Bank

RPCD, Central Office, Mumbai - 400 001

SIB House, 266, Linking Road, Bandra (W), Mumbai - 400 050

Ph 022-22661000 Extn. 2320 (M) 9920092625

Ph 022-26556538 Fax 26556539 (M) 9322344369

pproy@rbi.org.in

ro1001@sib.co.in

33

List of participants

Mr. P.P. Roy

Mr. B.S. Chauhan

Mr. M.M. Chadha

Chief Manager

Chief Manager

State Bank of Bikaner & Jaipur

State Bank of Patiala

Lead Bank Department, Head Office, Tilak Marg, Jaipur (Rajistan) - 302 001 (M) 9414128246

Regional Office - III, 21 Vidhan Sabha Marg

Ph 0141-5101609 & 2227044 Fax 2227674

Lucknow (M) 09415040499 Ph 0522-2237246

chauhanbhimusha@gmail.com Mr. Subodha Chandra Mishra

Ms. Lakshmi Krishnan

Chief Manager

Research Associate

The Catholic Syrian Bank Ltd.

IFMR-Centre for Micro Finance,

Plot No. 45, Janpath, Ashok Nagar

8th, Floor, Fountain Plaza, Pantheon Road, Chennai - 600 008

Bhubaneswar - 751 009 (M) 9937021656

lakshmi@ifmr.ac.in

Ph 0674-2536040, 2533466 Fax 2533466 bhubaneswar@csb.co.in Mr. L. Chandran

Mr. Ajay Kumar Tannirkulam

Chief Manager

Programme Head, Analytics

The Dhanalakshmi Bank Ltd.

IFMR-Centre for Micro Finance,

Corporate Office, Credit Department, Naickanal, Thrissur, Kerala - 680 001 (M) 9495357091

8th, Floor Fountain Plaza, Chennai - 600 008

Ph 0487-2335177 Extn. 144 Fax 2323724

ajay.tannirkulam@gmail.com

chandran.lakayil@gmail.com Mr.U.V. Raorane

Professor, IIM Indore

Senior Manager

Rau, Indore M.P. - 453 331

The Ratnakar Bank Ltd.

Ph 0731-4228531 Fax 4228800 (M) 09755552450

Admn. Office, Shri Sahu Market Yard

sapovadia@iimidr.ac.in

Kkolhapur - 416 005 (M) 9823122484 Ph 0231-2659459, 2650981to983 Fax 0231-2659459 uraorane@yahoomail.com

Dr. Sudha Kothari

Mr.S.R. Junankar

Director

Sr. Manager

Chaitanya

Bank of Maharashtra

Rajgurunagar, Tal Khed, Dist Pune - 410 505

Rural Credit Department, H.O. Lokmangal

Ph 02135-226580, 93 Fax 226580 (M) 9822529697

1501, Shivajinagar, Pune - 411 005

chaitanya_pune@yahoo.co.in

Ph 020-25513813 Fax 25536748 (M) 9325557022

List of participants

shrimandardas.junankar@mahabank.co.in

34

List of participants

Mr. V.K. Sapovadia

Ms. Reena Sen

Mr. S.G. Anil Kumar

Deputy CFO

C.E.O

Swadhaar Finserve Pvt. Ltd.

IFMR Trust Holding Co.

5/39, Shree OM Co-op. Housing Society

1, Cenotaph Road, Teynampet, Chennai

Anand Nagar, Santacruz (E), Mumbai

(M) 9790866366

(M) 9870495603

anil.sg@ifmrtrust.co.in

rsen@swadhaar.com Mr. Biju N. John

Mr.Narayanan Subramaniam

Sr. Manager

Director

EMFIL

Svasti Foundation

9, Ramkrishna Society, Gorewada Road

16/A, 2, Prathamesh, MHADA Colony

Nagpur - 440 013 (M) 9422545775

Andheri, Mumbai - 400 093 (M) 9840099120

Ph 0712-2593159 Fax 2596703

Ph 022-28258851

bijyemfil@gmail.com

narayanan@svasti.in

Ms. Vijayalakshmi Das

Mr. Manab Chakraborty

C.E.O

Managing Director

Friends of WWB India

MIMO Finance

101, Sakar Building 1, Ashram Road

Johor Bhanan, 3, Turner Road, Dehradun - 248 002

Ahmedabad - 380 009 (M) 9824012209

Ph 0135-6451719 (M) 9997997740

Ph 079-26580119, 26584199, 26584082

manab@mimofin.net

List of participants

fwwb@fwwbindia.org Mr. Harish Khare

Mr. M. Parthasarathy

Senior Manager

Agricultural Officer

HDFC Ltd.

Karur Vysya Bank

HDFC House, No. 51, Kasturba Road,

Central Office, Credit Management Department

Bangalore - 560 001 (M) 9845611241

Erudi Road, Karur, Tamil Nadu - 639 002

Ph 0890-41183254

Ph 04324-225525 Fax 225525 (M) 9444477614

harish@hdfc.com

sarathymanickam@yahoo.in

Mr. Sankar Datta

Mr. Brahmanand Hegde

Dean

Director

The Livelihood School

Fullerton India Credit Co. Ltd.

Surabhi Archade, 3rd Floor, Bank Street, Koti

1st Floor, Mirchandani Business Park, Sakinaka

Hyderabad - 500 001 (M) 09347513079

Behind Bluestar House, Andheri (E),

Ph 040-30512500

Mubmai - 400 073 (M) 9987005826

dattasonkor@basixindia.com

Ph 022-67601327 Fax 67601460 brahmanand.hegde@fullertonindia.com List of participants

35

Mr. J. Prakash

Mr. Potdar Hanmant Sadashiv

Manager

Lead District Manager

The Lakshmi Vilas Bank Ltd.

Bank of India

29, Govindu Street, Chennai - 600 017 T.N.

Lead District Office, Udyog Bhavan, Vishrambag

Ph 044-28155499 (M) 9884032922

Sangli - 416 415 (M) 9423859387

jagannathan.prakash@gmail.com

Ph 0233-2672174, 2675874 Fax 2672174 san_hspotdar@sancharnet.in Dr. Susmita Mukhopadhyay

Deputy General Manager

Assistant Professor

NABARD

Indian Institute of Technology, Kharagpur

Shivajinagar, Pune - 411 005

Kharagpur - 721 302 (W.B.)

Ph 020-25500181 (M) 9422355411

Ph 03222-283864 (M) 09839095089, 09433756021

nukurkure@yahoo.com

susmita@vgsom.iitkgp.ernet.in

Mr. Raghabendra Chattopadhyay

Mr. Gautam Ch. Swain

Professor at IIMC

Branch Manager

Indian Institute of Management Calcutta

Shramik Sahayog

Joka, Diamond Harbour Road,

Megrant’s Project by Adhikar, Bhubaneswar

Kolkata - 700104 Ph 033-24678300

103, Cambodar Apartment, Jaynagar, Waliv

Fax 24678062/8307 (M) 9433055230

Vasai (E) (M) 9960537648

rc@iimcal.ac.in

gautamswain@yahoo.com

Mr. Doug Johnson

Mr.Mohammad N. Amin

Research Associate

President

IFMR-Centre for Micro Finance, 8th Floor, West Wing,

Adhikar

Fountain Plaza, Khaleel Shirazi Estate

113/2524, Khandagiri Vohar, Khandagiri

31/2-A, Pantheon Road, Egmore,

Bhubaneswar - 751 030 (M) 09338092826

Chennai 600008 Ph 044-42892778 Fax 424892799

Ph 0674-2384542 Fax 2384731 (M) 09437079051

doug@ifmr.ac.in

amin.adhikar@yahoo.com

Dr. Rabi N. Mishra

Dr. Jivan Kumar Chowdhury

General Manager

Assistant Manager

Reserve Bank of India

Reserve Bank of India

Ranchi (M) 9431820503

Kanpur - 208 001 U.P.

rabi60@gmail.com, rabinmishra@rbi.org.in

Ph 0512-2331472 (M) 09839068726

List of participants

alyarjivan@yahoo.com

36

List of participants

Mr. N.U. Kurkure

Dr. Tara Nair

Ms. Sakshi Varma

Head of Research

Vice President

Friends of Women’s World Banking (India)

HSBC Bank

101, Sakar 1, ashram Road, AhmedabAd - 380 009

4th Floor, HSBC Centre, Pali Naka Road

Ph 079-26584199 Fax 26580119 (M) 9427329465

Bandra (W), Mumbai - 400 050

tara01@gmail.com

Ph 022-26594352 Fax 26594337 (M) 09987592173

List of participants

sakshivarma@hsbc.co.in Mr.S.M. Kotewar

Dr. B.K. Swain

General Manager

Professor & Head

Vidarbha Kshetriya Gramin Bank

National Institute of Rural Development

Madhu Malati, Gupte Marg, Jathar Peth

Rajendranagar, Hyderabad - 500 030

Akola - 444 005 (M) 9422166310

Ph 040-24008489 Fax 24008502 (M) 09963632253

Ph 0724-2420767 Fax 2421533

bk_swain2@yahoo.co.in

Mr. Prabhakara S.

Mr. Jayaram Venkatesan

Manager

Research Consultant

SA-DHAN

Center for Micro finance (IFMR)

New Delhi - 110 067 (M) 09958536081

8th Floor, Fountain Plaza, Pantheon Road

Ph 011-26966518 Fax 26518276

Egmore, Chennai - 600 008 (M) 09841894700

prabhakara@sa-dhan.org

jramvnkt@gmail.com

Ms. Theresa Chen

Mr. Paul Breloff

Programme Head

Vice President, Business Development

Center for Micro finance (IFMR)

SKS India Micro finance

8th Floor, Fountain Plaza, Pantheon Road

(M) 9866211344

Egmore, Chennai - 600 008 (M) 09841894700

paul.breloff@sksindia.com

theresa.chen@ifmr.ac.in Mr. Ajit Bapu Shinde

Mr. S.P. Singh

Vice President

Chief Manager

Mizuho Corporate Bank Ltd.

Punjab National Bank

Maker Chamber III, 1st Floor, Nariman Point

H.O. New Delhi - 110 001 (M) 09999007651

Mumbai - 400 021 (M) 9819830606

Ph 011-23317158 Fax 23328833

Ph 022-22886638, 22828760 Fax 22886640

s.singh@pnb.co.in

ajit.shinde@mizuho.cb.com

List of participants

37

Ms. Rajalaxmi Kamath

Mr. Sanjay Bhargava

Assistant Professor

Executive Chairman

Indian Institute of Management, Bangalore

Eko India Financial Services Pvt. Ltf.

Bannerghatha Road, Bangalore - 560 076

547, Mandakini Enclave, New Delhi

Ph 080-26993748

(M) 09999994086

rajalakxmik@iimb.crnet.in

sanjay@eco.co.in

Mr. Sharad P. Hudale

Ms. Balwinder Kaur

Branch Manager

Manager

Swabhimaan

NABARD

14, Landmark Apartments, B.J. Road

54, Wellesley Road, Shivajinagar

Sadhu Vaswani Circle, Pune - 411 001

Pune - 411 005 Ph 020-25500213 Fax 25542250

Ph 020-26051013 (M) 9730465434

balwinder.kaur@nabard.org

s.hudale@gmail.com

Ms. Medha Vijay Ranade

Mr. Stephen Rasmussen

Secretary

Senior Micro finance Advisor

Development Support Team

CGAP

Flat No.2, Pooja Heritage Apartment, Plot No. 46

1818-H, Street, Washington D.C. USA

anand Park, Lane No.3, Aundh, Pune - 411 007

srasmussen@worldbank.org

Ph 020-25887524 (M) 9890641841 Mr. Avishek Bose

Ms. Addavail Coslett

Product Manager

Product Manager

Ujjivan Financial Services

Ujjivan Financial Services

No. 93, Jakksandra Extension, 1st Block

No. 93, Jakksandra Extension, 1st Block

Koramangala Sarjapur, Main Cross Road

Koramangala Sarjapur, Main Cross Road

Bangalore - 560 034 (M) 09731308591

Bangalore - 560 034 (M) 09008300948

Ph 080-40712121 Fax 41468700

Ph 080-40712121

avishek.bosek@vijjivan.com

addavail.coslett@ujjivan.com

Mr. .Sanjay Kuberkar

Mr. Sanjay Sinha

Chief Operating Officer - FINO

Managing Director

Financial Information and Network Operations

Micro - Credit Ratings International Ltd.

Plot No. 38/39, Tarun Bharat Building

602, Pacific Square, 32nd Milestone NH 8

Sector 30, Near Sanpada Railway Station

Gurgaon - 122 001 (M) 09811089836

Navi Mumbai - 400 706 (M) 09870988755

Ph 0124-2309707 Fax 2309520

Ph 022-41613584 Fax 27810721

sanjaysinha@m-cril.com

sanjay.kuberkar@fino.co.in

38

List of participants

List of participants

ranade.medha@gmail.com

Mr. Romar Correa

Ms. Frances Sinha

Professor

Executive Director

University of Mumbai

EDA Rural Systems Pvt. Ltd.

Department of Economics, Vidyanagari

602, Pacific Square, Gurgaon - 122 001

Mumbai - 400 098 (M) 9892095973

francessinha@edarusal.com

Ph 022-26526942 Fax 26526918 romar77@hotmail.com Ms. Amelia Correa

Ms. Veena Halwe

Lecturer

Deputy Programme Coordinator

St. Andrew’s College

BAIF Development Research Foundation

St. Domenic Road, Bandra (W), Mumbai - 400 050

BAIF Bhavan, Dr. Manibhai Desai Nagar

Ph 022-26428684 (M) 9820481127

Warje, Pune - 411 058 (M) 09922066118

amelia@vsnl.net

Ph 020-25231661 Fax 25231662 veenahalwe@baif.org.in

Mr. Abhijit M. Lele

Mr. Ravi V. Belagali

Special Correspondent

Officer

Business Standard Ltd.

Allahabad Bank

H/3&4, Paragon Cenre, Opp. Century Mills

Station Road, Near Hotel Tourist

P. Budkhar Marg, Worli, Mumbai - 400 013

Kolhapur - 416 001 (M) 09764033388

Ph 022-24978459 - 60 Extn. 286 Fax 24978540

Ph 0231-2652366 Fax 6689517

(M) 09987015890

List of participants

abhijit.lele@bsmail.in Mr. Yeshu Bansal

Mr. Ashish Kumar Gupta

Sr. Programme Coordinator

Chief Operating Officer

Access Development Services

Sonata Finance Private Ltd.

28, Hauz Khas Village, New Delhi - 110 016

1719/1, Swami Vivekanand Word

Ph 011-26510915 Fax 26850895 (M) 9999797437

Opp. Boom Montesory, MR-4, Road

yeshu@accessdev.org

Jabalpur - 482 002 (M) 09425325659 ashish@sonataindia.com

Mr. Jolly Zachariah

Mr. Samit Ghosh

Chief Operating Officer

Managing Director

Ujjivan Financial Services (P) Ltd.

Ujjivan Financial Services (P) Ltd.

Gulraj Residency, Flat No.4, Sahyadri Park

No.93, Jakkasandra Extnn., Sarjapur Main Cross Road, Karamangala, 1st Block, Bangalroe - 560 034

Kondhwa, Pune - 411 048 (M) 09730044925 Ph 020-40094346 Fax 40094397

samit.ghosh@ujjivan.com

39

List of participants

jolly.zachariah@ujjivan.com

Ph 080-40712121 Fax 41468700 (M) 9900244441

Ms. Elaine Marie Ghosh

Mr. Justin Oliver

Executive Director

Executive Director

Parinaam Foundation

Center for Micro finance (IFMR)

93, Jakkasandra Extn., Main Sharjapur Road

8th Floor, Fountain Plaza, Pantheon Road

Koramangala, 1st Block, Bangalore - 560 034 Ph 080-40712121 Fax 41468700 (M) 91-9845028680

Egmore, Chennai - 600 008 (M) 09841894700 justin.oliver@ifmr.ac.in

emghosh@ujjivan.com Mr.Michael Chasnow

Mr. Amulya Champatiray

Research Associate

Courses & Workshops Coordinator

Center for Micro finance (IFMR)

Center for Micro finance (IFMR)

8th Floor, Fountain Plaza, Pantheon Road

8th Floor, Fountain Plaza, Pantheon Road

Egmore, Chennai - 600 008 (M) 09841894700

Egmore, Chennai - 600 008 (M) 09841894700

michael.chasnow@ifmr.ac.in

amulyakrishna.champatiray@ifmr.ac.in

List of participants

List of participants

40

Centre for Micro Finance 8th Floor, Fountain Plaza, Pantheon Road Egmore, Chennai 600 008 http:w w w.ifmr.ac.in/cmf

College of Agricultural Banking Reser ve Bank of I ndia University Road, Pune 411 016 http:cab.org.in