“Explore micro-finance opportunities at the bottom of the pyramid,” had said management guru CK Prahalad. His words are turning into reality at India’s rural hinterlands.
Insurance companies, global software firms and financial services’ majors are tapping the rural areas for micro-finance opportunities. The Indian micro-finance market is now estimated at Rs 60,000 crore and market demand for micro credit is over Rs 50,000 crore.
Last week LIC, India's largest life insurance company, launched a micro-insurance scheme by teaming up with 3i Infotech, a Mumbai-based IT company that designs insurance-based technology solutions. 3i provides software to enable LIC’s micro insurance agents — institutions like non-governmental organisations (NGO), self-help groups (SHG) and micro finance institutions (MFI) — conduct business online and offline.
Elsewhere, venture capitalist Vinod Khosla and California-based Sequoia Capital have invested in SKS Microfinance, a Hyderabad-based company that disburses loans to the rural poor.
Last month, Financial Information Network and Operations and global software major IBM partnered with Janalakshmi Social Services, a Bangalore-based microfinance company, to introduce smart cards. The smart car is designed to help janalakshmi provide financial assistance to its customers participating in fruit and vegetable auction at Safal outlets.
“Technology provides banking and financial service to those who don’t have access to formal banking,” said Vikram Akula, founder of SKS Microfinance.
"The software will help the micro insurance agents manage their insurance portfolio and provide them with updated information on policies due or processing claims," says Anirudh Prabhakaran, Chief Operating Officer, South Asia, 3i Infotech.
A recently released report by Associated Chambers of Commerce and Industry of India (Assocham) emphasises on the potential of roping in 200 million rural investors by Financial Institutions (FIs) and insurance companies to provide agriculture, housing, personal and education loans and easy insurance schemes at affordable rates.
Assocham President, Venugopal N Dhoot said in the study that insurance schemes would provide rural youth safety net to protect their investments, and financial institutions and insurance companies should come forward to explore these areas.