Are Banks and Microfinance Institutions Natural Partners in Financial Inclusion?

MicroSave Focus Note, Forthcoming

19 Pages Posted: 15 Jun 2012  

Ignacio Mas

Tufts University

Akhand J. Tiwari

affiliation not provided to SSRN

Alphina Jos

affiliation not provided to SSRN

Denny George

affiliation not provided to SSRN

Krishna Uma Mahesh Thacker

MicroSave

Nitin Garg

affiliation not provided to SSRN

Raunak Kapoor

affiliation not provided to SSRN

Shivshankar V.

affiliation not provided to SSRN

Swati Mehta

affiliation not provided to SSRN

Vartika Shukla

affiliation not provided to SSRN

Date Written: May 14, 2012

Abstract

In India, the business case of the BC model is yet unclear. The main limiting factor is very low customer activity rates. Low usage is compounded by the prevalence of unduly low pricing models on the basic savings proposition, which is based on a perception that customers have low willingness to pay for savings services. These two factors are of course linked: usage and willingness to pay are both a function of the strength of the value proposition that customers perceive. Ventures that have incorporated a remittance service have found both higher usage and the ability to charge higher transaction prices. However, the limited geographic coverage of these services limits the value of the remittance service. Where the value proposition is based on remittances, scale and network effects are all-important.

Keywords: business correspondents, agent banking, microfinance, access to finance, financial inclusion

Suggested Citation

Mas, Ignacio and Tiwari, Akhand J. and Jos, Alphina and George, Denny and Thacker, Krishna Uma Mahesh and Garg, Nitin and Kapoor, Raunak and V., Shivshankar and Mehta, Swati and Shukla, Vartika, Are Banks and Microfinance Institutions Natural Partners in Financial Inclusion? (May 14, 2012). MicroSave Focus Note, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2084159 or http://dx.doi.org/10.2139/ssrn.2084159

Ignacio Mas (Contact Author)

Tufts University ( email )

Medford, MA 02155
United States

Akhand J. Tiwari

affiliation not provided to SSRN

Alphina Jos

affiliation not provided to SSRN

Denny George

affiliation not provided to SSRN

Krishna Uma Mahesh Thacker

MicroSave ( email )

B-52, Mahanagar Extension
Kapoorthala
Lucknow
India

Nitin Garg

affiliation not provided to SSRN

Raunak Kapoor

affiliation not provided to SSRN

Shivshankar V.

affiliation not provided to SSRN

Swati Mehta

affiliation not provided to SSRN

Vartika Shukla

affiliation not provided to SSRN

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