ICICI Group

Financial Inclusion efforts of the Group


  • Direct Lending to the BOP through ICICI Bank's Microfinance Programme: With a portfolio of Rs.9.6 billion and a client base of 3.5 million, ICICI Bank's micro finance programme is one of the largest among private sector banks in India. Our micro finance portfolio scaled up rapidly with the use of an innovative financing structure, the "Partnership Model" (described under the section on innovations). The key social benefit resulting from this financing structure has been the rapid scale-up of the operations of smaller MFIs in India at a time when most of the industry faced severe capital constraints.

  • Capacity Building for MFIs: Microfinance Practice at Social Initiatives Group (MFSIG), MFI Strategy Unit (MSU) and the Emerging MFI Team: In 2007, there were only 5 MFIs in India with a minimum base of 5,00,000 customers. To universalise access to finance, ICICI Group adopted a strategy to seek the development of many more MFIs. The Emerging MFI Team, Social Initiatives Group and Centre for Microfinance at Institute of Financial Management & Research (IFMR) work in collaboration in this area. The Social Initiatives Group acts as a catalyst for the development of appropriate channels, products and an environment that makes basic formal financial services accessible to the poorest clients. This has resulted in partnership with venture capital funds engaged in the task of identifying and providing equity finance and mentoring new entrepreneurs and product development. Centre for Microfinance works with large MFIs, whose volumes require stronger planning and processes at different levels to expand or consolidate their operations, refine their risk assessment and manage an increasing inflow and outflow of funds. The Emerging MFI Team identifies and develops organizations or individuals at varying stages of readiness to take up micro finance as a viable business. It works to resolve the current geographical asymmetry of micro finance in India. The Group's other innovations in the field included securitisation deals in the microfinance industry in India. Its current major initiatives include introduction of biometric cards towards ensuring Know Your Customer (KYC) compliance and roll out of the banking correspondent model. ICICI Prudential Asset Management Company launched India's first Micro Systematic Investment Plan.

  • Beyond Microcredit: Micro-savings: Recognizing the need for easy savings facilities for its low-income customers, ICICI Bank has launched a micro-savings facility under its "business correspondent" model. A state-of-the-art solution based on a biometric-enabled smartcard and a battery-operated authentication device developed by an ICICI partner, Financial Information Network and Operations (FINO), the micro-savings product provides access to a savings account with convenient features. The product combines security, convenience (proximity, convenient opening times and minimal paperwork), appropriate design (frequent deposits, small variable amounts and quick access) and positive returns. The customer receives interest as in a regular savings account and can maintain zero opening balance. The customer also gets doorstep banking through business correspondents. Apart from this savings account, the bank also offers recurring and fixed deposits to enable customers to avail of higher return on their savings. Today, ICICI Bank works with 41 business correspondent partners operating out of 127 branches across the country, serving over 77,000 customers.

  • Micro Insurance: The perpetual uncertainties in the income cycle of the poor increases their vulnerability to economic shocks, thereby reducing their risk appetite. ICICI Prudential Life Insurance's (www.iciciprulife.com) provision of micro-insurance services has promoted financial security among the rural poor and increased their comfort to avail credit facilities (micro-credit) for undertaking income-generating activities. Increased credit worthiness results in availability of low cost capital that is employed in entrepreneurial activities. Similarly, ICICI Lombard (www.icicilombard.com) provides a range of non-life insurance products, including health, weather and cattle insurance to help mitigate the impact of other contingencies such as illness and crop failure.

  • Government Welfare Schemes: The rural Indian economy is exposed to fundamental risks and has limited access to risk mitigating solutions. In order to achieve significant impact, it is critical to operate on a large scale with operational costs that are one tenth of those in urban areas. To achieve this, ICICI Lombard has worked on the premise that the governments' social and welfare initiatives can be outsourced for better implementation and has focused on mass-based social and employee welfare schemes. ICICI Lombard has structured need-based, cost effective insurance solutions for a number of state governments and ministries of the Government of India covering around 89 million lives for Personal Accident insurance and Health insurance. A key challenge was to offer service of a consistent quality across geographies and to all strata of customers in a timely and transparent manner. This was achieved by leveraging the government machinery for information dissemination as well as claims processing. ICICI Lombard has now successfully established the model for such large-scale initiatives with significant learning in underwriting large retail risks and managing the related customer service processes. The benefit for the Government has been the transfer of risk to ICICI Lombard, greater accountability, transparency and reporting as well as removal of leakage in the process. In acknowledgment of ICICI Lombard's learnings in this area, the Government's recently launched National Health Insurance Scheme (Rashtriya Swasthya Bima Yojana) was designed with key inputs from ICICI Lombard. ICICI Lombard has also insured over 6.5 billion rail passengers who use the Indian Railways train services, for Personal Accident insurance.