How do we design a financial system in which there are multiple and diverse originators providing integrated financial services to low income (or otherwise under-served) households and small businesses, evaluating and pricing risks appropriately, and ultimately taking responsibility for good financial outcomes for their customers?
The report card for the Indian financial system today shows glaring deficiencies, it is barely able to reach significant numbers among the urban population of the country leave alone the vast rural population. More than 70% of the lowest income quartile borrows from informal sources such as friends, relatives and moneylenders, less than 35% of the lowest income quartile have access to savings; only 14% of the lowest income quartile have life insurance; only 1% of the population has medical insurance. Small enterprises also tend to be under-served from the financial system: the share of bank lending to Small Scale Industry in India declined from 17.5% in 1998 to 8.5% in 2006. Therefore, the smaller the entity, the higher its dependence on alternative, informal financing sources, which are considerably costlier than formal sources.
To dramatically expand access to capital for financially under-served households, the IFMR Capital Partners Meet will provide a platform for reflection, discussion and action. Participants comprise a select group of leading practitioners in the field of access to inclusive finance, who will help answer key questions of pressing importance.
The spirit of this conference is to take a step back from the existing products, institutional frameworks, and regulatory architectures, and take a more fundamental view of what can be done to improve the ability of our financial system to ensure access to finance for every individual and every enterprise.
Together, we will work on a shared vision for the industry and identify specific pathways to achieve that vision. As an illustration, some of the issues that will be discussed and addressed are presented alongside.
It’s time for us all to be champions, and we can only get there together.