India Microfinance Innovations

Indian MFIs publish detailed results of forward-thinking initiatives to help the microfinance industry mature and improve quality of financial inclusion

Women enjoying role-playing exercise while learning financial literacy

Unitus Labs is pleased to publish the results of four innovative initiatives by Indian MFIs completed in 2011:

Financial Literacy on Debt Management

Ujjivan Financial Services developed a financial literacy program for low-income, low-educated urban populations in India

Streamlining Individual Microlending

Swadhaar FinServe publishes in-depth analysis of multiple years of individual microloan data in order to accelerate industry progress for new individual lending products

Affordable Rural Education Centers

Grameen Koota opens new, affordable rural education centres seeking improved school results for very low-income children

Technology-Based Risk Management Framework

Mimo Finance has developed a technology-based risk management framework design to help MFIs to better assess business risks in a timely manner


About India Microfinance Innovations Initiative

Unitus Labs made a large investment in Microfinance Acceleration for over a decade. We announced in July 2010 that we would fulfill existing microfinance partner commitments but that we would not be taking on new microfinance partners or projects.

As we were winding down our engagements with existing MFI partners, the India microfinance industry ran into a crisis. We decided that we would make some final philanthropic investments to strengthen some of our MFI partners as well as the India microfinance industry. We thought the best way to do this was to identify and support innovation initiatives proposed by our MFI partners.

The turmoil in the Indian microfinance sector (starting in the Fall of 2010) had challenged traditional thinking about how organizations and industries that pursue financial and social returns should be managed. MFIs needed to improve their operations by creating robust and transparent delivery systems with a customer centric approach, in order to serve the poor better and achieve long term sustainability. Specifically, we felt that:

  1. It is imperative for social organizations to thoroughly understand the capacity and needs of target clients, and assess whether they’re servicing these needs on a continuous basis,
  2. Incentives that drive organizational performance need to be periodically evaluated and modified as per the industry lifecycle
  3. While traditional industries are often applauded for focusing solely on their core value proposition, social enterprises may need to approach solutions more holistically and diversify on their client touch points.
  4. Finally, since socially motivated enterprises often cater to large, diverse and politically sensitive client groups, buy-in for the services being through transparent and inclusive practices is imperative for longer-term sustainability.

In the India Microfinance Innovation program, Unitus Labs supported initiatives to help MFIs mitigate political, credit and operational risks, with an eye towards scalability and replicability of these projects across the industry. We funded four innovations projects proposed by trusted MFI partner organizations to study, identify and test key customer-centric innovations. These programs have the potential to transform the way microfinance is delivered to low-income clients. A key requirement for each project was that detailed results would be published in an open source format so that other organizations could benefit.

Acknowledgements

These learnings and published materials would not have been possible without the significant time and dedication of the teams at Ujjivan, Swadhaar, Mimo and Grameen Koota. These were managed as important strategic initiatives and had the full attention and support of the leaders of these organizations. We especially appreciate their willingness to share what didn’t work and to offer these detailed materials and tools for use by others going forward.

We would especially like to acknowledge the special contributions of Shashwat Mody as the lead for this initiative. Shashwat worked closely with each partner to help with project execution, and later to package the learnings in a manner that would be accessible to others so that this work can be leveraged for more innovation and impact.

About Shashwat Mody

Shash designed the India Microfinance Innovations initiative to help the microfinance industry build robust and transparent delivery systems, and balance financial and social returns. Shash joined Unitus in 2007, and subsequently led the Operations Advisory practice, passionately scaling critical financial and livelihood services across India, Africa and SE Asia. Shash also founded Eduheights Schools, an organization that provides quality education in North India, and Little Tree Financial Services, that envisions scaling affordable hospitals and schools across India.

Shash Mody is an Aga Khan Scholar, and is currently pursuing his MBA at The Wharton School, University of Pennsylvania.

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