CAB-CMF

MICROFINANCE CONFERENCEJanuary 18, 2008

Summary of Proceedings

Foreword 3

Programme Description 4

Research Summaries 5

Conference Proceedings 25

Questions and Answers 29

Programme Schedule 33

Profi les of Key Speakers 35

List of Participants 39

Contents

Foreword

Microfi nance in India has achieved tremendous growth in the last ten years, due to the progress of the SHG-Bank link-age model and of Micro Finance Institutions (MFIs) using variations of the Grameen Bank model. Both delivery models tackle selection and monitoring issues [that are inseparable from lending to the poor] through groups and joint liabil-ity.

Despite this growth, there are still a large number of households with no access to fi nancial 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 fi ll the “white space” where there is no microfi nance activity, let alone a formal banking network?

Further, critical gaps remain in our understanding of how microfi nance can be best used to fi ght 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 fi nancial products have the most impact on the lives of those who take them up? Can the impact of microfi nance be enhanced by the addition of non-fi nancial programmes such as business training? How can we ensure that the poorest are not left out of the microfi nance revolution?

Practitioners regularly 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 innova-tions 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, microfi nance practitioners, bankers and policymakers 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, with support from Union Bank of India, held a national conference on microfi nance in January 2008 in Pune. The objective was to provide insights and highlight the policy implications from on-the-ground research, 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.

The conference was very successful in achieving these objectives. Speakers included eminent international development economists working closely with CMF, such as Profs. Abhijit Banerjee (MIT), Rohini Pande (Harvard University), Esther Du-fl o (MIT), Raghabendra Chattopadhyay (IIM Calcutta), Sendhil Mullainathan (Harvard University) and Jonathan Morduch (NYU) - and leading microfi nance practitioners in the country - Ms. Jayahsree Vyas (Sewa Bank) and Mr. Mohammad Amin (Adhikar). The sessions were chaired by Dr. Nachiket Mor (ICICI Foundation), Mr. Ajit Ranade (Aditya Birla Group) and Mr. C.S. Murthy (RBI), three prominent individuals in the sector. The conference was attended by a wide variety of au-dience, comprising representatives from private and public commercial banks, MFIs, non-governmental organizations, policy makers, and several experts from the sector, and witnessed active discussions among them.

These proceedings showcase brief write-ups based on presentations from the conference, summaries of questions and answers, as also answers to some questions that speakers did not have time to respond to during the conference itself, and are extremely rich in learning for researchers and practitioners. They address issues such as the nature of small busi-nesses fi nanced by microfi nance, possible interventions to help these businesses, the fi nancial behavior of poor house-holds and their vulnerabilities, and the need for appropriate fi nancial services. 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 rigor-ous research can provide important insights for policy and practice. In his concluding remarks for the conference, Mr. Michael Walton (Senior Visiting Fellow, Center for Policy Research, Delhi) observed that research is generally conducted with a long-term view and policy makers and practitioners have to take decisions with the limited information they have. Nevertheless, he acknowledged, policy makers and practitioners have an interest in using evidence-based research when taking such decisions. The conference encouraged us to further facilitate such dialogues and interaction between academics, microfi nance practitioners, bankers, regulators and policy makers, and, we view this as an on-going eff ort 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. We fi nally thank all the participants for attending and actively participating in the conference.

Sandip Ghose (Principal, College of Agricultural Banking-RBI, Pune)

A i D fl (E ti Di t C t f Mi Fi t IFMR Ch i)

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Programme Description

As microfi nance innovation spreads across the country, several challenges arise. In areas where microfi nance has existed for a few years and has expanded, issues relate to expanding outreach to include the poorest, managing compe-tition and determining the product portfolio, among others. In areas untouched or underserved by microfi nance, one of the challenges, for instance, is to design programmes and delivery mechanisms best suited to the needs of clients either through introducing fl exibility in existing products or designing new products. There has been some amount of experimentation on the ground with programmes and models, by practitioners and by academic researchers, to docu-ment and address some of these issues.

The objective of this conference is to draw lessons from some of these instances of existing research and microfi nance practices, and, to identify areas for future research and experimentation, of relevance to both practitioners and policy makers. The conference aims to achieve this by facilitating interaction between researchers, microfi nance practitioners, bankers and policy makers involved in the sector.

During the conference, three panels comprising of researchers, leading practitioners, and experts from the Indian fi nan-cial sector will discuss the following topics:

o Current issues in product design;

o Challenges in off ering innovative fi nancial and non-fi nancial services with micro-credit; and

o Emerging issues in the microfi nance sector and related regulatory issues.

The Centre for Micro Finance will showcase some of its projects undertaken in collaboration with leading research-ers from across the world. These include recommendations from experiments with loan repayment schedules in West Bengal, impact of business training on microfi nance clients in Gujarat, the nature of small businesses in urban slums in Hyderabad, client understanding of interest rates, and prevalence of competition. Researchers will share results from these experiments that have led or could lead to improvements in microfi nance programmes or policies.

Similarly, leading practitioners of microfi nance in the country will present their experiences with innovations in devel-oping tailor-made products for their clients and also identify challenges and emerging issues in the sector. Faculty from the College for Agricultural Banking will provide feedback and insights from a regulatory perspective.

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A snapshot of small business in Hyderabad: Results from a

large-scale survey

Abhijit V. Banerjee, Esther Dufl o, and Rachel Glennerster

Starting in early 2005 we surveyed about 2400 households randomly selected from 120 “small” slums in and around Hyderabad city. The proximate goal was to create a baseline for a randomized evaluation of Spandana’s micro-lending program, but it also provides a rich new dataset for studying tiny family-run enterprises.

The average family in this data set is a family of 5, with monthly expenditure of Rs 5,000, which makes them poor, but not ultra poor: only 6% of these households live under a dollar a day per member, but 47% live under 2 dollars a day. 67% of the household live in a house they own, and 29% in a house they rent. The median house has two rooms though 2/3 of the houses are Kuccha. 98% of the 7-11 years old, and 84% of the 12-15 year olds are in school.

The fi rst fact that emerges from the survey is that it is very common for families to own a business: 31% have one busi-ness and 9% have more than one, compared an OECD average of 12%. Most businesses do not require many specialized skills: 17% own a Kirana store, 8% own a fruits and vegetable sellers, 6.6% own a telephone booth, 6.3% have a milk business and 4.31% are auto drivers. The one possible exception is tailoring—12% are tailors.

Given the fact that there are so many people doing the same things, it is no surprise that many people in same slum are running the same business: many Kirana shops in a single slum, presumably with the predicted implication for their profi t margins.

Businesses are small. Only 2% of businesses have a partner; 10% have an employee; and no one has more than 3 em-ployees. Even when we include household members, only 42% of businesses have more than one worker and 5% have more than three workers.

Only 20 out of 730 businesses have a separate room in which they operate. 20% use no productive assets whatsoever. The productive assets that are used are not particularly sophisticated: the most common assets include: Sewing ma-chines (43), Tables (71), Chairs (83), a weighing balance (61), a pushcart, motorized or not (86). Interestingly almost none of these assets are rented.

Not surprisingly, the businesses do not generate a lot of revenues: The average revenue is actually Rs 12,000 per month but the median is Rs 3600. Yet the owners work very long hours: in our data, the number of hours worked in the last week by a full-time business owner ranges between 40 hours per week and 119 hours per week. The mean is 72 hours, and the median is 77, which means more than ten hours a day, seven days a week. However many businesses are part-time businesses, one of the many activities the owner undertakes. Part-time owners work only 24 hours per week on average.

The average monthly profi t, after deducting any rents they pay but not the unpaid time spent by household members, is Rs 1,859, and the median is Rs 1,035, a real but modest gain. Fifteen percent of the businesses have lost money in the last month, after subtracting rents.

However when we value the long hours spent by household members, even at the low rate of Rs 8 an hour (which would give someone close to the minimum wage for a eight hours day), both median and average profi ts turned mildly negative.

Are these negative results because the scale is sub-optimally small: i.e. are the long hours largely being wasted because the amount of capital they are working with is ineffi ciently small? Or is it because the household is starting a business to “buy a fl exible low-intensity job” and does not really want a larger business because that would make the job too demanding? And if it is the latter, would the availability of much/cheaper bigger loans change that?

Why should these businesses lack capital? One obvious explanation is that there are imperfections in the credit market, though it could be the risk of taking on a larger investment that is also holding them back.

What do we know about access in this population? A large fraction of household have debt: 69% of the households have at least one outstanding loan and 46% of the households have more than one outstanding loan. The average loan, when it was taken out, was for Rs 20,000 (the median was Rs 10,000). The average interest rate is 3.85% per month (which is close to 80% a year). Loans are taken from moneylenders (49%), family members (13%), friends or neighbors (28%). Loans from commercial banks are rare and there are almost no MFI loans (this was before Spandana entered the slum). We asked the respondents how much more extra loan repayment they could handle: The median person said Rs 500 per month while the mean was Rs 1,000, both of which, conveniently, are in the range of what it would take to repay a Rs 7,500 loan from Spandana. Among those households who do not have a loan, 56% say they want one but could not get one.

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However when we asked people why they took out the loans they have few (7%) said it was for starting a new business and 1.33% said it was for business expansion. Moreover households that have businesses are no more likely to be in-debted. The main purposes for taking out a loan are health expenses (17%), temporary diffi culty (10%), marriage (13%), home construction (10%), and consumption (10%). Of course this might just refl ect the fact that the loans that they had access to were very expensive. Credit here is clearly acting partly as a substitute for insurance: essentially no one has health insurance in this population (though 26% have life insurance and 34% have savings accounts) and 40% of the household had to spend Rs 500 or more on health in the last year. Moreover for those who had to spend money, the average expense was Rs 7,500 (median Rs 3,000) and 60% of the households who had a sick member had to borrow.

The fact that Spandana loans are much cheaper than the loans that they were getting gives us some reason to believe that these loans might go into business expansion/creation. However a puzzle remains: many of the Kirana shops have Rs 1500 or less in capital. This is not a lot of money for these people, especially for the half of them who spend $2 a day or more. Just by cutting their spending on alcohol and cigarettes to the levels we see among those who spend $1 a day or less, they could save enough to double the amount of capital stock they have. Why aren’t they?

6

Experiment on repayment schedules

Rohini Pande, Erica Field, Emmerich Davies, and Anup Roy

A schism exists in microfi nance between academics – who believe that microfi nance can only stand to gain from greater fl exibility – and practitioners – who are reluctant to introduce greater fl exibility in microfi nance contracts for fear of greater client default and delinquency. Over the past year, Professors Erica Field and Rohini Pande and the Centre for Micro Finance, in conjunction with the Village Welfare Society (VWS), a microfi nance institution (MFI) in West Bengal, have sought to rigorously test these contending views.

A fi rst intervention with VWS took place between April 2006 and June 2007 and randomly assigned diff erent repay-ment schedules to fi rst-time female borrowers in joint-liability groups. Clients could either be assigned to 1) the tradi-tional weekly meeting and weekly repayment schedule; 2) a weekly meeting and monthly repayment schedule; or 3) a monthly meeting and monthly repayment schedule. It soon became clear that introducing greater fl exibility had no discernible eff ects on client default or delinquency: The rate of default in all three groups was virtually identical. These results are discussed in greater depth in Field & Pande, 2007. However, over the course of the fi rst intervention several other fi ndings stood out as interesting and worth further research.

How Microfi nance Clients Make Use of their Loans

How clients make use of their loans has been an important question for any research on microfi nance. From survey questionnaires, we ascertained that clients did not use their money for large upfront investments in productive capital. This fi nding defi es conventional wisdom that suggests that clients use their loans to make productive investments. At the same time, there has recently been scepticism in the effi cacy of microfi nance because of widespread use of micro-loans for consumption. This discrepancy between what has been suggested and the ground reality motivated us to fi nd ways to better design microfi nance loan contracts so that clients can make the best use of loans.

Social Cohesion

Microfi nance is diff erent from traditional debt contracts in the frequency of their meetings and repayments. Frequent meetings and repayment are believed to teach clients fi nancial discipline, as well as build cohesion within groups so that clients will turn to each other in times of need and lack of verifi able collateral. Practitioners argue that with less frequent meetings, groups will not be as comfortable with each other and, as a result, clients will be reluctant to ask for help in making payments.

Due to the randomised nature of our intervention, we had a unique opportunity to test this proposition. We found, during the fi rst intervention, that although clients that met more regularly had greater familiarity with fellow group members, this familiarity did not translate into greater fi nancial reliance. Instead, clients relied on traditional networks for making payments - such as their husbands and family members - suggesting that the group structure has a very limited role to play in joint liability groups. We are unsure whether this is a generalizable phenomenon as these clients were fi rst time borrowers and, thus, receive the smallest loan size that VWS off ers. The fact that clients did not turn to their group members in times of need might be due to its small loan size or the age of the group rather than diff erent meeting schedules.

Early Repayment

Another salient - but unexpected - result from the fi rst intervention was the diff ering rates of early repayment between meeting schedules. VWS has a policy that after 33 weeks clients are allowed to repay the entirety of their loan. Results from our fi rst intervention revealed that clients that met more frequently were more likely to repay the entirety of their loan earlier, suggesting that some aspect of more frequent repayment schedules made it easier or more appealing to repay early. Two explanations are possible: 1) As having to repay more frequently imposes a higher eff ective interest rate, clients on weekly repayment schedules were eager to fi nish their loan payments faster and move onto more lucra-tive loan contracts, or 2) The more frequent meetings made it easier for clients to repay their loan faster.

Areas for Further Research

The results discussed above as well as the results discussed in Field & Pande 2007 have created several avenues for fur-ther research. Two more interventions have been designed to test these questions presented above: loan contracts that incentivise clients to make larger investments at the beginning of the loan cycle; and the early repayment eff ect.

The second intervention with VWS introduces a treatment group that has a two-month time lag before they are required to make their fi rst loan repayment. This change in the loan contract was derived through our interactions with VWS cli-ents who hinted that having a longer period before having their fi rst repayment would give them an opportunity to use their loans for larger and more productive investments. This intervention is currently ongoing and we have about 800 clients who have formed groups and received loans and we are hoping to add another 200 clients to the intervention.

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The third intervention tries to tease out the mechanism behind the diff erence in early repayment results discovered in the fi rst intervention. As one of the reasons behind weekly clients repaying earlier could have been a diff erence in eff ec-tive interest rates between repayment schedules, we have equalised the interest rates faced by clients on all repayment schedules. As a result, clients on monthly repayment schedules will pay a slightly higher amount at each repayment, as they initially faced a lower eff ective interest rate. We hope to begin this intervention in the fi rst quarter of 2008.

Implications

The most important implication of our results is that MFIs can potentially reduce their transaction costs through less frequent repayment schedules without signifi cantly increasing their rates of default. This should be considered in light that the fi rst intervention was conducted on fi rst time loan clients with loans no greater than Rs. 4,000, as well as dis-tricts in West Bengal where MFI competition was absent. There exists the potential that increasing loan size would also increase loan default rates, as well as consequences from the entry of other MFIs into the area. We hope to test the ef-fects of larger loan sizes in our third intervention, and also potentially test the eff ects that increased competition would have on default rates in a particular MFI.

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Business training for micro-entrepreneurs

Rohini Pande, Erica Field, and Divya Varma

The Centre for Micro Finance, in collaboration with SEWA Bank in Ahmedabad, has undertaken a fi eld experiment to examine the impact of business training on fi nancial and business behaviour outcomes of members. The primary research questions explored are the impact of a scalable business training program and the eff ects of receiving training with a peer.

A key motivation underlying eff orts to expand microfi nance and micro-savings is that providing credit and banking opportunities to the poor will increase their economic opportunities and generate long-run income growth, thereby helping them out of poverty. However, these services reduce poverty only if the poor are adequately positioned to take advantage of borrowing and savings opportunities to improve household and business fi nancial management. But, many of the poor lack human capital and have limited information about business and other economic opportunities, and women in particular face constraints on mobility and lack social networks to assist them with information and skill acquisition. Hence, the returns to entrepreneurial skill building and information about business opportunities gained through business training may be particularly high.

MFIs have an interest in business training as a catalyst to savings and loan repayment, as it helps their clients learn about loan and savings opportunities and manage their limited resources,. For this reason, it is important to conduct an impact evaluation to measure the cost and benefi ts of trainings and understand how they can be most eff ectively structured for the largest impact and for scalability. The Centre for Micro Finance, together with SEWA, has conducted a randomized impact study that investigates the impact of a streamlined, scalable training model as well as the eff ect of training with a peer.

Setting

Shri Mahila SEWA Sahkari Bank was created in 1974, by the Self Employed Women’s Association (SEWA) in the city of Ahmedabad, Gujarat. For four years, SEWA Bank has run a fi ve-day program on fi nancial literacy, which uses lessons, games, and movies to teach modules on accounting skills, interest rates, avoiding excess debt, and the importance of long term “life-cycle” planning. Recently, it began a second fi ve-day course, meant to supplement its fi nancial literacy training, which teaches business skills such as marketing, cost reduction, investment, and customer service.

Design of the study training module

We designed a streamlined training module aimed at maximizing the potential to scale up such a program to micro-fi nance clients in other settings. We used information on what elements of the training the SEWA Bank clients found the most useful, what they implemented in the short run and what they retained or abandoned in the long run to condense the two fi ve-day trainings into a two-day training (a total of 4 hours) costing approximately Rs.157 per student.

Our training had a few unique features. During the training, women would work in groups to identify one or more fi -nancial goals (and ways to achieve them) and sources of wasteful expenditure (and how to curb them). We introduced an inspirational element in the training, in the form of a movie, showcasing the lives of a few successful SEWA members who have used good fi nancial practices to bring themselves out of poverty. Another unique feature was that half of the participants were invited to come alone while the other half were invited with friends. This primarily was to investigate if coming with peers infl uences take-up, participation in class, retention and reinforcement of the training lessons.

Study Protocol

To evaluate the training module we selected 634 SEWA clients, of which a randomly sampled 423 were invited to the training. All women in the sample were either actively saving or borrowing from SEWA Bank between December 2004 and January 2006. The women in our sample were between ages 18 and 65 and were either business owners, piece-rate workers, or self-employed. For each session, twelve women were invited from our sample, among which four were in the control group and not trained; four were invited with a friend and four were invited alone.

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Preliminary Results

We are currently conducting a detailed survey aimed at understanding how the training aff ected business and fi nancial outcomes and women’s aspirations. Here we report fi ndings based on women’s saving and loan behavior as observed in SEWA’s bank transactions database. We fi nd that the business training increased borrowing in general and savings for the peer-trained cohort. Figure A shows that the amount of new borrowing increased in general by Rs.772 with a slightly larger increase for those trained individually. We also fi nd the monthly savings of (only) the peer treated group increased by about Rs.217 per month. Also, the uptake of the training diff ered by treatment group, with 69% of those invited to train with a friend attending and 63% of those invited to train individually attending.

Figure A Figure B

Average amount of new borrowing per month

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Why is savings higher for those who are "Peer Treated"?

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Future Directions

Our fi ndings suggest several future avenues of research. For example, we would be interested in whether a follow-up training impacts long-term retention rates. It would also be interesting to disentangle the reasons why coming with a peer has an infl uence on the savings and borrowing behaviour of the client. These questions suggest the need for fur-ther work to help us design appropriate methods to increase the likelihood of long-term fi nancial improvement.

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Targeting the hard-core poor in West Bengal

Raghab Chattopadhyay, Esther Dufl o, Abhijit Banerjee, and Jeremy Shapiro

Over the last three decades, microfi nance has emerged as a tool for the economic development of the poor across the globe. Nobel Laureate Muhammad Yunus’s pioneering Grameen model has been adopted in diff erent countries and microfi nance has become a global movement. But who are microfi nance clients after all? There has been a persistent criticism about the discrepancy between whom microfi nance claims to target and whom it actually reaches. Whether microfi nance has been able to provide credit to the poorest of the poor remains a debatable topic1. As a matter of fact, microfi nance institutions (MFIs) generally neglect ultra poor households because they are extremely vulnerable to shocks and are more likely to spend loans for consumption purposes rather than invest in productive activities. So even if an ultra poor household is interested in starting a petty business, it is often denied loans and hence such households fi nd emancipating themselves from the shackles of poverty extremely diffi cult. They continue to face the tyranny of lo-cal moneylenders and other humiliations.

Take the case of Basanti of Hazrapara in Beldanga, West Bengal. She is keen to start a micro-enterprise but she could not start one due to a paucity of funds. No MFI approached her to join a microfi nance group because she belongs to an ultra poor household. Hence she thought that her dream would never turn into reality. This is the fate of many such “Bas-antis” who cannot aff ord a square meal every day. To reinforce this, Morduch (1999) once opined that “poorer house-holds should be served by other interventions than credit” (p.1600). One such intervention would be to uplift ultra poor households by providing income generating assets so that they can eventually participate in regular microfi nance programs. With this objective, Bandhan, a Kolkata MFI, started the “Chartering into Unventured Frontiers-Targeting the Hard Core Poor” (CUF-THP) program in 2006. This grant-based program is fi nancially supported by the Consultative Group to Assist the Poor (CGAP) and draws inspiration and technical support from a similar program2 run in Bangladesh by the Bangladesh Rural Advancement Committee (BRAC).

Targeting Hard Core Poor (THP) Program at a Glance

The aim of the THP program is to provide income generating assets, such as livestock and other inventories for non-farm enterprises, to the poorest of the poor (the “Ultra Poor”) to assist them in starting businesses and eventually graduating into small scale entrepreneurs. To make this program successful, area selection and Ultra Poor targeting are of utmost importance.

Bandhan selected Murshidabad for the intervention because the district performs poorly in terms of certain human development indicators compared to other districts in West Bengal3. Once the village lists were fi nalized, Bandhan con-ducted Participatory Rural Appraisals (PRAs) to identify Ultra Poor households in each hamlet. The PRA includes social mapping of the hamlet and subsequent wealth ranking of residents based on information from neighboring house-holds. Bandhan uses the wealth ranking to identify potentially Ultra Poor households in the particular hamlet.

A few days after conducting a PRA, Bandhan administers a detailed questionnaire to verify the results of the PRA and to identify the benefi ciary in Ultra Poor households. Ideally, an able-bodied woman member of a household is the target benefi ciary of this program. Subsequently, the THP program coordinator carries out the fi nal verifi cation of households identifi ed as Ultra Poor through visual inspection and informal conversation. During the fi nal verifi cation, special at-tention is paid to the condition of the house, the health and nutritional status of the women and children, educational attainment of the children, and employment status of the women. One mandatory eligibility requirement is that the household must not be involved in any micro-credit activities and/or should not obtain “adequate assistance4” from any government aided program.

Targeting Eff ectiveness Study

At Bandhan’s request, CMF undertook a study led by Profs. Abhijit Banerjee (MIT), Esther Dufl o (MIT) and Raghabendra Chattopadhyay (IIM-Cal) to assess how accurately Bandhan’s identifi cation procedure targeted the very poorest house-holds with the least access to credit. To accomplish this, the researchers conducted detailed household interviews with households identifi ed as Ultra Poor by Bandhan and households not so identifi ed, but which appear poor according to an economic census of the village. The study then compares Ultra Poor households to others along various dimensions of poverty.

1. See Morduch, J. (1999). The Microfi nance Promise. Journal of Economic Literature. 37 (4), 1569-1614. and Rabbani, M., Prakash, V.A. & Sulaiman, M. (2006) Impact Assessment of CFPR/TUP: A Descriptive Analysis Based on 2002-2005 Panel Data. CFPR/TUP Working Paper Series, 12. 2. See BRAC website: http://www.brac.net/cfpr.htm3. Murshidabad was ranked 15th among 17 districts of West Bengal in Human Development Index Ranking, 2004. Source: West Bengal Human Development report 2004. 4. “Adequate assistance” is determined on a case-by-case basis.

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Results and Implications

The results indicate that Bandhan’s identifi cation procedure targets a sub-population which is notably poorer in certain respects, particularly readily observable attributes. Notably Ultra Poor own less land, have fewer assets and are more likely to lack formal credit access than non-Ultra Poor households. Another important result from the study is that the peer wealth rankings established by PRA’s generate a reliable assessment of relative poverty; households ranked as poorest by their neighbors also appear less advantaged, again particularly with respect to land holdings.An additional fi nding is that targeting based on an economic census alone, such as is done for various other assistance programs, does not appear to identify an especially poor sub-population. The study compares recipients of certain forms of gov-ernment assistance to non-recipients and fi nds that, in this sample, recipients are not noticeably more disadvantaged than non-recipients.

The implications of this study are that the method used to identify the desired target population aff ects the charac-teristics of that group and may impact the success of the program. Defi ning the target population according to easily observable characteristics and using household surveys or PRAs, rather than broad censuses, to identify eligible house-holds is more likely to result in eff ective targeting.

12

Health Insurance: Opportunities and Challenges

Esther Dufl o, Abhijit Banerjee, Rachel Glennerster, and Richard Hornbeck

Poor households face considerable risk both in their professional occupation and in their personal lives. Very few of them have any access to formal insurance against any of these risks. One particularly important source of risk comes from health shocks. A single bad health shock can cost thousands of rupees, undermining savings or forcing house-holds to take loans. Governments and civil society organizations have thus felt the need to provide health insurance to the poor. However, the provision of insurance to the poor runs into considerable implementation challenges. Reaching and insuring a large number of individuals is necessary to achieve operational sustainability, and to avoid the classical problems facing health insurance, such as adverse selection (i.e. the risk that people who know they are sick are more likely to join the insurance pool).

Microfi nance institutions (MFIs) have the potential to solve this problem. They reach a large number of clients, from whom they collect repayment on a weekly basis. Thus, MFIs have the ability to reach a very large client base in a very cost eff ective way, which makes it possible to keep the premiums to a minimum. Moreover, since the main reason the clients join the organization is to get a loan, making insurance mandatory for the client of the organization can mitigate adverse selection. Several MFIs have thus started to introduce catastrophic health insurance as part of their service to their clients. However, many questions remain unanswered: Does health insurance discourage clients from staying clients of the MFI? Does it encourage only the sicker clients to stay enrolled, which would threaten the main line of business of the MFI? What is the benefi t to the clients of being enrolled (health benefi ts, economic benefi ts, etc.)? Does the availability of health insurance help client overcome health crises, maintain better businesses, and ultimately repay their microfi nance loans?

To answer all these questions, the Center for Micro Finance (Chennai, India), the Abdul Latif Jameel Poverty Action Lab (J-PAL South Asia and J-PAL at MIT) and SKS microfi nance set up a randomized experiment to evaluate the impact of off ering health insurance to micro-lending clients. While SKS is already working in several hundreds villages and has insured close to 50,000 lives, two hundred and one villages were selected for the pilot study and 101 of these villages were randomized into the treatment group where clients purchase health insurance at the time they renew their loan. The 100 remaining village form the comparison groups. The heath insurance product will be rolled out in those villages after two years. The loans and insurance products are administered by SKS in the state of Karnataka, and provided by ICICI Lombard. The data cover 7,000 households and about 28,000 adults.

This note presents preliminary fi ndings from the analysis of part of the baseline data, and the experience of SKS since the health insurance has been introduced. The analysis reveals that the insurance has not led to clients dropping out in the villages where it was introduced, and has not adversely aff ected the composition of SKS clients. Moreover, the health insurance product is well understood, and well used by clients. The data therefore suggests that microfi nance institutions are indeed eff ective channels for the delivery of health insurance. Future research will assess the benefi ts to the clients.

Note that all these results are highly preliminary and subject to change when more data becomes available.

The Need For Insurance: Evidence From The Baseline Survey

The baseline data reveals considerable unmet demand for insurance. Less than a percent of surveyed households have accident or health insurance. Yet, they face frequent health shocks: in the last year, 93% of the households have expe-rienced a serious health event, requiring an expense of at least Rs 300, a hospitalization, or keeping them away from work for more than a week at a time). 40% of the households experienced at least two of these shocks, and 6% of the households had at least one member hospitalized.

The average health event costs Rs 1,900, while the average monthly expenditure per capita is Rs 708. The distribution of these costs is very skewed: 5% of the households are responsible for 87% of the expenditures on these major health events. When they face an adverse health event, 43% of the households resort to a loan to pay off expenses (the vast majority of others use household savings). 32% of these loans are obtained from a money lender.

Thus, this data suggests that SKS households, despite the fact that they are already members of a microcredit organiza-tion, are facing considerable fi nancial risk due to health events. Bundling catastrophic health insurance with the main microfi nance product thus seems a promising avenue.

The Insurance Product

The insurance policy (administered by ICICI Lombard) covers catastrophic costs which include costs related to mater-nity, hospitalizations, and accidents. The client must insure herself, and can include her husband as well as up to two children. The premium, including administration fees, varies from Rs. 350 to Rs. 525 depending on the number of family members covered. The policy includes annual premiums, but does not include co-payments or deductibles.

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The insurance products is rolled out progressively in SKS work areas, starting with northern Karnataka. When the prod-uct is introduced in a center, a specialized team fi rst meets clients, explains the product to them, and shows a video produced by SKS.

In order to minimize adverse selection while only minimally aff ecting SKS core business, the purchase of health insur-ance was made mandatory for SKS clients in centers where the health insurance was introduced at the time of the re-newal of the loan. When clients become eligible for a midterm loan or need to renew their main group loan, they must purchase health insurance as well if they want to become a member.

Did Health Insurance Aff ect Sks Client Pool?

While one of the goals of the insurance product is to ensure fi nancial protection for those most at risk of having seri-ous health shocks, the sustainability of these schemes depends upon the ability of the scheme to attract a large cross section of individuals to mutualize the risk. It is thus important to investigate whether the health insurance product discourages SKS clients from renewing, or selectively encourages some types of client to renew.

We compared the renewal rate (i.e. the take up of a new group loan for client fi nishing their fi rst group loan) in treat-ment and control centre. The renewal rates are high, and similar in treatment and control groups. 96% of clients take up a new group loan in treatment centers, and 95% do so in comparison centers. The results are similar when we restrict the data to our baseline (94% in treatment and 95% in control, respectively). This is encouraging on two counts: fi rst, it suggests that the health insurance product is not aff ecting SKS core business. Second, since the renewal rates are so high, it implies that SKS can eff ectively cover and keep covered a large number of lives.

It could still be the case that the few clients who drop out are diff erent in the treatment and control groups. We thus compared the diff erence in a number of characteristics between those who renew and those who did not renew in treatment and control groups. A number of measures of health were created to capture diff erent aspects of health which might explain a client’s choice to take up the insurance product. These measures include the number of consulta-tions in the last month, total household spending on health in the last month, an index of chronic disease, an index of self-reported health, the number of health conditions reported by adults in the household during the last month, and the number of adverse health shocks in the last year. When each of these health measures are included in the analysis, we do not fi nd a statistically signifi cant diff erence in enrollment rates between the treatment and control group.

Policy Implications:

o Households experience frequent and costly health shocks, which often result in fi nancial jeopardy. Health insurance could lead to considerable improvement in household health and fi nancial stability. Providing health insurance could in turn be benefi cial to icrofi nance organizations if it helped clients repay their loans and maintain a healthy busi-ness.

o Health insurance does not lead to a change in the rate of renewal or the composition of clients who renew their loan: providing health insurance does not negatively aff ect SKS main business, and SKS is able to insure a large number of clients at a very small administrative cost: Microfi nance institutions are thus likely to be an eff ective channel to pro-vide health insurance.

o Evidence shows that insurance can be provided to poor populations without necessarily entailing adverse selection. Coupling insurance with other much needed products that the poor lack access to may be a promising mechanism for reducing adverse selection and ensuring the sustainability of insurance schemes.

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What is an informed consumer?

Sendhil Mullainathan and Minakshi Ramji

In recent years, discussions on microfi nance policy and regulation in India have centred on the extent to which small borrowers understand their loans and the fi nancial liability implicated therein. Lack of fi nancial awareness can lead to over-indebtedness and greater economic vulnerability for the very clients that microfi nance 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 and interest rates. Thus, fi nancial literacy has become a key policy focus in microfi nance.

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 loan term aspects are important to MFI clients and this should mean for regulation.

Methodology

For this study, we randomly surveyed two hundred fi rst-time borrowers to gauge their understanding of their loan con-tract from two microfi nance institutions in two locations in India, one in the north and one in the south. While this is a fi rst preliminary round of surveying, we plan to complete a few more rounds based on the results from the fi rst round.

Findings

a) What clients already know

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

Right Answer 96.5%Wrong Answer 3.5%

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

Right Answer 89.0%Wrong Answer 11.0%

What is the weekly instalment on your loan, as written in your contract?

As written in loan contract

Adjusting for collection of savings (Rs. 12) in

the South Within 10% of their

weekly amount Right Answer 42.5% 66.0% 84.5%Wrong Answer 52.0% 28.5% 10.0%Tried But Does Not Know 0.0% 0.0% 0.0%Did Not Try and Does Not Know 1.5% 1.5% 1.5%Blank 4.0% 4.0% 4.0%

An overwhelming majority of respondents were able to correctly state the size of the loan and duration of the loan. At fi rst glance, the numbers seem to indicate that only 43% of the respondents were able to state their weekly repayment amounts accurately. Th is 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%. About 85% of the respondents are within the 10% range of the correct weekly repayment amount they owe.

b) What clients do not know

Annualised Interest per Rs. 1,000 of Loan, as reported by respondents

Interest in South- Rs.

150

020406080

-999

-444

-111 25 50 10

0

125

150

175

200

250

Interest per Rs. 1,000 of loan (in Rs.)

Freq

uenc

y Interest in North- Rs. 180

Annualised Rate of Interest, as reported by respondents

% in South-15%

0

20

40

60

80

-999

-444 11.

21.

25 1.5 2

2.3

2.5 5 6 10 14 15 21

annualised rate of interest (in %)

Freq

uenc

y % in North - 18%

-999: Did not try and does not know -444: Tried and does not know

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What is the total interest on this loan that you are required to pay over the time of this loan?Right Answer 13.5%Wrong Answer 48.5%Tried But Does Not Know 16.0%Did Not Try and Does Not Know 21.0%Blank 1.0%

As suggested by the tables to the left and the graphs above, clients are not able to accurately state the interest on the loan either as a percentage or as a Rupee amount. 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

ScenariosIn case Lakshmi is not able to pay her loan and centre manager 42%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 its 45%appropriate to extend the meeting for another 30 mts to enforce the repayment?If Lakshmi doesn’t repay her loan in your group, do you think its 33%appropriate to extend the meeting for another 3 hours to enforce the repayment?Lets say that Lakshmi is not able to repay her loan. Would it be 54%okay for the MFI to take any of her assets, such as for instance, any cows she owns, her house her land or machinery she uses for work?

(% of respondents who said the action was appropriate)

The table above shows reactions from respondents to four hypothetical situations where MFI staff use coercive collec-tion 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 these results may come as no surprise, this data provides 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 loan size and duration, and their loan’s weekly instalment. 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.

This study argues for regulation which would require fi nancial institutions to provide interest rate and total interest expense information to clients, which clients can understand and use. The data here shows that clients are able to un-derstand the liability on their loan in terms of weekly repayments, rather than in terms of interest rates. A majority of the clients seem to fi nd 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 refl ective 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 unreason-able and unrealistic to expect small borrowers to have a deeper understanding of their loans than borrowers who have greater access to information and fi nance. 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 view 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 fi nancial literacy. As such, more research is required in this area to examine how small borrowers understand their loans and how they use this understanding to make fi nan-cial decisions.

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The psychology of debt

Sendhil Mullainathan and Elizabeth Koshy

Micro-entrepreneurs, around the world, pay exceedingly high rates of interest in order to fi nance working capital. In some cases this expensive investment does not translate into growth for their enterprise. Given that a signifi cant por-tion of their profi ts is spent on servicing debt, it appears that they could considerably increase their long term income by using savings for working capital. Understanding this behavior can provide great insights into the functioning of micro –enterprises.

The Debt Traps project aims at understanding this behavior of entrepreneurs who take on high interest debt for working capital without a corresponding increase in the size of business activity. The sample population consists of 1000 small-scale fruit/vegetable/fl ower vendors in Chennai who have been selected on the basis of two criteria - buying goods on credit at a premium or taking a daily loan for working capital. The baseline survey collected information on business activities, debt and expenditure, and the main results from this baseline survey are summarized in the next section.

Following the baseline survey, the study used a randomized design to experiment with two interventions, 1) fi nancial training and 2) a grant equal to working capital. Two follow up surveys after these intervention have been completed., and the fi nal survey will be soon administered to the respondent population.

Findings - Debt Burden

These are the fi ndings from the baseline survey that was administered before the interventions. The sample population has been selected from twelve markets in Chennai.

* Standard deviations are given in parentheses.

Table 1 – Business characteristics of sample population

Detail Percentage of respondents

Average amount purchased*

Profi ts per day*

1. One trip a day to the market- normal days 89.7% Rs. 1075.3 (589.2) Rs.110.5 (54.7)

2. Twice or more trips a day( total amount purchased per day)

8 % Rs.707.5 (422.6) Rs.95.6 (46.1)

3. Once in two days trip to the market (amount pur-chased per trip)

2.3% Rs. 1034.8 (515.8) Rs.97.2 (44.3)

4. Good days a week 98.9% Rs. 1666.3 (834.3) Rs. 186.6 (83.4)

5. Festival days 91.5% Rs. 2580.7 (1543.7) Rs. 318.2 (187.3)

Table 1 presents some information on the business fl ows and the rotation of working capital for the sample population. The sample population had been selected in such a manner that working capital requirements on a normal day are less than Rs. 3000. As can be seen from the table, majority of respondents make one trip to the whole sale market to buy goods that they resell. For those who make more than one trip a day to the market, they typically do it twice a day. It is mainly fl ower sellers who make two trips to the market to buy goods for resale.

The table presents information about three scenarios-normal days, good days and festival days. Good days are recur-rent days in a week when the respondent knows with certainty that business will be good. Good days for fl ower sellers are Friday and Tuesday because of the increased temple visits on these days. Festival days are also marked by increased working capital because of the expected high business. It is to be noted that the phenomenon of good days and festival days is not applicable for all vendors. The table also shows the profi ts earned in each of the three scenarios. Profi ts have been defi ned as “take home profi ts,” i.e. money taken back home after all expenses of business have been incurred.

The respondents in the sample use two main sources of fi nancing for working capital. The fi rst is the meter loan/daily loans. These are high interest loans taken every day for the purpose of working capital fi nancing. The interest rates on these loans vary from individual to individual and it is possible that two people working next to each other in a market get this loan from diff erent moneylenders and pay diff erent rates of interest on them. The second source of fi nancing is buying goods on credit. A vendor who buys goods on credit incurs a charge for being able to do so.

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This charge is the diff erence between the goods bought on credit and the cost of the same bundle of goods if bought on cash. As can be seen in tables 2 and 3, 40 % of the respondents buy goods on credit and close to 70% fi nance their working capital through meter loans.

Another main point that emerges from the tables is the number of years that the sample vendors have been borrowing persistently for. If one looks at the fi gures from the table on meter loans, 9.5 years of borrowing 1000 Rs daily translates into 167,580 rupees of just interest payments . This constitutes close to half their income for the same period. For the 500 respondents who were randomly selected for the fi nancial training classes, their training focused on the high inter-est payments experienced in daily borrowing.

Table 2 – Buying on credit

1. % of sample size that buys goods on credit 40%

2. % of sample size that buys goods on credit for more than 15 days a month 34.6%

3. Average number of days in a month that the respondent buys goods on credit 19.9 days

4. Average number of years of buying goods on credit 13.4 years

5. Average premium paid for goods bought on credit 17.3%

6. Average of maximum that can be bought on credit Rs. 3420

7. Alternate to buying on credit

a. another moneylender 72.25%

b. friend 3.75%

c. family/relatives 1.75%

d. no one else 24%

Table 3 – Meter loans for fi nancing

1. % of sample size that takes daily loans 69.4%

2. % of sample size that takes daily loans for more than 15 days a month 65.7%

3. Average number of days in a month that respondent takes a daily loan for working capital 25.8 days

4. Average number of years of taking daily loans 9.5 years

5. Average daily interest rate 4.9%

6. % of total meter loan borrowers who borrow from the same moneylender daily 67.7%

7. Average of maximum that can be borrowed as a daily loan Rs. 4098.6

8. % of meter loan borrowers who feel there is no other way of doing business and the interest is unavoidable

63.8%

Table 4 – Usage of savings products

Savings product Usage by respondents (in %)

Cash at home 77.5

Cash lent out 5.7

Cash saved with family/friends 1.5

Chit funds 11.2

MFI/SHG 29.2

Bank account 12.8

Gold 74.6

One possible explanation for people being stuck in this debt trap may be that people cannot save easily. The fi nal table (Table 4) looks at the diff erent savings products that are available to respondents and the percentage of the sample population using these. As can be seen from this table, except for gold, the usage of formal savings is fairly low. The good thing to note is the relatively higher savings within MFIs and SHGs.

Policy Implications

Preliminary results point towards both a debt trap for some and a lack of a formal savings vehicle. The two main policy implications to take from this analysis follow here: (i) despite spread of credit to the poor, many of the poor for whom credit is absolutely essential do not have access to low cost finance and (ii) despite being in urban18

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Competition in microfi nance

Doug Johnson and Karuna Krishnaswamy

With the phenomenal growth of the Indian microfi nance sector over the past decade, microfi nance institutions (MFIs) increasingly fi nd themselves competing for the same customers. Competition between MFIs may lead to lower interest rates, better designed products, and better customer service as more innovative and effi cient MFIs are reward-ed and less effi cient ones are driven out of business. Yet, competition may have adverse eff ects as well: overall repay-ment rates may drop if MFIs’ threats to withhold future loans in the case of default no longer act as a disincentive for customers with multiple borrowing options. Operating costs may increase due to client and staff poaching, clients may take on more debt than they can handle and credit offi cers may adopt overly-aggressive loan collection tactics as MFIs each try to squeeze delinquency rates down as far as possible. Indeed, many experts blame the recent crisis in Andhra Pradesh, in which government offi cials shut down nearly all MFI branches in Krishna district, on the negative eff ects of unbridled competition.

There is little consensus on how signifi cant these potential positive and negative eff ects really are and, in the case of the negative eff ects, what, if anything, should be done about them. Some argue that the voluntary code of conduct, estab-lished in the wake of the AP crisis, should be revised or that new regulation aimed at curbing such activities as client or staff poaching should be adopted. Others argue that a credit bureau with mandatory participation is the way to avoid the potential negative eff ects of competition. Still others argue that the concerns over supposed “excessive” competi-tion are overblown and that, in the end, it is only by greater competition that the end customer will truly win.

In an attempt to shed light on these, and other, issues, the CMF is currently conducting a series of studies on competi-tion in the Indian microfi nance sector. These studies, along with their results in the case of already completed studies, are described below.

Completed Project: Competition and Multiple Borrowing in the Indian Microfi nance Sector by Karuna Krishnas-

wamy

Multiple borrowing is a critical issue for MFIs and the microfi nance sector as a whole. Multiple borrowing, if not accom-panied by a sharing of client repayment information between the diff erent lenders, may lead to a weakening of the incentive of the client to repay and over-indebtedness.

Through the use of a newly available dataset on MFI clients in a highly competitive region, interviews with managers of MFIs, and interviews with clients who borrow from more than one MFI at a time, the CMF sought to quantify the extent of multiple borrowing and to determine how multiple borrowers diff er from those who borrow from only one source.

The key fi nding of this study is that there is no negative relationship between multiple borrowing and repayment per-formance. In fact, over a 3 year time frame of loan disbursal records, multiple borrowers had a lower or equal arrears rate than their single borrowing counterparts in the same villages or colonies, which in turn was lower than the overall arrears rate of all clients in the sample. A majority of the multiple borrowers interviewed reported that they used the second loan for investment purposes and none had repayment diffi culties. The study also found that all MFIs for which data was available, except one operating in urban locations only, had equal or better repayment rates in more competi-tive branch locations (defi ned as villages with at least 3 MFIs with multiple borrowers) than in less competitive ones.

The results of this study were presented at the annual CMF summer policy conference in September.

Completed Project: Map of Microfi nance

The CMF, in collaboration with the Swiss Development Corporation has created a district-by-district map displaying the total number of bank-linked SHG members and total number of clients for 22 of the top MFIs in India. The map allows viewers to gain a comprehensive overview of microfi nance coverage and competition levels across the country. In ad-dition, the map also allows viewers to drill down to the state level and view which districts each of the MFIs for which data was collected have a presence in. To date, maps have been successfully created for the years 2005 and 2006. The CMF is currently working on creating the map for 2007.

The map can be found online at http://ifmr.ac.in/cmf/map-of-microfi nance/

Current Project: Patterns of Competition and Expansion in Microfi nance: A Case Study in the State of Karna-

taka

The Centre for Microfi nance is currently conducting a study on patterns of competition and expansion in the microfi -nance sector. Using historical data on district expansion for MFIs operating in the state of Karnataka, the CMF will anal-yse how MFIs respond to competitive pressures and whether, on average, MFIs seek out areas previously un-served by other MFIs or tend to gravitate toward areas in which at least one MFI already operates when deciding where to expand operations to. In addition, the impact of increasing competition on loans sizes and interest rates will be analysed.

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Microfi nance and the market

Jonathan Morduch

One of Muhammad Yunus’s remarkable qualities is to make microfi nance sound easy. But, in truth, it is not. Build-ing banks for the poor has vexed banks and government offi cials for decades, and only now have microfi nance success stories edged out the many narratives of failures that litter the historical record. Now that the 2006 celebrations have quieted and there are a fresh crop of Nobel winners, it is the right time to step back to assess Yunus’s vision and the land-scape on the ground. Despite the microfi nance success stories, practitioners and policy makers continue to struggle with hard questions. Most important: how can the microfi nance “industry” grow while institutions remain committed to their missions over time?

Microfi nance institutions must have strong business models in order to survive over time, but the challenge is raised by the fact that most microfi nance institutions have “double bottom lines”: they are not just working to make profi ts. Inspired by Yunus and others, they are “social businesses” in part working to create lasting social change, and in that pursuit, donors—whether governments, foundations, or individuals—are helping with subsidized resources. Experts estimate that investments in microfi nance average around $4 billion annually, much of that invested with social aims. A recent analysis of 94 million microfi nance borrowers shows that over 80 percent are served by non-licensed institutions like NGOs or government banks, set up in part with social missions. The idea is clear, but how, in practice, can social businesses do justice to both the social side and the business side?

A recent international survey by a donor consortium showed that 30 percent of respondents stated that the most im-portant use for subsidies is to help institutions operate reach “rural and/or remote clients.” Others pointed to various kinds of capacity-building and bridge-building to domestic capital markets. Every single one of the 45 institutions re-viewed in the survey has a donor partner that provides some form of subsidy: seven institutions had one donor partner, fi fteen institutions two or three and twenty of them more than three. The use of subsidies decreased in 12 institutions from 1999 to 2003, but in 14 the share of subsidies on total liabilities increased.

So far, however, the decision of governments or donors to grant subsidies is rarely based on considerations of effi ciency. Most institutions complain that donors push them toward more emphasis on poverty reduction or on fi nancial self suffi ciency. Institutions with several donor partners often get confl icting signals. Well-designed subsidies should focus fi rst on ensuring that the institution operate most effi ciently, whatever is its chosen combination of social and fi nancial goals. Too often, current practices of subsidization lead to market distortions and unfair competition, as well as under-mining accountability in the management of institutions. Focusing on effi ciency, conditional on the type of institution, is an important way forward.

A starting point is to better understand the drivers of effi ciency. In part, managers of microfi nance institutions must deal with the markets they’re in, and have to take the nature of regulation and the structure of costs and wages as given constraints. But managers also have discretion; they can improve incentive contracts for loan offi cers, modify loan delivery techniques (e.g., choose between individual versus group transactions), adjust collateral requirements, choose combinations with non-fi nancial services, and develop strategic partnerships with local groups and associations.

Given the mixed track record of subsidies to support microfi nance so far – or in the entire fi nancial sector of many countries, for that matter – some scepticism is justifi ed. Which types of subsidies are “smart” and which are not? The form, intensity, timing, duration, transparency, conditionalities and magnitude of subsidies can make all the diff erence to market distortion, impacts, and institutional incentives. It is time to examine and debate these issues in an open way and to keep a sharp eye on effi ciency as a critical element of the bottom line.

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Designs for Microfi nance: Linking Research, Policy

and Product Design

Michael Walton 1

Why should policymakers, practitioners and researchers be talking with each other, and, indeed, working together? This seems an almost trivial question, with an obvious answer: surely there is potential for large mutual benefi ts? Yet, all too often there is a gulf in communication and understanding between these communities. Much policy design is ill-informed by research, or even by careful review of evidence. Practitioners shape their designs from their assess-ment of practical experiences rather than careful assessment of eff ects. Researchers often seem to spend far too much time exploring technically engaging questions whose results seem too remote or too abstract for the serious world of development practice.

This note explores these questions for microfi nance. It is based on the Pune workshop on research on micro-fi nance held in January 2008, which was co-sponsored by the Agricultural College of the Reserve Bank of India and the Centre for Micro Finance at the Institute for Financial Management Research. It fi rst describes why research should be of keen interest to policymakers and practitioners. It then suggests why policy and practice is of equal interest to applied re-searchers. And fi nally it describes some challenges associated with the diff ering goals, style and rhythm of work for the diff erent communities, and suggests approaches to tackling these challenges.

Why research matters - an example :

To focus attention on the issues let’s take the highly topical example of farmer suicides in India. This is generally seen as the tip of the iceberg of a broader agrarian crisis, in which weather, economic vulnerability and debt are intertwined. By one estimate there were some 150,000 farmer suicides between 1997 and 2005, of which about two-thirds were in the States of Maharashtra, Andhra Pradesh, Karnataka, and Madhya Pradesh. 2 These are personally tragic events, refl ec-tions of suff ering of the farmers and causes of further suff ering by their families. There is surely a welfare and political case for public action?

While the prima facie case for action is clear, just what it makes sense to do is much less clear. This depends on both an understanding of the underlying causes and the short and long-term responses to alternative actions. Take a simplifi ed schema, as presented in Figure 1. First, there is incomplete understanding of underlying processes and causes. What is the relative importance of the sequence of droughts, indebtedness, market structures for borrowing and selling, as drivers of the underlying causes? How do we understand the psychological and cultural context for taking such devas-tating action? And, even if we understand the causes, there are an array of alternative responses (in addition to doing nothing). There can be debt forgiveness—and a sweeping plan for debt forgiveness was indeed proposed in the March 2008 budget. This proved very politically popular, with political parties competing to argue for bigger and better for-giveness. But there are alternatives. Reduced interest rates could be part of a solution. This in turn can work through innovations in product design, broader fi nancial market thickening, regulation or subsidies. And, to the extent that the real problem is not credit per se, but the exposure to adverse risks, there is surely a case for insurance, whether this is bundled with credit or through various independent schemes—for example independent weather or health insurance. Finally, there may be a problem of farmers not understanding what they are getting into when they take on debt—here programs of fi nancial literacy could be relevant.

And, to the extent that the real problem is not credit per se, but the exposure to adverse risks, there is surely a case for insurance, whether this is bundled with credit or through various independent schemes—for example independent weather or health insurance. Finally, there may be a problem of farmers not understanding what they are getting into when they take on debt—here programs of fi nancial literacy could be relevant.

1. Senior Visiting Fellow, Centre for Policy Research, Delhi, and VKRV Rao Chair Professor, Institute of Social Economic Change, Bangalore; also ad-junct lecturer of the Harvard Kennedy School. See Morduch, J. (1999). The Microfi nance Promise. Journal of Economic Literature. 37 (4), 1569-1614.

2. Study by K. Nagaraj of the Madras Institute of Development Studies, as reported in The Hindu 12th November, 2007.

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And, to the extent that the real problem is not credit per se, but the exposure to adverse risks, there is surely a case for insurance, whether this is bundled with credit or through various independent schemes—for example independent weather or health insurance. Finally, there may be a problem of farmers not understanding what they are getting into when they take on debt—here programs of fi nancial literacy could be relevant.

Figure 1. Farmer suicides: a clear problem with many alternative policy solutions

What is the point of this example? All these questions—and others that a more careful review of the processes would pose—can all be illuminated by careful, evidence-based research. And this can matter a lot. Even before we consider implementation issues, alternative technically plausible choices can be: o Irrelevant (but still have costs) o Highly eff ective o Poverty-increasingThis is not merely academic. It is quite possible that the favored, highly politically popular, government action of debt forgiveness will be poverty increasing. Those with overdue debt will benefi t, and will experience relief. These are not the poorest, since very few of the poor have access to formal sector debt. More important, widespread debt forgiveness is one of the most eff ective ways of setting back the goal of increased fi nancial inclusion that many believe to be an important instrument for long-run agrarian progress. Moreover, issues of implementation are huge in India (as they are in any developing country). Just how product designs and policies really work on the ground—with all the questions of administrative capability, corruption, social context, and household responses—is as important to success or failure as is technical design.

We can extend this heuristic example with reference to some of the research presented in the Pune conference, and summarized in this volume. None of the research was directly focused on the farmer suicide issue. But we can see how the kinds of questions being addressed in this ongoing work could be of direct relevance in comparable research.

Take the following examples:

o To inform policy responses, it is important to develop a detailed understanding of the underlying household-business model. The careful descriptive work of poor household-business in Hyderabad by Banerjee et al exemplifi es this; there is a long tradition of such analysis of farmer conditions. This type of analysis is necessary to understand how farmers interact with formal and informal fi nancial markets, take on debt, and how this is linked to product markets.

o Just what leads to debt problems is also important to any policy response. Is it an issue of unexpected shocks, and lack of insurance? Or are there psychological factors that lead to farmers not understanding the full fi nancial con-sequences of borrowing, or being unable to “control” borrowing, despite an underlying preference to do so—as discussed in the two papers by Mullainathan and co-authors on the awareness of fi nancial product characteristics amongst MFI borrowers, and on the practices of street-vendors.

o To the extent that the problem lies in real risks, just how to provide insurance can have major eff ects. Is the problem weather risk or health shocks? How can insurance be off ered in ways that ensure the insurer is not only left with the bad risks, or farmers expend less eff ort in cultivating their crops or taking care of their animals? Is bundling of insur-ance with credit a deterrent to borrowing, or likely to exclude lower-risk borrowers? The study on bundling of health with credit reported in Dufl o et al is exploring the last question, with initially encouraging results for a diff erent risk category. This type of insurance evaluation could also be explored for farming-related risks.

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Farmer suicides Droughts + indebtedness + shame + ?

Political and prima facie welfare case for public action

Debt forgiveness

Reduced interest ratesEx ante insurance

Bundled Independentweather insurance

Regulated caps

Subsidies

Product innovationto reduce transaction costs

Etc….

Financial literacy

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o On interest rates, an excellent example of a product design innovation that can lead to large declines in administrative costs is shifting to less frequent repayment schedules. But the concern, especially amongst practitioners, is that this would lead to lower repayment. Research on repayment schedules by Pande et al working with an MFI in West Bengal demonstrates some promise in reducing repayment frequency, with initial results suggesting there is potential for greater fl exibility, and thus lower costs, without worsening of repayment.

o While not in an experimental context, the analysis of the eff ects of multiple borrowing by Johnson and Krishnaswamy casts light on an issue that became very contentious after the Andhra Pradesh crisis in microfi nance in one district.

o The potential benefi ts of business training on management are being assessed in the study by Pande et al working with SEWA Bank in Ahmedabad. This too could be explored in a farming setting.

o As a fi nal example, as noted above, the poorest farmers typically have little or no access to formal credit, even from mi-crofi nance institutions. The study of an experiment on targeting the hard-core poor in West Bengal by Chattopadhay et al, which uses grant-fi nanced assets as a fi rst step to bring the poorest into the fi nancial net, is directly applicable here.

Note what the message is. It is not that the research being reported on here can be generalized and translated to the context of farming crisis and suicide. It is that the kinds of questions that need to be explored in diagnosis and policy design are researchable. The specifi c questions depend on the context, and this must be assessed in the research pro-cess—interacting with policymaker and practitioners. Moreover, actual eff ects of policy or product design innovations are also infl uenced by context: thus the central importance of a practical approach that builds in discovery of eff ects in a rigorous fashion, which would enable ongoing learning and adaptation.

What of researchers? Why should they be interested in connecting with policymakers and practitioners? One part of the answer is that policy and product design is a crucible for the exploration of empirical, and indeed theoretical, research questions. This was always true, but has acquired major additional force with the growing recognition of the centrality of carefully designed fi eld experiments as a core tool for micro, empirical development economics. This rec-ognition has been driven both by statistical concerns—that there are so many infl uences on observed outcomes that structured experiments are often essential to understand just what is going on—and especially so in response to policy and product design changes. But it is, perhaps more deeply, related to the recognition of the complexity of develop-ment processes and the need to understand behaviors of fi rms, farmers, households and government agents in the particular contexts in which they operate.

There are also more mundane, but equally important, reasons why researchers should, and increasingly are, concerned to contribute to policy and product design questions. First, most researchers working on development want to have an impact—they care about the lives of poor people, and they like to have infl uence. Second, relevance and infl uence is important to the authorizing environment for research—for the fi nancial, human and organizational support that is necessary to conduct rigorous fi eld-based research.

On style and rhythm: challenges and approaches

Enough about the case for tighter interactions between researchers, policymakers and practitioners; if it is so obviously desirable, why is there so little of it going on, relative to the huge amount of development action, and associated out-lays of fi nancial and human resources? Figure 2 portrays a happy ideal of interactions: careful empirical research forms the basis for both policy and product design. Implementation is then constructed to be systematically linked with research—for example through building fi eld experiments with randomized designs into the implementation process. And this can then feedback into the adaptation of policies and product designs.

Figure 2. An “ideal” pattern of research-practice interactions

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A happy ideal of interactions…

Initial empirical research

Policy design Product design

Implementation

…is hard to achieve given different cultures, time pressures, requirements of researchers and practitioners

Field experiments

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There are perhaps two broad categories of reason why this happy ideal so rarely occurs in practice.

First of all, when there are political economy implications, programme advocates are often unenthusiastic about care-ful evaluation. The real purpose of policies or programmes are to further the entrenched, and infl uential interests of particular groups. The last thing these powerful groups want is revelation that policies supposedly adopted to reduce poverty (for example) are doing nothing of the sort, bur rather doing a great job of channeling scarce government re-sources to the infl uential.

Now it may often be really important to do research even if the above situation exists. There will surely be a role for researchers in cases such as these, documenting the eff ects, revealing these to the public through the press and other means, analyzing why the political equilibrium supports the chosen policies, and so on. But it is unlikely that this will be vigorously supported by programme advocates. Alternative means of fi nancing and undertaking this kind of research will be needed.

A second kind of case is more relevant here. Often policymakers and practitioners really are sincere in seeking to do what they say: improve the lives of the poor, increase fi nancial inclusion, reduce vulnerability, etc. They may have strong views on how this can be done, but there is not decisive evidence on what works. And researchers really want to apply their tools to help solve practical problems. Yet, the marriage often does not occur because of the very diff erent cultures and rhythms of work. Policymakers and practitioners want to take action now, and get concrete results on the bottom line of their eff orts. Researchers can take seemingly forever working through a design that can deliver a carefully sup-ported result that may seem little more than a theoretical curiosity to the world of practice. They may have data collec-tion demands that seem unreasonable to practitioners. For randomized evaluations involving treatment of controls, there can be practical or political diffi culties with groups of people assigned to be the control.

It is important to recognized diff erences in objective and style. However, the cases in this workshop illustrate the gen-eral principle that there is potential for overlap, and this potential is arguably much greater than is generally recognized, given the inertia of distinct traditions. For policymakers and practitioners are also keen to discover what does and does not work, to get results, to understand just what were the drivers of change, the infl uence of context and the potential for replication or adaptation of fi ndings more broadly. Moreover, this increased interest in basing policies and actions on rigorous research aligns with the growing societal and political pressure for accountability, transparency and the as-sociated right to information. To take a parallel case, the case for randomized trials in medicine is accepted at a techni-cal, political and societal level.

This brings us back to one of the central techniques on display in the work presented at the Pune conference: insti-tutionally embedded fi eld experiments (generally using randomized designs). This type of experimental approach is highly suitable for many, if not all, fi nancial sector questions, whether this is through exploration of underlying drivers of behavior, or responses of fi rms, households and fi nancial sector actors to alternative product designs. The conference provide illustrations of tight links to specifi c product designs, some noted above, others summarized in the earlier parts of this volume.

To move things forward, there is a case for a more strategic approach. There is a need to:

• Show the practical value of evidence-based research for policy and product design—that goes beyond “dis-semination” to taking real design choices and exploring the statistical and economic signifi cance of alternatives;

• Organizational structures (formal or informal) that involve structured interactions, at both the design and eval-uation phases of policy and practice that:

• Discipline researchers to provide structured responses to policy and practitioner questions (over time); and

• Discipline policymakers and practitioners to seek evidence-based results for policy design, and present the basis for choices to their stakeholders, and to society as a whole.

There are many ways of doing this. This conference already provides examples of such collaboration occurring, if more commonly with non-government organizations than with large scale fi nancial institutions and governments. The latter is really important in order to fi nd genuinely scaleable results.

*************

The Pune conference involved a sharing of preliminary research results involving all three communities—researchers, policymaker and practitioners. It was a highly fruitful exchange but only a fi rst step. There is enormous potential for deepening the relationships and developing joint work that uses the tools and approaches or researchers to tackle the very pressing issues faced by policymakers and practitioners. Strengthened collaboration needs to take account of the diff erent style and rhythm of the three groups, while also exploring the very rich areas of common interest.

Conference Proceedings

Over three sessions, original research fi ndings were presented on 1) issues of product design; 2) challenges in off er-ing innovative fi nancial and non-fi nancial services with micro-credit; and, 3) emerging issues in the microfi nance sector. 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 Dr Nachiket Mor, President, ICICI Foundation for Inclusive Growth

Special Address Mr. C S Murthy, CGM-in-Charge, Rural Planning and Credit Department, Re-serve Bank of India

Special Address Mr. T Y Prabhu, Executive Director, Union Bank of India

Special Address Ms. Annie Dufl o, Executive Director, Centre for Micro Finance

In his welcome address, Mr. Ghose expressed his delight in the CAB-CMF collaboration and hoped that the conference would succeed in encouraging more interaction between academicians, microfi nance practitioners, bankers and policy makers. Mr. Prabhu, in his special address, spoke about the eff orts made by the Union Bank of India towards promoting fi nancial inclusion – particularly its pygmy deposit schemes and the provision of biometric cards to hawkers.

In his special address, Dr. Mor spoke about the importance of high-quality research for designing microfi nance products and policies and the sectoral attempts to achieve inclusive growth. He welcomed the CAB-CMF initiative to bring to-gether world-class researchers, and high-level practitioners and policy makers. The two key challenges, Dr. Mor argued, the sector is facing today are that of value addition and operations. While the positive eff ect the presence of a bank branch has on rural poverty in a given area had been established by Pande and Burgess, an important question that remains to be addressed is whether consumption smoothing leads to value creation – considering that a large percent-age of credit is utilized for consumption purposes. While speaking about operational challenges in the sector, he high-lighted the debate centered around the SHG-bank linkage model vis-à-vis the Grameen and the Joint Liability model, in terms of sustainability and social value addition. In particular, a recent RBI report fi nds that the cost of funds to a bank for SHG lending is around 12-14% raising a question whether the current interest rates charged are cost eff ective in the long run. On the other hand, the SHG-bank linkage model is considered superior because RBI considers credit linkage after just 6-7 days inappropriate. Apart from the issues related to operations and delivery mechanism, Dr. Mor expressed his concerns about the collection practices of microfi nance institutions (MFIs) and banks.

Mr. Murthy, in his special address, raised concerns about the skewed growth of the sector towards the southern states. He observed that in some states MFIs overlap with the banking infrastructure and emphasized the need for the sec-tor to focus on expanding access and outreach in 13 states that National Bank for Agriculture and Rural Development (NABARD) had identifi ed as under-served. He also expressed concern about the continued focus on credit and urged practitioners and policy-makers to take note of the constricted growth of savings and mechanisms to satisfy individual credit needs within the framework of group lending. He opined that there is an urgent need for the sector to evaluate the recovery practices employed by MFIs and develop technology-based solutions that would allow MFIs to track their activities and also create an enabling environment for the functioning of credit bureaus.

In her special address, Ms. Dufl o spoke about the Centre’s objective to identify and bridge knowledge gaps in the practice of microfi nance by facilitating interactions between researchers, practitioners and policy makers, and, the dis-semination of research fi ndings to promote evidence-based programme and policy design. She expressed her delight in the CAB-CMF initiative and highlighted its potential to achieve these very objectives.

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Technical Session I

Theme : Improving Businesses – Product Design and Additional Services

Chairman: Dr Nachiket Mor, President, ICICI Foundation for Inclusive Growth

A snapshot of small businesses in Hyderabad: results from a large-scale survey

Professor Abhijit Banerjee, MIT

Experiment on repayment schedules and business training for micro-entrepreneurs

Professor Rohini Pande, Harvard University

Tailoring products to clients’ needs Ms Jayashree Vyas, SEWA Bank

A snapshot of small businesses in Hyderabad: results from a large-scale survey

Professor Banerjee drew upon preliminary results from a CMF research project in Hyderabad slums that focuses on evaluating the impact of micro-credit on households. The dataset of 2400 households reveals that most businesses are labour intensive (not requiring any specialized skills) at sub-optimal scale suggesting constrained access to risk capital or imperfect risk sharing mechanisms. Also, there was a lack of innovation and diversifi cation of activities with many individuals involved in similar type of businesses and narrow profi tability margins. The lack of diversifi cation could be due to a lack of awareness about alternative businesses or the lack of incentives to innovate because it is easier for neighbours to adopt the innovation and drive profi ts down. Also, 69% of the households have at least one outstand-ing loan and 46% of the households have more than one outstanding loan. However, only 8% of those who had loans had taken it for business purposes. This leads to a question as to why households were not attempting to double their capital and grow their business. Perhaps, such an infl ux of capital would not be suffi ciently transformative – implying that the Spandana loan may not be large enough – or people may simply fi nd it diffi cult to save.

Speaking about the possible role of government and that of subsidies, Professor Banerjee pointed out that subsidies could function as a credit multiplier – cutting the cost of credit, increasing the ability to repay and take larger loans, and, reduce transaction costs. Also, if there is a concern that people are not aware of the cost of their loans and that they may not be willing or able to pay for fi nancial literacy, the government could intervene to promote fi nancial literacy.

Experiment on repayment schedules and business training Professor Pande presented results from a research project that tested the impact of fl exible repayment schedules with an MFI, Village Welfare Society (VWS), in Kolkatta. From the experiment, it was obvious that monthly repayment sched-ules had no discernible eff ects on client default or delinquency. The study compared repayment behaviour and other indicators among three groups of clients randomly assigned to a) weekly meetings and weekly repayments; or b) week-ly meetings and monthly repayments; or c) monthly meetings and monthly repayments. The rate of default in all three groups was virtually identical. However, early repayment – indicative of fi scal discipline – was higher for weekly repay-ment clients, and, monthly repayment clients worked more on the day before the repayment was due and borrowed more from husbands to repay loans. It was also observed that although clients that met more regularly had greater familiarity with fellow group members, this familiarity did not translate into greater fi nancial reliance and these clients relied on traditional networks for making payments such as family and friends. These results are discussed in greater depth in Field and Pande (2007).

Most importantly, study results show that MFIs can potentially reduce their transaction costs through less frequent re-payment schedules without signifi cantly increasing their rates of default. While this study was conducted with fi rst time borrowers who consequently had smaller loans in an area where competition was absent, further experiments with the same set of clients in their subsequent loan cycles are on-going and would allow the researchers to test the eff ects of larger loans and also, potentially, the eff ects of increased competition on default rates with the entry of other MFIs into the area.

Business training for micro-entrepreneurs Professor Pande also presented fi ndings from a study in collaboration with SEWA Bank to examine the impact of busi-ness training on fi nancial and business behaviour of its members. Preliminary results from this study indicate that the business training increased borrowing in general and training with a friend (peer) had signifi cant eff ect on clients’ sav-ings. In addition, training attendance diff ered between the treatment groups. The attendance rate among peer-trained clients was 69% and 63% among individually-trained clients.

While the results are indicative of the positive eff ects of business training, further experiments are necessary to deter-mine the eff ect of follow-up sessions on long-term retention rates, and, to disentangle the reasons why training with a peer infl uences the savings and borrowing behaviour of clients. This would help design appropriate programmes that positively impact long-term fi nancial status of clients.

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Describing the eff orts of SEWA Bank to tailor products to the needs of their clients, Ms. Vyas traced the history of prod-uct development at the Bank from their fi rst basic savings and credit products to fi nancial literacy training today. She emphasized that SEWA Bank’s product development strategy has been driven by rigorous research and a system of con-tinuous feedback from fi eld staff and clients. In the late 1980s, for example, the results from a Harvard study indicated that women were confused about personal and business needs, and consequently, made impulsive fi nancial decisions in which clients did not eff ectivly use various fi nancial products off ered by the Bank. This led to the development and off ering of a fi nancial literacy curriculum that emphasized the management of cash and the power of compounding. Most recently, when they deputed village leaders on a commission basis to start daily collections for savings and loans, SEWA Bank realized that their staff incentives were oriented towards collecting loans (2.5% commission with an average collection of Rs 500 a day in comparison to 2% commission on an average collection of Rs 100 a day).

Technical Session II

Theme : Addressing Vulnerability Through Microfi nance

Chairman: Dr Ajit Ranade, Chief Economist, Aditya Birla Group

Health insurance: opportunities and challenges Professor Esther Dufl o, MIT

Targeting the hard-core poor in West Bengal Professor Raghab Chattopadhyay, IIM Calcutta

Remittancs: addressing the needs of migrant workers Mr. Md N Amin, Adhikar

Health insurance: opportunities and challenges

Professor Dufl o presented preliminary fi ndings from a randomized experiment with SKS Microfi nance to evaluate the impact of off ering catastrophic health insurance to micro-lending clients. Households experience frequent and costly health shocks which often result in fi nancial jeopardy. While MFIs have the potential to lower transaction costs through their established delivery channel and large client base, and, address adverse selection issues by combining the deliv-ery of health insurance with credit, they face threats such as selective drop-outs and under-utilization of the insurance policy. And, of course, the question of whether health insurance ultimately benefi ts the client remains.

Speaking about preliminary fi ndings from the baseline and take-up data, she said that it revealed a considerable unmet demand for insurance. Households face frequent ‘health shocks’ with 93% of the households experiencing a serious health event resulting in an expense of at least Rs 300 or more than 7 days of work loss; and 6% of households had at least one member hospitalized in a given year. Hence, there is potential for a health insurance product to reduce the fi nancial risks households face. The insurance policy administered by Lombard covers catastrophic illnesses that include delivery, hospitalization and accidents. To minimise adverse selection, SKS made this policy mandatory to its clients along with renewal of loans. The take-up data revealed that there was no signifi cant diff erence in the rate of loan re-newal or the composition of the clients who renewed their loan when the product was made mandatory. These results suggest that this mandatory policy did not aff ect SKS fi nancially and the high rates of renewal would help them cover operational costs. Coupling insurance with other much needed products that the poor lack access to may be a promis-ing mechanism for reducing adverse selection and ensuring the sustainability of insurance schemes.

Targeting the hard-core poor in West Bengal

Microfi nance faces persistent criticism about the discrepancy between who it claims to target and its actual outreach. There is a growing consensus, even among practitioners, that microfi nance does not reach the poorest of the poor. MFIs may neglect Ultra Poor households because of their high vulnerability to shocks, making it less likely that they would invest the loan in productive activities and spend it on consumption items. Bandhan, a Kolkatta-based MFI, started the “Chartering into Un-ventured Frontiers – Targeting the Hard Core Poor” (CUF-THP) programme in 2006. This grant-based programme for the Ultra Poor households draws inspiration and technical support from a similar programme run in Bangladesh by the Bangladesh Rural Advancement Committee (BRAC).

Professor Chattopadhyay presented fi ndings from a study that assessed the eff ectiveness of Bandhan’s identifi cation strategy for the Ultra Poor. This is a part of a longer-term study that evaluates the impact of Bandhan’s grant programme for the Ultra Poor. The strategy adopted by Bandhan consists of a series of discussions and interviews at the village and household level, starting with a Participatory Rural Appraisal (PRA) to identify Ultra Poor households in each hamlet using wealth rankings, followed by detailed household survey and a personal visit by the THP Coordinator to verify the results of the PRA and identify the benefi ciary. By comparing households that were identifi ed as Ultra Poor by Band-han and households that appeared poor according to an economic census but were not identifi ed as Ultra Poor, the researchers were able to evaluate the accuracy of the identifi cation strategy. The results indicated that Bandhan’s pro-cedure identifi es a sub-population which is notably poorer in certain respects, particularly readily observable attributes (land, assets and access to formal fi nancial services). The study confi rmed that the peer wealth rankings established by PRAs generate a reliable assessment of relative poverty – households ranked as poorest by their neighbours also appear less advantaged. However, economic census alone, as is done for many government assistance programmes, is not suf-fi cient to identify a poorer sub-population – recipients were not found to be noticeably more disadvantaged than non-recipients. These results have broader implications for the effi ciency and eff ectiveness of the programmes that target certain sub-populations particularly the poorest of the poor 27

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Remittances: addressing the needs of migrant workers Mr. Amin of Adhikaar spoke about his organisation’s remittance product for migrant workers from Orissa. He stressed the diffi culties migrants face in accessing formal fi nancial service providers for remittances – a combination of rigid Know Your Customer (KYC) norms, absence of network at the destination, and, opportunity costs they face (loss of a day’s wages). Apart from the diffi culties in access to remittance products, migrants encounter a lot of health and oc-cupational hazards compounded by lack of civic amenities and poor living standards. While there is an estimated Rs 2000 crores (20 billion rupees) worth of inward remittances from just the State of Gujarat to Orissa, there is an absence of regulation concerning remittances and there is an urgent need for it.

Technical Session III

Theme : Emerging Issues in Microfi nance

Chairman: Mr. C S Murthy, CGM-in-Charge, Rural Planning and Credit Department, Reserve Bank of India

What is an informed consumer? The psychology of debt Professor Sendhil Mullainathan, Harvard

Competition in microfi nance Mr. Doug Johnson, CMF

Microfi nance and the market Professor Jonathan Morduch, NYU

What is an informed consumer? The psychology of debt Professor Mullainathan presented fi ndings from a CMF Loan Contract Information study that was aimed at understand-ing whether and how MFI clients comprehend their loan contracts. The study identifi ed which aspects of loan contracts are important to clients and the implications thereof for regulation. The fi ndings revealed that clients think about their loans in terms of how much they owe on a weekly basis and not in terms of interest rates and interest expenses. This raises a question of whether it is reasonable or realistic to expect small borrowers to have a deeper understanding of their loans, whether this understanding is necessary at all and the relevance of fi nancial literacy training. Hence, a top-down regulation that works on this assumption – borrowers should be able to calculate and understand their interest rates – may stifl e access to fi nancial services rather than protect small borrowers.

Professor Mullainathan also spoke about fi ndings from a study that surveyed 1000 micro-entrepreneurs (vendors in Chennai) who had taken and continue to take a high-interest debt for fi nancing their working capital. There are two ways in which these individuals fi nance their businesses. The fi rst is the meter loan/daily loans which are characterized by their high interest rates (averaging 5% per day). The second source of fi nancing is buying goods on credit, where a vendor incurs an interest rate that averages 17% for the sample. Interestingly, over a long period of time, the interest payments alone constitute nearly half their income while the size of their business remained the same. It is striking that if these individuals had attempted to save small amounts of money (assuming they have access to a suitable savings mechanism), for e.g. drink one less cup of tea a day, in 30 days, given the power of compounding, they would have doubled their income. Faced with persistent borrowers - the average number of years these women have been using costly debt is 13 years – it is pertinent to wonder whether they are confused i.e. they do not understand the costs (inter-est rates) or tempted i.e. they just happen to make bad choices while taking loans they do not actually need.

Competition in microfi nance Mr. Johnson presented results from one of CMF’s studies on competition in the microfi nance sector. Through the use of a dataset on MFI clients in a highly competitive region, interviews with managers of MFIs, and, interviews with clients who had borrowed from more than one MFI, CMF sought to quantify the extent of multiple borrowing and to deter-mine how multiple borrowers diff er from those who borrow from only one source. The key fi nding of this study was that there is no negative relationship between multiple borrowing and repayment performance. In fact, over a three year timeframe of loan disbursal records, multiple borrowers had a lower or equal arrears rate than their single borrowing counterparts in the same villages or colonies, which in turn was lower than the overall arrears rate of all clients in the sample. The study also found that all MFIs (for which data was available, except one operating in urban locations only) had equal or better repayment rates in more competitive branch locations (defi ned as villages with at least 3 MFIs with multiple borrowers) than in less competitive ones.

Microfi nance and the market Professor Morduch spoke about the pressing trade-off s in the microfi nance sector illustrating that, often, the best choic-es are not obvious. One such trade-off concerns interest rate policy and debate on the need for interest rate caps. It has been theorized, and established to a certain extent, that when institutions are pushed to decrease their interest rates, they will look towards increasing their loan sizes, consequently, shifting away from the poorer clients. In India, com-pared to the global scenario, average costs are relatively high and the interest rates are relatively low (given these costs). This raises important questions of whether (a) an increase in interest rates would lead to an exclusion of certain popula-tions and (b) technology and competition will impact costs as MFIs expand outreach and scale-up. The other trade-off he described was regarding loan usage. Money being fungible, even ‘production loans’ will be used for consumption, and, MFIs face a trade-off between possible fi nancial implications of such behaviour (non-productive loans leading to

lower repayments) and the institutional urge to help households smooth their consumption cycle and address emergencies Speaking about the third trade-off – that of profitability/commercialization and social value ad-28

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Valedictory Session

Learning from the conference and future research needed Mr. Michael Walton, Policy Advisor, IFMR

Vote of thanks Mr. Sandip Ghose, CGM & Principal, CAB

Learning from the conference and future research needed In summarizing the discussions, Mr. Walton spoke about the need for greater interaction between research, policy and practice. He underlined the importance of evidence-based research in helping distinguish highly eff ective programmes from those that are irrelevant and contribute to increasing levels of poverty. A perfect harmony of interests is diffi cult to achieve among researchers, practitioners and policy-makers given the diff erences in requirements and constraints arising from the environments they operate in. However, by better disseminating relevant research to direct policy and product design, and designing better organisational structures that seek evidence-based results, congruence can be achieved.

Closing remarks In his closing remarks, Mr. Ghose said that the Conference had generated many ideas for further research and collabo-ration between researchers, practitioners and policy makers. He expressed hope that the interactions would continue outside of the forum, and, stated that the Centre for Micro Finance and CAB would approach policy makers and present the results and recommendations from the discussions.

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Questions and Answers

Session 1: Product design and additional services

Chair: Nachiket Mor

Speakers:

Abhijit Banerjee – Spandana results

Rohini Pande – Repayment schedules, Business training

Jayashree Vyas – SEWA Bank: Tailoring product to client needs

1) If in a slum area, almost all of them are involved in a similar activity, could this be a reason for their not earning much on their business?

Also, if people are not taking on bigger loans and are content with small amounts, is it because they may not be using the loan towards their primary income generation activity?

Abhijit Banerjee: The short answer to this is that in fact, this is one of the primary reasons why businesses are not so profi table in these slums. One of the key facts which emerged from the survey was that while it is common for house-holds to own businesses, there is very little diversifi cation of activities. For instance, 17% own a Kirana (retail) store, 8% are fruits and vegetable sellers, 6.6% own a telephone booth, 6.3% have a milk business and 4.31% are auto drivers. As a result, the revenues earned via these businesses are quite small and averaged about Rs 12,000, though the median was only Rs. 3600. The average monthly profi t, not accounting for time spent by household members, is Rs. 1,859, and the median is Rs 1,035, which is only a small gain. But, once the time spent by household members is factored in, even at a fairly low rate of Rs. 8 an hour, profi ts turn negative. This raises the issue of why do people not start new businesses. Some possible answers are that people do not know the alternatives and that innovation is under-rewarded (even if they did, neighbours can adopt what they are doing and drive profi ts down).

2) For larger credit absorption (in the context of the Spandana case study), in addition to ensuring suffi cient credit supply, what other factors would be critical?

Abhijit has left us with a number of questions but off ered no preliminary answers. Why does he think that some of the out-comes he described happen? Why, in his view, do people seem reluctant to increase their capital base? Does he have some insights based on conversations, etc.?

Abhijit Banerjee: To answer this question, let us examine what would happen with the infl ux of capital. One thing we fi nd is that loans are rarely taken for business expense – only 9% of our sample took out loans for their businesses. The largest proportion (17%) of our sample took out loans for health expenses. So here, credit is substituting for insurance. Further, maybe the high interest rates are a constraint – perhaps they need a more productive business to repay loans. The question this leads to ofcourse is why households are not attempting to double capital stock. Perhaps there are few avenues for saving, it is hard to save or a tiny increase in capital would not be transformative raising questions such as: do they have a capital constraint? is the Spandana loan large enough?

3) Can working longer hours translate into greater cash fl ows? It’s the same enterprise with similar demand across all days. Are they simultaneously producing and selling?

Any fi ndings on why women prefer self-employment to wage employment?

Abhijit Banerjee: Women are not necessarily simultaneously producing and selling, and in some of their occupations their income is partly a function of how many hours they work for a day.

Clients might be daily wage labourers and be paid by the number of hours they work a day or the number of goods they produce. In such situations, the story makes sense: working long hours translates into a higher income for the day. Anecdotal evidence shows that a lot of women work producing saris or other such goods. In our survey, a lot of women are paid on commission – another situation in which longer hours translates into greater cash fl ow.

4) The big principle is to roughly match income infl ows to repayment timing/ So, if income is salaried + monthly, then monthly repayments make sense. In urban settings, (maybe husband’s salary is monthly, or female customer has a salary). If income comes daily, then weekly repayments may be optimal. The question is, can results be distinguished by occupation and by income pattern of the customer?

Rohini Pande: Results from the study can indeed be distinguished by occupation and income pattern. We will keep this in mind for the fi nal paper.

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Session 2: Addressing vulnerability through microfi nance

Chair: Ajit Ranade

Speakers:

Esther Dufl o – Health Insurance

Raghabendra Chattopadhyay – Targeting the hardcore poor

Mohammed Amin – Domestic remittances

1) To what extent can the methods used by Bandhan for targeting be used by the government on a large scale?

How does Bandhan convince the government of this targeting procedure to get the benefi ts from the government for ultra poor clients, in terms of subsidies for land, housing, etc.?

Raghabendra Chattopadhyay: Bandhan’s identifi cation strategy for the Ultra Poor consists of 3 steps – a Participatory Rural Appraisal (PRA) with wealth ranking of households; a detailed questionnaire to verify the PRA and identify the potential benefi ciary from the household; and fi nal verifi cation process – informal discussions and visual observation – by a program coordinator. This was found to be effi cient in identifying a sub-population that was poorer (including observable characteristics) – they own less land, have fewer assets, and are more likely to lack access to formal fi nancial services. The fi nding from the study that economic census (such as used by government programs) alone is not par-ticularly effi cient in identifying the poorer sub-population has broader implications for policy makers. A methodology combining PRAs, household surveys and observational interviews could be better suited to identify the sub-population for a government subsidy or assistance. Bandhan has thus far not approached the government to convince them of their strategy.

2) Is the ultra poor microfi nance program self-sustainable (without CGAP and Ford Foundation support)?

Raghabendra Chattopadhyay: While the program is funded by CGAP at Bandhan, they have been looking to expand this further than their pilot areas – which suggests that they are operating at full cost recovery (it is possible that micro-fi nance is cross-subsidizing THP, but we do not know for certain).

3) What permissions or regulatory compliance is required for starting a remittance program?

Mohammed Amin : In order for any organization to be able to off er remittances services, they should be licensed money transfer agents. Currently, only banks and post offi ces are licensed to off er domestic money transfer services. However, microfi nance institutions and other organizations can act as agents to banks (as a business correspondent) in order to provide domestic remittance services to their members.

4) By introducing health insurance with microcredit:

(a) Don’t we increase fi nancial burden for clients without giving them a choice?

(b) Aren’t we promoting curative health habits rather than preventive health habits?

(c) For poor people, government public health centers are providing a type of insurance by providing services at low cost. Aren’t we jeopardizing this system rather than trying to improve it?

Esther Dufl o: Combining health insurance with micro-credit helps to address the problems of adverse selection and moral hazard. This has advantages for the insurer, and for the clients. Access to micro health insurance has been limited largely due to insurers’ concerns with these two risks. Further, operational costs are prohibitive for companies in servic-ing small value policies. Combining insurance with micro-credit is an eff ective means of addressing the information problems and in managing costs. For the clients, this increases availability of formal fi nancial instruments to address one of their biggest risks. Also, premiums would be much higher if it were to be marked up for adverse selection and moral hazard.

Combining micro insurance with micro-credit also introduces fl exible options for paying premiums through small loans /installments, as opposed to an upfront lump sum payment.

It is true that health insurance does not address issues relating to preventive health care. While the importance of health education cannot be underestimated, it is as important to have access to formal fi nancial instruments, such as, insurance for catastrophic illnesses, and accidents, and often, these are not avoidable through preventive healthcare. However, micro insurance lends itself to innovative models where fi nancial services, such as insurance, can be easily combined with health and insurance education to reach a large number of people.

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rsWhile, in principle, poor people are entitled to free or low cost healthcare at government health centres and hospitals, we fi nd that people also spend a considerable amount out-of-pocket towards health expenses. Government health centres at the village level are often not staff ed adequately, and are rarely equipped to deal with surgeries, or maternity care. Insurance provides cover against catastrophic illnesses, accident, and maternity. It is a fi nancial instrument to man-age health risks, it does not replace the existing public health infrastructure.

5) How did MFI handle operational issues – for instance delayed payment or decline in payment in account of unexplained exclusions?

Esther Dufl o: The microfi nance institution evolved a fund for emergencies and unexpected payments of claims. In case of a genuine claim rejected due to any administrative or coordination problem with the insurance company, the MFI, upon investigation, is willing to reimburse the client out of this fund. This was seen to be fair and also in line with maintaining a good image and relations, especially in early stages of the product roll out. Thus far, the organization has not needed to use this fund.

6) Is the health insurance product coupled with fi nancial literacy (i.e., education on concepts of insurance, what is covered and what is not, etc.)?

Esther Dufl o: Currently, the product is not combined with fi nancial literacy. However, the product is marketed after detailed discussions informing the client about product uses and other important details. A combination of diff erent methods – an informational video, a power point presentation, village meetings, and small group discussions, are used to create awareness and market the product.

Session 3: Emerging issues in microfi nance

Chair: C S Reddy

Speakers:

Doug Johnson – Microfi nance and competition

Sendhil Mullainathan – Psychology of debt

Jonathan Morduch – Microfi nance and the market

1)Is the partnership model still in vogue with the banks? What is the lending scenario other than the partnership model?

Doug Johnson: No, it has run into serious problems due to enforcement of Know Your Customer (KYC) norms by RBI. (See the most recent State of the Sector report for more details.) Aside from the partnership model, MFIs may also re-ceive funds via direct loans from banks or equity investments.

2) Microfi nance includes savings, insurance, remittances and investment, in addition to credit. What about competition in these areas, particularly, investment?

Doug Johnson: Very good point. As these areas are still relatively undeveloped the levels of competition seen between providers is still relatively low. For this reason, while we at CMF are certainly thinking about these questions, our work has been limited until now.

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Conference on Microfi nance

January 18, 2008

Organized by

College of Agricultural Banking, Reserve Bank of India, Pune

Centre for Micro Finance, Institute for Financial and Management Research, Chennai

Union Bank of India

PROGRAMME SCHEDULE

Registration: 09. 15 to 09.45 hrs.

Inaugural Session: 09.45 to 10.45 hrs.

Welcome Address and introductory remarks Shri Sandip Ghose, Principal, College of Agricultural Bank-ing, Reserve Bank of India, Pune

Special Address Shri T Y Prabhu, Executive Director, Union Bank of India

Special Address Dr. Nachiket Mor, President, ICICI Foundation for Inclusive Growth

Special Address Shri C S Murthy, CGM-in-Charge, Rural Planning & Credit Department, Reserve Bank of India

Tea break (10.45 – 11.00 hrs)

Technical Session I: 11.00 to 12.30 hrs.

Theme : Improving Businesses: Product Design and Additional Services

Chairman : Dr Nachiket Mor, President, ICICI Foundation for Inclusive Growth

A snapshot of small business in Hyderabad: results from a large-scale survey

Abhijit Banerjee, MIT

Experiment on repayment schedules and business train-ing for micro-entrepreneurs

Rohini Pande, Harvard University

Tailoring products to clients’ needs Jayshree Vyas, SEWA Bank

Technical Session II : 12.30 to 14.00 hrs.

Theme : Addressing Vulnerability Through Microfi nance

Chairman : Dr.Ajit Ranade, Chief Economist, Aditya Birla Group

Targeting the hard-core poor in West Bengal Raghab Chattopadhyay, IIM Calcutta

Health insurance: opportunities and challenges Esther Dufl o, MIT

Addressing the needs of migrant workers: Remittances Md N. Amin, Adhikar

Lunch: (14.00 to 15.00 hrs)

Technical Session III: 15.00 to 16.30 hrs.

Theme : Emerging Issues in Microfi nance

Chairman : Shri C S Murthy, CGM-in-Charge, RBI, RPCD

What is an Informed Consumer? The Psychology of Debt

Sendhil Mullainathan, Harvard University

Competition in microfi nance Doug Johnson, CMF

Microfi nance and the market Jonathan Morduch, New York University

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Tea break (16.30 – 16.45 hrs)

VALEDICTORY SESSION : 16.45 to 17.45 hrs.

Learning from the conference and future research need-ed

Michael Walton, IFMR

Special Address Shri C S Murthy, CGM-In-Charge, RBI, RPCD, CO

Concluding Remarks & Vote of Thanks Shri Sandip Ghose, CGM & Principal, CAB, RBI, Pune

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Profi les of Key Speakers

Abhijit Banerjee

Department of Economics, MIT

Abhijit V. Banerjee is the Ford Foundation Professor of Economics in the Department of Economics at Massachusetts Institute of Technology, the Director of the Poverty Action Lab and the past President of the Bureau for Research in Economic Analysis and Development (BREAD). He received his Ph.D. in economics from Harvard University in 1988, and has taught at Princeton and Harvard before joining the MIT faculty in 1996. In 2001, he was the recipient of the Malcolm Adeshesiah Award, and was awarded the Mahalanobis Memorial Medal in 2000. He is a fellow of the Econometric Soci-ety and the American Academy of Arts and Sciences, and has been a Guggenheim Fellow and Alfred P. Sloan Research Fellow. His areas of research are development economics, the economics of fi nancial markets and the macroeconomics of developing countries. With Esther Dufl o, he has conducted randomized evaluations of remedial and computer as-sisted education in India. He has also assessed reforms of informal schools in tribal areas in India, working closely with a local NGO.

Abhijit Banerjee, along with Esther Dufl o, work with the Centre for Micro Finance on three diff erent projects: an impact evaluation of urban microfi nance in Hyderabad; an impact evaluation of providing health insurance through microfi -nance networks in Karnataka; and an impact assessment of integrating the poorest into microfi nance, in West Bengal.

Raghabendra Chattopadhyay

Professor, IIM Calcutta

Raghabendra Chattopadhyay is a professor of business environment at the Indian Institute of Management, 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 Master’s in economics from Calcutta University and a Ph.D. 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, particu-larly adult and elementary education in India; and poverty eradication through self sustaining economic programmes. As a follow up to an earlier research study with Esther Dufl o, Raghab and Esther have initiated another study on the socio-economic impact of statutory participation of women in Panchayat in West Bengal.

Raghabendra Chattopadhyay, along with Esther Dufl o and Abhijit Banerjee, works with the Centre for Micro Finance on an impact assessment of integrating the poorest into microfi nance, in West Bengal.

Esther Dufl o

Department of Economics, MIT

Esther Dufl o is the Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics in the Department of Economics at the Massachusetts Institute of Technology. She is a co-founder and director of the Poverty Action Lab, Research Associate at the National Bureau for Economic Research, and on the board of directors of the Bureau for Research and Economic Analysis of Development (BREAD). She is the recipient of the Bronze Medal from the Centre National de la Recherche Scientifi que (2005), Le Monde’s Cercle des économistes Best Young French Economist Prize (2005), and the Elaine Bennett Prize for Research (2003). She received her undergraduate degree in history and econom-ics from the Ecole Normale Supérieure (Paris) in 1994, a master’s in economics from DELTA (Paris) in 1995, and her Ph.D. in economics from MIT in 1999. She specializes in development economics and the design and evaluation of eff ective anti-poverty policy. Several of her research projects take place in India: among others, she has conducted a random-ized evaluation of the usage of cameras to monitor teacher absenteeism in Udaipur district, and an impact evaluation of providing iron fortifi ed wheat in villages. She has also examined the impact of women and lower caste members of village councils in West Bengal, India.

Esther Dufl o, along with Abhijit Banerjee, works with the Centre for Micro Finance on three diff erent projects: an impact evaluation of urban microfi nance in Hyderabad; an impact evaluation of providing health insurance through microfi -nance networks in Karnataka; and an impact assessment of integrating the poorest into microfi nance, in West Bengal.

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rsJonathan Morduch

Wagner Graduate School of Public Service,

New York University

Jonathan Morduch is a professor of public policy and economics at New York University’s Wagner Graduate School of Public Service. He received his B.A. in Economics from Brown and his Ph.D. in Economics from Harvard University. He has taught on the Economics faculty at Harvard and has held fellowships or visiting positions at Stanford, Princeton and the University of Tokyo. Since 2000 he has taught at NYU and is the Managing Director of the Financial Access Initiative (FAI). His research interests are in fi nance and international development. In 2005 he co-authored a book, The Economics of Microfi nance (MIT Press) and is currently chair of the United Nations Committee on Poverty Statistics.

Jonathan Morduch, along with Shamika Ravi (ISB), works with the Centre for Micro Finance on an impact assessment of a fi nancial literacy programme.

Sendhil Mullainathan

Department of Economics, Harvard University

Sendhil Mullainathan is a professor of economics at Harvard University. He is the recipient of a MacArthur “genius” award, and he is currently a Director of the Financial Access Initiative. He received his B.A. in Computer Science, Math-ematics, and Economics from Cornell University in 1993 and his Ph.D. in Economics from Harvard in 1998. He has taught at MIT for six years before joining Harvard. His research interests are development economics, behavioral economics, and corporate fi nance. Among other things, he has conducted a randomized evaluation of racial bias in hiring in the US with Marianne Bertrand. He has also examined the impact of cash transfers to the elderly in South Africa. Another paper with co-authors (Marianne Bertrand, Dean Karlan, Eldar Shafi r and Jon Zinman) shows that small psychological factors can have large eff ects even in big decisions, such as borrowing decisions.

In the last few years, Sendhil Mullainathan has initiated several projects in India on fi nancial services, contract design and client behavior with IFMR and also ICICI Bank. Along with Dean Karlan, he works with the Centre for Micro Finance on several projects including: an impact evaluation of rural micro credit in Karnataka. They are also examining the fea-ture of high interest debt traps of micro-entrepreneurs. Sendhil has also initiated an experiment to assess the impact of fl exible repayment schedules for dairy clients in Orissa.

Rohini Pande

Kennedy School of Government, Harvard University

Rohini Pande is Mohamed Kamal Professor of Public Policy. Prior to joining the Kennedy School she was an Associate Professor of Economics at Yale University. She has taught at Yale University, MIT, and Columbia. A Rhodes Scholar, she is the recipient of several NSF grants, the Russell Sage Presidential Award (with Lena Edlund), and the Royal Economic Society Junior Research Fellowship. She holds a PhD and MSc in economics from the London School of Economics, an MA in philosophy, politics, and economics from Oxford, and a BA in economics from St. Stephens College, Delhi Univer-sity. Her research focuses on the economic analysis of the politics and consequences of diff erent forms of redistribution, principally in developing countries. Most of her fi eld work is based in India. Ongoing projects examine microfi nance, voter campaigns and anti-corruption policies.

Rohini Pande, with Erica Field and in collaboration with the Centre for Micro Finance, is evaluating the impact of provid-ing business training for microfi nance clients, in Gujarat, and an experiment with fl exible repayment schedules, in West Bengal.

Jayshree Vyas

SEWA Bank

Jayshree Vyas has been Managing Director of Shree Mahila Sewa Sahakari (SEWA) Bank in Ahmedabad, India, for seven years. During her tenure there, Ms. Vyas has implemented various innovative programs aimed at providing self-em-ployed women with access to credit, secure savings, insurance and housing. Prior to her position with SEWA Bank, she was a fi nancial analyst at the Central Bank of India, a commercial bank. Ms. Vyas has been a member of the WWB Board of Trustees since 1998. She is also on the board of the Indian School of Microfi nance for Women (ISMW) where she uses her experience to actively contribute to capacity building.

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Mohammed Amin

Adhikar

Md Amin is the CEO of Adhikar, an NGO-MFI that provides remittance services for migrant workers. Since it was es-tablished in 1993, Mr. Amin has spearheaded Adhikar’s transformation from an NGO working for the rights of migrant workers and slum dwellers to an organization that off ers a range of microfi nance services throughout the state of Orissa in India. Today, Adhikar’s clientele includes migrant workers, small and marginal farmers, daily wage earners, domestic servants and street vendors.

Michael Walton

Institute for Financial Management and Research (IFMR)Michael Walton is Senior Visiting Fellow at the Centre for Policy Research, Delhi, and Adjunct Lecturer in International Development at the John F. Kennedy School of Government, Harvard University, where he taught in the MPA in Interna-tional Development from 2004. He is also Visiting Professor for the 2007-08 semester at the Delhi School of Economics, and V.K.R.V.Rao Chair Professor, Institute of Social and Economic Change, Bangalore for 2008-09. He holds a masters degree in economics from Oxford University and a bachelors degree in philosophy and economics. In addition to his work, he is also the Policy Advisor for the Institute for Financial Management and Research (IFMR)

Between 1980 and 2004, Michael Walton worked at the World Bank, including extended periods on Indonesia and Zim-babwe, adviser to two Chief Economists, Chief Economist for East Asia and the Pacifi c (1995-97), Director for Poverty Re-duction (1997-2000), Chief Economist for Human Development (1999-2000), adviser for poverty and human develop-ment in Latin America and the Caribbean (2000-2004). He was part of the management group for World Development Report 2000/2001: Attacking Poverty, and played a central role in the design of the poverty reduction strategy process for low income countries. Prior to joining the World Bank, he worked for the Central Planning and Development Offi ce for the Government of Lesotho, 1979-97.

Doug Johnson

Centre for Micro Finance, IFMR

Doug holds a BA in Political Science from Rice University and a Masters in International Development from Harvard University’s Kennedy School of Government. 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. At CMF, Doug is currently working on projects in the areas of technology and microfi nance, the potential of post offi ces to increase fi nancial inclusion, and the impact of competition in the microfi nance sector.

Nachiket Mor

ICICI Foundation

Nachiket Mor is currently President of the ICICI Foundation for Inclusive Growth. He is a Yale World Fellow (2004), and, has a Ph.D. in Economics from the University of Pennsylvania with a specialization in Finance from the Wharton School, a Masters degree in Management from the Indian Institute of Management, Ahmedabad and an undergraduate degree in Physics from the Mumbai University.

While completing his Ph.D., he was associated with a Philadelphia based hedge fund (Quantitative Financial Strategies) for three years. He has worked with ICICI since 1987 in a variety of jobs, including, Corporate Planning, Project Finance, Treasury and Rural Banking and was a member of its Board from 2001-2007. In addition to his work within ICICI, he is a member of the Boards of: Institute for Financial Management and Research (IFMR), CARE USA and International Food Policy Research Institute (IFPRI).

C. S. Murthy

Reserve Bank of India

C S Murthy is former Chief General Manager in charge of Rural Planning and Credit Department of RBI. As head of the department that is responsible for policy formulation in the area of rural credit and micro fi nance, he was closely associ-ated with developments in the fi eld of microfi nance in India. Mr. Murthy has been member of several committees set up by the Reserve Bank and the Government of India in the fi eld of rural credit and has chaired the RBI internal working

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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 4 years, overseeing recruitment, training, performance, compensation and industrial relations. His responsiblity also included formulation and monitoring of the Strategic Action Plan (SAP) for the RBI, as also grooming and capacity building of 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 9 years, viz. 1996-2004. He was instrumental in setting up RBI’s Human Resources Develop-ment Department in 1995, and continues to be a part of Asia-Pacifi c and World HRD Congress.

Ajit Ranade

Aditya Birla Group

Ajit Ranade is currently with Aditya Birla Group as Group Chief Economist. Dr. Ranade has held faculty positions at the Indira Gandhi Institute of Development Research (IGIDR), the Indian Council of Research on International Economic Relations and JNU, New Delhi. He was also a faculty of Brown University, Holy Cross College, and Wesleyan University in the US. He is an op-ed columnist for the Financial Express and has been a consultant to the World Bank, the Tobacco Institute of India and the UN ESCAP among others.

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List of Participants

Shri Vipin Sharma

C.E.O.

Access Development Services

28, Hauz Khas Village, New Delhi - 110016

Ph 011-26510915

vipin@accessdev.org

Shri Md. N. Amin

President

Adhikar

113/2526, Khandagiri Vihar, Khandagiri

Bhubaneswar - 751 030 Orissa

Ph 0674-2384542, 2384731

amin.adhikar@yahoo.com, adhikar@satyam.net.in

Shri Gautam Ch. Swain

Project Co-ordinate

Adhikar

113/2526, Khandagiri Vihar, Khandagiri

Bhubaneswar - 751 030 Orissa

Ph 0674-2384542, 2384731

gautamswain@yahoo.com

Shri N. Viswanadha Reddy

Asstt. General Manager

Andhra Bank

Head Offi ce, Dr. Pattabhi Bhawan

Saifabad, Hyderabad - 500 004 (M) 9949229446

inallamilli@yahoo.co.in

Shri Chandra Shekhar Ghosh

Executive Director

Bandhan Financial Services Pvt. Ltd.

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

Ph 033-23347602, Fax 23343015

csghosh@bandhanmf.com

Shri Arjun P. Ghugal

Dy. General Manager

Bank of India

Head Offi ce Star House, C-5, ‘G’ Block,

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

Mumbai - 400 051, Ph 022-66684648

Fax 66684649 (M) 9833060820

apghugal@bankofi ndia.co.in

Shri V.K. Verma

General Manager

Bank of Baroda

Baroda Corporate Centre, C-26, ‘G’ Block

B.K.C. Bandra (E), Mumbai - 400 051

Ph 022-66985736 Fax 26525762

gm.ps.boc@bankofbaroda.com

Shri N. Narasa Reddy

Dy. General Manager

Canara Bank

Priority Credit Wing, H.O. 112, J.C. Road

Bangalore - 560 002 Ph 080-22227859

Fax 22293517 (M) 9448589357

narasareddyn@canbank.co.in

Shri K. Sekar

Manager

City Union Bank

Registered Offi ce, 149, T.S.R. Big Street

Kumbakonam - 612 001 Ph 0435-2432322

Fax 2431746 (M) 09367722738

cubmis@cityunionbank.com

Shri Aruloli C.

Probationary Offi cer

City Union Bank

Registered Offi ce, 149, T.S.R. Big Street

Kumbakonam - 612 001 Ph 0435-2432322

Fax 2431746 (M) 09367722738

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tsShri Avtar Singh Midha

Sr. Vice President

Capital Local Area Bank Ltd.

MIDAS Corporate Park, IIIrd Floor

37, G.T. Road, Jalandhar - 144 001

Ph 0181-5050719 fax 5050744

as_midha@capitalbank.co.in

Ms. Sagarika Gnanaolivu

Research Associate

IFMR-Centre for Insurance and Risk Management

8th, Floor, Fountain Plaza, Pantheon Road

Egnore, Chennai - 600 008

Ph 044-42892785 Fax 42892799

sagarika.gnanaolivu@ifmr.ac.in

Smt. Aparna Krishnan

Research Associate

IFMR-Centre Micro Finance,

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

Ph 044-42892718 Fax 42892799

aparna@ifmr.ac.in

Kum. Lakshmi Krishnan

Research Associate

IFMR-Centre for Micro Finance,

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

lakshmi@ifmr.ac.in

Kum. Divya Varma A.

Research Associate

IFMR-Centre for Micro Finance,

B-801/802, Gurukul Park Apartments, Behind Sterling Hospital

Gurukul (M) 09327111067

divya@ifmr.ac.in

Kum. Minakshi Ramji

Research Associate

IFMR-Centre for Micro Finance,

8th, Floor Fountain Plaza,

Chennai - 600 033 Ph 044-42892729

minakshi.ramji@ifmr.ac.in

Shri Surojit Chattopadhyay

Research Associate

IFMR-Centre for Micro Finance,

8th, Floor,Fountain Plaza, Pantheon Road,

Chennai - 600 008 Ph 044-42892729

surojit.chattopadhyay@ifmr.ac.in

Shri Kulkarni Atul Narhari

Microfi nance Faculty in Chaitanya

Chaitanya Moti Chawk, Brahmin Ali, Rajgurunala

Tal. Khed Dist Pune - 410 505

Ph 02135-223176 (M) 9226379112

atul.kulkarni8@gmail.com

Shri Gaurav Wadhwani

Head Strategy - Assets

Deutsche Bank

Private & Business Clients, India

7th Floor, Nicholas Piramal Towers,

Peninsula Corporate Part, Ganpatrao Kadam Marg,

Lower Parel, Mumbai - 400 013 Ph 022-67063000

Extn. 3309, 67063309 Fax 67063963 (M) 09892323460

gaurav.wadhwani@db.com

Shri Avinash Chander Katial

Asstt. General Manager

Dena Bank

28-A, Praveen House, V.S. Marg

Lucknow - 226 001 (U.P.)

Ph 0522-2272866, 3916885 Fax 2623150, 2614814 (M) 9839900366

katial@denabank.co.in

Shri Sunirmal Paul

Regional Manager

Dena Bank

Geethanjali Convention Centre, 32, Venkatasen Street,

T. Nagar, Chennai - 600 017

Ph 044-24359716 Fax 24330448

ro.chennai@denabank.co.in

Shri V. Sridharan

Asstt. General Manager

Dena Bank

Regional Offi ce, Shri Ram Complex,

Radhanpur Road, Mehsana - 384 002

Ph 02762-251433 Fax 250874

ro.mehsana@denabank.co.in

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Smt. Mini Bedi

Managing Trustee

Development Support Team

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

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

Ph 020-25884987

dstpune@vsnl.net , dstpune@dataone.in

Shri George K. John

General Manager

ESAF

Zonal Offi ce, P.B. No.23, 9, Ramkrishna Society,

Gorewada Road, Katol Road P.O

Nagpur - 440 013 Ph 0487-2371472 Fax 2373813

bobbyesaf@gmail.com

Smt. Smita Aggarwal

Executive Vice President

Fullerton India Credit

Level 5, West Wing, Workherdt Towers

Bandra Kurla Complex, Mumbai - 400 051

Ph 022-67491230

smita.aggarwal@fullertonindia.com

Shri Mohan P. Abraham

Chief Manager

The Federal Bank Ltd.

Arihant, 1187/26, Ghole Road, Near Balgandharva Suare,

Pune - 411 005

Ph 020-25512194 Fax 25538754

pne@federalbank.co.in

Shri Raj Singh Khaira

VP - Business Development

Financial Information Network & Operations Ltd.

C-401, Business Square, Chakala, Andheri Kurla Road,

Andheri (E), Mumbai - 400 093

Ph 022-40973303, 40973466 Fax 40973300

khaira@fi no.co.in

Shri Kishor Magdum

Managing Trustee

14, Landmark Apartment, Sadhu Vaswani Circle,

Pune - 411 001 Ph 020-26051013

kbmtour@gmail.com

Shri K. Manohara Raj

Sr. Vice President

HDFC Bank Ltd.

751-B, Anna Salai, (Mariam Centre),

Chenani - 600 002

Ph 044-28528861 Fax 28513547

manohara@hff cbank.com

Shri Pramod Marar

VP - Commercial Banking

The Hongkong and Shanghai Banking Corporation Ltd.

3rd Floor, Ashoka Estate, 24, Barakhamba Road,

New Delhi - 110 001

Ph 011-43522633 (M) 09811848500

pramodmarar@hsbc.co.in

Kum. Bindu Ananth

President, IFMR Turst

24, Kothari Road, Chennai

bindu.ananth@ifmrtrust.co.in

Ms. Shamika Ravi

Assistant Professor

Indian School of Business

Gachibowli, Hyderabad - 500 032

shamika_ravi@isb.edu

Smt. Neelima Khetan

Chief Executive

Seva Mandir

Udaipur Rajasthan - 313 004 Ph 0294-2450960

neelima@sevamandir.org

Shri P. Arunkumar

(Staff OP MFI)

Svasti Foundation

801, Nav Sanapra, Hons Bhugra Road

Santacruz (E), Mumbai 400098 Ph 022-26652443

arun4all@yahoo.com

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Chief Executive Offi ce

Hand in Hand Tamil Nadu

42/270, Vandavasi Road, Chinna Kancheepuram,

Periyar Nagar, Kancheepuram - 631 503 (Tamil Nadu)

Ph 044-27267065, 67271373 (M) 09840490455

kalpana.sankar@hihseed.org

Smt. Purvi Bhavsar

Asstt. General Manager

ICICI Bank Ltd.

ICICI Towers, Bandra Kurla Complex

Mumbai - 400 051 Ph 022-26536468

purvi.bhavsar@icicibank.com

Smt. Leena Venugopal Pillai

Manager, ICICI Bank

ICICI Bank Towers, Bandra Kurla Complex

Mumbai - 400 051 Ph 022-26536148

Fax 26531175 (M) 09820121375

leena.venugopal@icicibank.com

Smt. Sona Varma

Economic Adviser, ICICI Bank

ICICI Bank Towers, Bandra Kurla Complex

Mumbai - 400 051 Ph 022-26536148

Fax 26531369 (M) 09920303343

sona.varma@ext.icicibank.com

Shri Raghabendra Chattopadhyay

Professor at IIMC

Indian Institute of Management Calcutta

Joka, Diamond Harbour Road,

Kolkata - 700104 Ph 033-24678300

Fax 24678062/8307 (M) 9433055230

rc@iimcal.ac.in , rchattopadhyay@gmail.com

Shri M. Kalyana Sundaram

Chief Executive , JNAFI India

New No. 65, First Floor, IIIst Harvey Nagar

Ph 0452-2300480 Fax 4358490

mdumk2000@yahoo.co.in

Shri Doug Johnson

Research Associate

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

Fountain Plaza, Khaleel Shirazi Estate

31/2-A, Pantheon Road, Egmore,

Chennai 600008 Ph 044-42892778 Fax 424892799

doug@ifmr.ac.in

Shri M.S.V. Prasadarao

Vice President

ING Vysya Bank Ltd.

No. 22, M.G. Road, Bangalore - 560 001

Ph 080-25005108 Fax 25005121

prasadaraomsv@ingvysyabank.com

Dr. S. Elangovan

Dy General Manager

Indian Overseas Bank

Central Offi ce, 763, Anna Salai Chennai 600 02

Ph 28519441 Fax 28418030 (M) 9444015411

drsc@iobnet.co.in, drsciob@hotmail.com

Shri G. Rangarajan

Asstt. General Manager

Indian Bank

Rural Banking Department, Head Offi ce

66, Rajaji Salai, Chennai - 600 001

Ph 044-25271327 Fax 25230285

rangarajan_g@yahoo.com

Shri Subhash Deval

Asstt. General Manager

Union Bank of India

239, Vidhan Bhavan Marg, Nariman Point

Mumbai - 400 021 Ph 022-22896508

deval@unionbankofi ndia.com

Shri Santanu Sen

Head Corporate Relations

Village Micro Credit Services

Village Tower, F-15, Geetanjali Park, Ariadaha

Kolkata - 700 057

Ph 033-25646545/5786 Fax 25443240

santsen@gmail.com, vws@cal3.vsnl.net.in42

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Dr. (Smt.) Kalpana Sankar

Chief Executive Offi ce

Hand in Hand Tamil Nadu

42/270, Vandavasi Road, Chinna Kancheepuram,

Periyar Nagar, Kancheepuram - 631 503 (Tamil Nadu)

Ph 044-27267065, 67271373 (M) 09840490455

kalpana.sankar@hihseed.org

Shri N.K. Bhatia

Dy. General Manager

Reserve Bank of India

Rural Planning and Credit Department

Central Offi ce, Mumbai - 400 001

Ph 022-22610890 Fax 22610943

nkbhatia@rbi.org.in

Shri Venkatesh Saha

Chief Manager

ICICI Bank

ICICI Bank Towers, Bandra Kurla Complex

Mumbai - 400 051 Ph 022-26536402

Fax 26531226 (M) 09820895991

venkatesh.saha@icicibank.com

Shri Puneet Gupta

Vice president

IFMR Trust

24, Kothari Road, Nungambakkam

Chennai - 600 034 Ph 044-28303508 Fax 28279208

puneet.gupta@ifmrtrust.co.in

Kum. Rohini Pande

Professor Harvard University

Kennedy School of Government

79, JFK Sheet, Cambridge 02138, USA

Ph 001-617-3845267

rohini_pande@harvard.edu

Rebecca J. Shively

AIF Fellow

Mann Deshi Mahila Sahakari Bank Ltd.

Post Mhaswad, Tal. Mann,

Dist Satara - 415 509

Ph 02373-270788 Fax 270141 (M) 9763420113

rebecca.shively@gmail.com

Smt. Sushama Chandrakant Shendge

Asstt. General Manager

Mann Deshi Mahila Sahakari Bank Ltd.

Post Mhaswad, Tal. Mann, Satara - 415 509

Ph 02373-270788 Fax 270141 (M) 9422042822

shendge.sushama@gmail.com

Shri Abhijit Banerjee

Professor

Department of Economics

E-52-252d, 50, Memorial Drive, HIT

Cambridge, HA 02142, USA

Ph 001-617253-8855 Fax 617-253-6915

banerjee@mit.edu

Shri Vikas Dimri

Product Head

Deutsche Bank

Private & Business Clients, India

7th Floor, Nicholas Piramal Towers,

Peninsula Corporate Park, Ganpatrao Kadam Marg.

Lower Parel, Mumbai - 400 013

Ph 022-67063000 Extn. 3310 Fax 67063953

vikas.dimri@db.com

Shri Gobinda Banerjee

Dy. General Manager

Punjab National Bank

P.S. & Lead Bank Division, Rajendra Place

Rajendra Bhawan, New Delhi - 110 008

Ph 011-25747449

43

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tsShri Pukhraj Kanther

Dy. General Manager

State Bank of Saurashtra

Regional Offi ce, Jeevan Seva Extn.

Ground Floor, S.V. Road Santacruz (W)

Mumbai - 400 054 Ph 022-26102761, 26105910 (M) 983359560

Fax 022-26105917

dgmmzo@sbs.co.in

Shri Chetananand M. Raut

Chief Executive Offi ce

Sakhi Samudaya Kosh, Solapur

Plot No. 16, Umberge Niwas, Bijapur Road

Solapur - 413 004

Ph 0217-2302507 (M) 9850104501

chtanssk@gmail.com

Shri Ramesh P.

Chief Manager

The Federal Bank Ltd.

Unatee, Plot No.61, Opp. Vanaz Industry

Lokmanya Colony, Kothrud, Pune - 411 038

Ph 020-25423805, 25446611 Fax 25423805

pneb@federalbank.co.in

Shri Ajit N. Kanitkar

Program Offi cer

The Ford Foundation

Development Finance & Economic Security

55, Lodi Estate, New Delhi - 110 003

Ph 011-24619441, 24648401 Fax 24627147

a.kanitkar@fordfound.org

Ms. Prema Gopalan

Director

Swayam Shikshan Prayog

5th Floor, Bhardawadi Hospital, Bhardawadi Road,

Andheri (W), Mumbai - 400 058

Ph 022-22907586, 26771132 Fax 26771132

(M) 09821413246

sspindia@vsnl.net

Mrs. Chouvet Delphine

Micro Finance Programme Manager

Swabhimaan - Uplift Duolia Association

14, Landmark apartment, B.J. Road

Sadhu Vaswani Chowk, Pune - 411 001

Ph 020-26051013 (M) 9960498423

delphine.dhouvet@gmail.com

Shri V. Ramkumar

Dy. General Manager

State Bank of India

Rural Business (Micro Credit & Financial Inclusion), Cor-porate Centre

8th Floor, State Bank Bhavan, Madame Cama Road, Mumbai - 400 021

Ph 022-22022847 Fax 22813757

dgm.me@sbi.co.in

Shri anup Kumar Singh

Managing Director

SONATA Finance pvt. Ltd.

1/1-A, Raibahadur Ramcharandas Road

Balrampur House, Allahabad - 211 002 U.P.

Ph 0532-3295984, 2503655 (M) 09839779346

anupmzp@yahoo.com, anup@sonataindia.com

Dr. R. Balasubramanian

Chief Manager

State Bank of Mysore

Lead Bank Department, Head Offi ce

Kempegowda Road, Bangalore - 560 009

Ph 080-22353901 Ext. 396, 22353464

(M) 944829183

balsn@rediff mail.com

Smt. Malini B. Eden

Director

SEARCH - KOPSA

2/9/26, VI Main, IV Block, Jayanagar

Bangalore - 560 011

Ph 080-22444226 Fax 22635361

malini_eden@yahoo.com

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Shri Simon Cox

South Asia Business Correspondent

The Economist

71, Sunder Nagar, Ground Floor

New Delhi - 110 003

Ph/Fax 011-24352336 (M) 9953131915

simoncox@economist.com

Shri K.C. Francis

Dy. General Manager

The South Indian Bank Ltd.

SIB House, Mission Quarters,

Thrissur - 680 001 Kerala

Ph 0487-2444530, 2420020 Fax 2442054

(M) 9495331150

Shri Ajay Tankha

Trustee

REACH India

20-D, Belvedere Road, 2nd Floor, Alipur

Kolkata - 700 027

Ph 033-24792450, 24792452 Fax 24792450 (M) 09818533116

ajaytankha@vsnl.net

Shri Bhor Nilesh Vijay

Agriculture Offi cer

UCO Bank

Branch Kalamb, Tal. Ambegaon,

Dist Pune Ph 02133-239121

nilesh.bhor82@yahool.com

Shri Vikas Dimri

Product Head

Deutsche Bank

Private & Business Clients, India

7th Floor, Nicholas Piramal Towers,

Peninsula Corporate Park, Ganpatrao Kadam Marg.

Lower Parel, Mumbai - 400 013

Ph 022-67063000 Extn. 3310 Fax 67063953

vikas.dimri@db.com

Shri Gobinda Banerjee

Dy. General Manager

Punjab National Bank

P.S. & Lead Bank Division, Rajendra Place

Rajendra Bhawan, New Delhi - 110 008

Ph 011-25747449

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College of Agricultural BankingReser ve Bank of I ndia

Univers i t y Road, Pune 411 016http:cab.org. in

Centre for Micro Finance8th Floor, Fountain Plaza , Pantheon Road

Egmore, Chennai 600 008http:w w w.i fmr.ac. in/cmf