The Global Scenario has not changed

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Improving Access to Micro Savings by Rajesh
Sud CEO Managing Director
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India has 115 million underserved households
VHNI
HNI
Affluent
Mass Affluent
Aspirers
Commoners
Struggling
Poor
Source MCKinsey Guide to Indian Markets 2006
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Indian households save, but not wisely !
Preferred form of saving
of households
Quintile 1 68 Quintile 5 31
Source Max New York Life NCAER India Financial
Protection Survey 2006-07
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The reality of their lives

• Lumpy income patterns
• Inability to pay premiums at fixed times
• Fear of policy lapse refrains them from making a
  beginning

The days activity is pre-setthe earnings are not
some days are real bad for earningbut sometimes
things are fine
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The reality of their lives

• Savings more important than insurance
• They have to pay to save - have to travel great
  distances to deposit small amounts
• Do not have access to tools that let them secure
  their future

They are keen to savebut they fail
There is no option that permits them to save in
small amounts in an unstructured time-pattern.
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The reality of their lives

• Do not have the resources to invest in
  traditional insurance and savings tools that have
  a high entry cost

Their financial condition is marked by perennial
debt
Taking a personal loan for a scooter without
working out a re-payment plan. Udhaari Ka
khataa Bandh hi nahin hota
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The reality of their lives
Cost of living hits them the hardest
They have no buffers and their price-volume
equations reveal the story. sahib, tel ka daam
ab solah rupaiya pao ho gaya hai.
Things have become expensive these days. Forget
saving we have to manage things
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Perpetual Deficit
due to life circumstancesHaving many
children,spending on festivals even when there
is a loan to be repaid,marriage adding to the
weight of responsibility, cost of living
outstripping earning,
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The underlying reality
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MoneyIt just slips through
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What does this segment require from financial
instruments?
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Examples.

• Kashf, Pakistan
• Objective To demonstrate economic competence of
  impoverished women
• Activities Provide micro finance and capacity
  development

• Model
• Formation of centre a group of 20 to 25 women
• Approve loan without collateral loan repayment
  ensured through Solidarity Methodology
• Educate regarding need for saving and life
  insurance
• Result
• 59000 clients 59000 active borrowers
  57000 active savers 100 loan recovery

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Examples.

• SEWA, India
• Objective To organize women workers for full
  employment to achieve work security, income
  security, food security and social security
• Activities

• Model
• Group of self employed women formed a bank by
  putting together their savings
• Facilitated credit to members through
  nationalized banks initially and later through
  own resources
• Loans provided for working capital, work tool and
  housing
• Result
• Self employed women participation in banking,
  lending and saving
• Deployment of own savings for employment
  generation and social change

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Max Vijay Our initiative in this direction
The customer proposition of Max Vijay
For The daily wage earner and the low
fixed-income earner who earns money so he can
spend today and never has thought about
tomorrow What Max Vijay because money saved
earns more money Why Every rupee saved brings an
extra bit that can be used for a better tomorrow
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An innovation that

• Is Affordable
• Minimal enrolment premium of just Rs. 1000
• Has Flexible premium payment options
• Any amount as per their convenience starting
  from as low as Rs.10
• Any time depending on income patterns
• Is Lapse free
• Policy will continue for 10 years even if no
  subsequent premium is paid
• There should be sufficient value in the policy
  account to meet mortality charges, service tax
  and monthly administrative charge
• Is Near Paperless
• Minimal documentation requirements. Just a simple
  ID proof required.
• No age proof/ No salary proof/ No health
  certificate/ No medicals

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An innovation that

• Is Accessible
• Distribution approach to make Life Insurance
  available even in remote locations
• Is geography neutral
• Leverages the natural reach of multiple channels
• Will be sold across conventional and
  unconventional channels like retail, telecom,
  MFIs, NGOs etc.
• Leverages and generates additional value in an
  existing eco-system
• Offers Claims registration and settlement at last
  mile
• Customers can submit requests for claims, partial
  withdrawals, change at their neighbourhood Max
  Vijay outlet
• No need to travel to distant nodal centres
• Is Transparent
• Technology supported backend that ensures
  immediate account status and payment receipt
• A customer friendly toll-free helpline

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Some success stories
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Optimal accessibility model
MFIs
Banks
Post Office
Customer
Retail
NGOs
Life Insurers
Agri - Retail
Create touch points to provide products and
service underserved customers
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Thank You