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Creating an Ecosystem for Sustainable Financial Inclusion through Community Institutions

Parmesh Shah's picture

Bihar, a state in Eastern India has more than 100 million inhabitants and is India’s second poorest state. Ninety percent of the population lives in rural areas and the state has lagged behind in increasing access to finance in these areas. The credit-to deposit ratio of Bihar at 37% (an indicator of availability of credit in peri-urban and rural areas) is one of the lowest in India.

Jeevika, a program jointly supported by the World Bank and Government of Bihar, has demonstrated that investments in community institutions can deliver significant results. Investments in community institutions have helped them mature and become an institutional platform for the poor enabling them to demand better services from the public sector, improve access to finance from commercial banks and enhance their existing livelihoods.

From Tribal Hamlet to Financial Consultancy...

Meera Shenoy's picture

It has been a long journey for Shekar Nalla –from a small tribal village in Andhra Pradesh, India to selling insurance products in the metropolitan city of Hyderabad.

Shekar’s family lived a hand to mouth existence, and he thought that maybe someday in the future he would earn Rs. 24,000 (US$400) per year. But now, Shekar earns Rs. 156,000 (US$3000) annually through his new job with an insurance company.

His widowed mother no longer has to struggle because Shekhar sends her Rs. 60,000 (US$1500) a year. With his new job the status of the family has risen among the village headman and higher caste members, especially when he sent home a colored Samsung TV—the first in his village. “Richer relatives who avoided us, call me saying, ‘Shekar can you show me a job’,” said Shekhar.

The United Nations commemorated the International Year of Youth from August 11, 2010 to August 11, 2011. To promote youth participation towards progress and development, the Rural Livelihoods team at the World Bank has put youth like Shekar Nalla at the forefront of poverty reduction and maximizing rural growth.