Household Finance

Remittances are the second largest source of funding for developing countries, contributing more than capital flows and development assistance.

In India, gram panchayats (GPs) were given constitutional legitimacy following the passage of the 73rd Constitutional Amendment Act, which was meant to decentralise power and responsibility to them to improve local public service delivery and governance.

A defining characteristic of the finances of low-income households is the irregularity and seasonality of cash-flows, and the generally small surplus.

Increasing urbanization and massive demographic pressures that India is witnessing has brought housing and infrastructure to centre stage.

IFMR Trust is a private trust whose mission is to ensure that every individual and every enterprise has complete access to financial services.

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 .

In this paper, we present two stylized models of the financial system. We make the case that in order to realize the potential of a well-functioning complete financial market, financial system designers and financial service providers will need to think about ways to deliver financial propositions that are customized to individual households by responding to their unique circumstances.

Finance Matters column in The Hindu Business Line – Farzana Najeeb of Advocacy writes the fifth article in the series.

The recent controversy surrounding the microfinance sector has entirely eclipsed the fact that it is the first effort in India to have delivered financial services to remote corners of the country in a self-sustaining manner.

Having understood the deep transformative potential of access to finance and the barriers to accessing it, here's a look at the fundamentals of the MFI cost structure in delivering finance.