Theme: Financial Lives of Poor Households

There is a need for updated dataset on households’ consumption patterns, increased frequency of surveys on households’ balance sheet, and to collect data on financial well-being.

Unlike term plans that provide life risk cover or unit-linked schemes, where returns are market-linked, endowment plans offer maturity benefits upon survival & minimum guaranteed return.

Low-income households seek loans often, but credit is suitable if it helps sustain or improve financial well-being. This is what must be ensured by lenders, regulators & policymakers.

Tremendous efforts have gone into creating new authoritiessuch as the Central Consumer Protection Authority.

Low-income households work with irregular income inflows, resulting in shrinking financial planning horizon and necessitating frequent decisions in response to frequent changes.

Indian households and businesses hold their wealth primarily in physical assets like real estate, gold, and durables, while barely investing in any financial assets.

There are several reasons for low take-up of life insurance policies in general and specifically low take-up of term life insurance. These factors range from supply side barriers such as misaligned incentive structures for agents selling life insurance policies, lack of availability and accessibility to a larger suite of life insurance products customized to the needs of low-income households to demand-side barriers such as household’s contextual factors that limit their awareness and priority for a life insurance product and their behavioural preferences pertaining to life insurance products.

The social dimension of household finances is often missed by popular commentary on finance, which sees such decisions as being made by an individual for only themselves.

The Microfinance sector is gearing up for change as the recent RBI (Regulatory
Framework for Microfinance Loans) Directions, 2022 has put in place comprehensive
regulations to ensure customer protection

This data book compiles trends on household participation in formal financial services over the last few years.