Tuesday, March 21, 2006

As Indian banks plan to march into rural India disbursing commercial loans and housing finance, they need insurance companies to keep in step in order to de-risk their borrowers and make their lending safer. The challenge and opportunity lies in moving to the bottom of the pyramid by providing flexible, affordable and easily available insurance to rural and semi-urban people, preferably through the involvement of state governments or through large companies (especially public sector undertakings), industry associations or NGOs and Self Help Groups (SHGs).

NGO sources say that there are two main causes of rural indebtedness?first, borrowing to fund marriages and second, losses caused by the vagaries of the temperamental Indian monsoon. There is no easy way to stop people from spending far beyond their means on weddings, but almost all insurers are working overtime to sell and design weather insurance products to make agri-business less risky.

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Source: Indian Express