Health Insurance

After undertaking sundry assignments from contract farming and book-binding to data entry outsourcing deals, about 65,000 women self-help groups (SHGs) in Kerala are gearing up to enter the boardroom. By next fiscal, Kudumbasree Anti-Poverty Mission (Kerala SHG) will float a company special purpose vehicle to make the most of the microfinance pie.
And make no mistake, well-known micro financing expert, Vijay Mahajan, has been roped in to run the show. Mr Mahajan, an IIM-A alumni, is executive director of the NGO, Basix. Besides Mr Mahajan, several experts have been persuaded to work as directors or consultants for Kudumbasree Mission’s company. The company will be in place in four months, sources told FE.
For too long, micro financing fund flow has been in stuck in a so-near, yet- so-far situation. For instance, only last year, Kudumbasree Mission had to shrug away a badly-needed Rs 10-crore government guarantees because of its ensemble as a society. “The changed legal status would entitle Kudumbasree to 2% interest loans to zero-cost loans from international agencies like Unido,” TK Jose, director, Kudumbasree said.
This would also give it operational ease in accessing finance from international NGOs, like Microsave.
Besides the 51% stake by Kudumbasree mission, the state government is taking 24% equity. Banks, like StateBank of India and ICICI bank, and agencies like Sidbi and Nabard are already in the race to pick up 26% balance stake in the new company.
In Kerala, the loan recovery rate in SHGs is the highest — 100% compared with 95-98% in other states. From 71% in 1998, the consumption component of microfinance shrunk to 12% by 2005, indicating a tilt towards entrepreneurship.
Last year, Kudumbasree had gone for a housing product, Bhavanasree, in tie-up with nine banks.
Last month, in a tie-up with ICICI- Lombard, Kudumbasree also brought 25 lakh poor women under health insurance cover, in the biggest insurance micro financing initiative in the country.
“It’s been a soft-pedalled revolution, but Kudumbasree needs to blossom to new microfinance products,” says Annette Busque, finance expert, Bank of America.
A World Bank working paper, too, indicates that increased resource management capacities should translate to scaling up.
“More than the capital access,” says P Vijayamma,an anganwadi worker involved with SHGs, ”the company framework could bring HRD miracles to careers of poor women.”