ICICI: Financial Services for the Poor

The world’s poor traditionally are trapped in the dilemma of having neither money nor the means to borrow any. Micro financing to the level of their needs has not been part of the agenda of formal banking, until now. For the poor in India, particularly in rural areas, ICICI Bank, the second-largest banking institution in the country, is beginning to convert the poorest of the poor into customers and, thus, at the same time empower them.

Ms. Pundiselvi, in the village of Nahramalaiphur, for instance, procured a bank loan to lease a small parcel of land to raise chilies for cooking and flowers for decorative purposes. The cost of the land was 10,000 rupees ($200) for the season, and the seeds cost a few thousand rupees. So far, Ms. Pundiselvi has paid back 7,000 rupees ($140), or 70 percent of the loan, from income generated from her land. In the same village, Ms. Saraswathi owned and operated a small grocery shop with a small inventory and limited selection of goods. With a 10,000 rupees ($200) loan, she expanded her existing shop and now enjoys a boost in monthly income. Ms. Saraswathi has never missed a monthly payment and has paid back 6,000 rupees ($120), or 60 percent of her loan. One enterprising woman pooled the money from a loan with other family assets and dug a new well for her village. She charges other farmers and villagers 25 rupees ($.50) per hour to pump water for irrigation purposes. The irrigation system the pump feeds has also increased the yield of her own nearby fields.