Insurance for Contractual Workers of Micro and Small Enterprises in India – A Conscience Call

• by Premasis Mukherjee, Lisa Chassin, Anup Singh and Abhay Pareek
• Oct 24, 2014
• 1 min
Download resource

In terms of access to formal risk protection measures, contractual workers employed at MSEs in India this note creates background for the next note of this series.

We applied a behavioural lens to examine why many clients do not save in accounts that MFIs open as business correspondents (BCs) of a bank. We found that a typical MFI is positioned (viewed in the market by their clients) as a credit service provider and, as such, MFIs do not fit into clients’ mental models of where to save. We discuss how MFIs can turn this situation around using client’s demand for credit and desire to accumulate lump sums as triggers to induce active savings behaviour through MFI-BCs. Such a change in product strategy will require MFIs to focus on branding themselves as savings service providers and to highlight their relationships with respected commercial banks to build trust. MFIs will have to be cautious not to position these savings services as a compulsory requirement, as part of loan insurance or at risk of offset against unpaid credit balances.