Independent Research and Policy Advocacy

The urgent need for high-quality distributors in the Indian financial system

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I had a fascinating meeting today with Gayathri, CEO of LabourNet Services that reminded me of some fundamental challenges in financial inclusion. So, here is a company deeply wedded to its mission of providing essential services and skills to urban informal sector workers. Over the years, they have realised that identity and basic financial services (savings and insurance) is an important need for the informal sector worker and started getting involved in facilitating access. However, 23000 accounts later, they find themselves in the familiar ‘bewilderment zone’ in dealing with multiple financial institutions and the lack of connect between existing products/processes and their sense of what their typical client requires.

This meeting reiterated for me the need for many-many more specialised distributors of financial services in India. These cannot be individuals or kirana shops, but formal institutions with the processes and understanding to effectively intermediate between the clients on the one hand and the product manufacturer (bank, insurance company, mutual fund) on the other. Like we are creating a set of new-generation distributors called KGFS to serve remote rural India, there is a similar need for high-quality distributors for the urban poor, for seasonal migrants and other demographic profiles with fundamentally different demand characteristics.

At IFMR, we think that pushing manufacturers to build last-mile distribution is a losing battle (one we have waged as a financial system for decades). Instead, we need to create several more institutional distributors in India with incentives aligned to the financial well-being of customers.

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4 Responses

  1. It is my pleasure to introduce to you Sanchayan Suraksha Point (SSP). SSP is a model of delivering suitable financial products and services to the urban poor like PAN Card, Banking, Micro-Insurance,  Mediclaim, UID, NPS, etc at one point situated within the slums.  The first SSP is operational in Trilokpuri, East Delhi, but to be honest with you, it has not yet broken even since the people mistrust any private organization as they have been cheated in the past. SSPs are being developed to become low-cost chain of retail outlets that will provide the “Last Mile Connectivity to Urban Poor” to sell/service financial products and services. Sanchayan Society is lacking funding, staff, resources; it’s damn difficult to continue this. But I have my hopes, since we have now started getting positive response from the area, and people are finding that we can deliver. We have been able to deliver 400-500 pan cards in the last quarter and people are talking. We had some camps – A Bank Camp, which got a good response. We are planning a Insurance Camp and a Pension Camp in November. Let’s see what happens now!!


    Avik Kedia
    Sanchayan Society

  2. Mr. Kedia, it is wonderful to learn about SSP’s work. We definitely need many more organisations like yours. I hope we can learn from each other and please let me know if there are ways in which we can support you with respect to training.

    1. Dear Mr. Suran, I apologize for the late reply as I have just returned from conducting series of financial literacy workshops for rural women. To be very direct, just managing the four services we have right now is tough, since we don’t have any external funding or support, and do this from our own pockets. We offer the following services right now to the urban poor:
      1. NPS Lite @ Rs. 100
      2. Bank Ac/ @ Rs.100 (opening bal.)
      3. LIC micro-insurance @ Rs.100
      4. PAN Card @ Rs.100

      As you can see, a poor person can easily understand the services, the price, and get all the information and servicing at one point. No need to go to the bank, post-office, insurance office, or PAN card / NPS center.

      We would like to implement UID sometime in the near future, but it is not our focus. Our focus remains on financial products and services like savings, banking, insurance, NPS, PAN card (financial id), and Financial Literacy, which is really the foundation of our whole idea. We do not want to become mere marketing agency, but want to pilot a qualitative financial inclusion, that works, for the urban poor. 
      It would be great to discuss this in length sometime. Look forward to your feedback. Thanks.   

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