Access to financial services enables individuals and enterprises to smooth consumption and allocate resources most productively, for example, by allowing them to better manage risk (e.g. insurance) and take advantage of opportunities at different points in time (e.g. saving today to build capital for tomorrow, or taking a loan for an opportunity today). A well-functioning financial system and access to financial services can also enable households to engage with the larger economy by providing payment and settlement systems (e.g. electronic payment systems) and by transmitting price information through the economy. Access to comprehensive financial services is therefore an essential part of the development process and of inclusive growth.

Despite many steps made in the direction of financial access for more Indians over the last five decades (e.g. the nationalisation of the commercial banking system, the introduction of Local Area Banks, Regional Rural Banks and Cooperative Banks) and evidence that financial access can lead to a sharp reduction in poverty, the majority of the Indian population remains without even minimal access to financial services.

In our view, lack of access to financial services represents the most serious impediment to the ability of rural households to attain their full income potential and to smooth their lifetime consumption. Lack of financial access for low-income households sharply reduces their ability to invest in skill building and education, to make optimal occupational choices and to benefit from and contribute to the national growth process.

Learn more about ICICI Group's CSR in the area of access to finance.

In the area of access to financial services, ICICI Foundation collaborates with and supports the work of IFMR Finance Foundation (IFF), which seeks to ensure that every individual and every enterprise in India has complete access to financial services.

IFF’s vision of an inclusive financial system entails community financial institutions providing continuous, reliable, flexible and convenient delivery of financial services, together with wealth management at the ‘front-end,’ and the aggregation of risk by a range of diversified, well-managed and well-capitalised institutions at the ‘back-end.’

Some of IFF’s initiatives include:

Designing and testing appropriate channels for a range of financial services and products such as insurance, savings, loans, investments and remittances – IFF has, for example, partnered with IFMR Holdings to learn from its work piloting and demonstrating high quality origination for remote rural India through its Kshetriya Gramin Financial Services (KGFS) companies. Learn more.

Understanding the needs and behaviours of low-income individuals, households and small enterprises that have traditionally been underserved by the formal financial market – IFF’s project with Innerworlds (www.innerworldsindia.com) seeks to understand rural households’ economic lives from their own perspectives, beyond assets and externally visible parameters.

IFF’s research-cum-advocacy effort with Institute for Human Development (IHD) New Delhi focuses on micro credit initiatives and entrepreneurship among Scheduled Castes or Dalits.

IFF’s project on financial services for migrants with Aajeevika Bureau (www.aajeevika.org) provides insights into the financial needs and behaviours of rural migrants.

Knowledge building with research and resource centres – IFF works with research and resource centres focused on developing new insights into design of financial products and channels for delivery of financial services. These centres include:


Developing institutional structures and innovations for risk transfer – IFF has partnered with IFMR Capital, which is working to develop models for linking asset classes relevant to low-income households with mainstream capital markets.

IFF initiated a partnership with Centre for Advanced Financial Studies (CAFS) at IFMR
(www.ifmr.ac.in/cafs) to develop risk management tools to help local/community banks to access different risk management mechanisms, which is crucial when diversification is not possible within the institution.

Supporting market infrastructure – IFF has partnered with CRISIL, the Indian subsidiary of S&P credit ratings agency, to develop products for rating micro finance institutions, urban local bodies, and vocational training institutes, enabling better analysis and a deeper understanding of these entities.

Understanding how best to manage aggregation of risk – IFF is working with the Center for Global Development (CGD), a Washington DC-based think tank, on a research project that lays out for regulators a series of financial system design principles and a case for why financial inclusion and the stability of financial systems are complementary goals.