The Indian economy is growing at a steady rate of 8.5 % to 9% in the last five years or so. Most of the growth is from industry and services sector. Agriculture is growing at a little over 2 %. The potential for growth in the primary and SME sector is enormous. According to data released by RBI, limited access to affordable financial services such as savings, loan, remittance and insurance services by the vast majority of the population in the rural areas and unorganized sector is believed to be acting as a constraint to the growth impetus in these sectors. Access to affordable financial services - especially credit and insurance - enlarges livelihood opportunities and empowers the poor to take charge of their lives. Such empowerment aids social and political stability. Apart from these benefits, FI imparts formal identity, provides access to the payments system and to savings safety net like deposit insurance. Hence FI is considered to be critical for achieving inclusive growth; which itself is required for ensuring overall sustainable overall growth in the country.
In India, majority of people do not have access to finance in rural areas. Only 5% of India's 600,000 villages have bank branches. Since RBI mandate on no-frill accounts, over 79 million such accounts have been opened in villages but 80% of these accounts are being used only for electronic benefit transfers. While the penetration of bank accounts is rising, only about 10% are insured for life, around 2% have a credit card, 13% have ATM + debit card. There is a need for encouraging savings habit and providing financial literacy to masses in rural areas.
Financial literacy is an important driver in effectively leveraging fruits of access to formal banking sector.
Indian Grameen Services, experts in the microfinance space in India are enabling environment for creating a space for emerging MFIs, by making tried and tested innovative MFI products available to common man.
IGS serves as a laboratory for testing new microfinance, micro-savings, and micro insurance products. It first aims to build upon the expertise of existing institutions; and second utilizes these existing distribution channels to offer new and innovative products to niche client groups.
IGC reaches 14,166 direct beneficiaries through its financial inclusion services. IGS tracks its progress by constantly developing new products and partnering with an increasing number of financial institutions.