Independent Research and Policy Advocacy

Access to Micro-Savings for Remote Rural India

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Rural households need relatively large sums of money for life cycle needs (such as marriages, festivals and old age), emergencies (such as illness, the death of a bread-winner and floods) and investment opportunities (as much in assets and household goods, for example, as in investments in micro-businesses)i . They therefore need access to a basket of financial services. When looking at rural financial markets, we discover not only the lack of access to credit, but also other financial services (Investments, Insurance, etc) not being available.ii This note discusses how innovative modes of savings products like money market mutual funds can be used to cater to the need of rural households in India. Such financial instruments can be used for planning and investment which can contribute in many ways to enhance their security by building capital for consumption and investments at the same time provide liquidity to meet emergencies.

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