Reaching India's poorest five percent

Carlin Carr, Bangalore Community Manager
Bangalore, 8 December

Microfinance has been a game-changer in improving the lives of millions of poor people across India. Small loans are primarily given to women to catalyze upgrades to housing, access to basic services, or better employment. Many microlending institutions across the developing world boast nearly 100 percent repayment. While many of the world's "unbanked" have gained financial access, one group continually remains outside the system — the poorest of the poor. These poor are not just in India's rural hinterlands. Many urban ultra-poor remain in dire need of financial services before they can truly improve their situation.

Bangalore-based Parinaam is working to address this gaping need. Founded by Elaine Ghosh in 2006, the organization works in eight slums, which house the city's most needy. They are the working poor — rickshaw drivers, street cleaners, vegetable sellers — who not only lack access to formal banking systems, but lack access to most other services as well. These extreme conditions make them vulnerable to malnutrition, disease, and very casual work conditions. They live on the edge with little opportunity to save, and the programs that have worked for other poor communities have hardly been experimented with among this population. "Despite the success of microfinance and other development initiatives, the bottom 5% of the poor are continually excluded," says Parinaam. The organization is working to change this.

In collaboration with Ujjivan Financial Services, Parinaam is pioneering a model outside the norm. "We realized that to be truly effective in treating poverty, the work must start from the bottom up with the poorest of the poor," says the organization. Parinaam's Urban Ultra Poor Program works to tackle generational poverty and familial poverty, rather than the "isolated female support" promoted by most microfinance initiatives. Over a 12-month period, families receive "intense" assistance, education, and monitoring in four target areas, including financial literacy. The others are livelihood development, healthcare support, and education.

Elaine Ghosh is passionate about this basket-of-services approach to tackling extreme poverty. In an interview last year, she said, "If you want to make a dent in poverty one has to take a multidimensional approach. You have to give them healthcare, you have to give them access to vocational training, you have to help the kids get into decent schools, and stay there, so that the parents won't pull them out and send them to work." At the core of all these needs is the ability for families to save and invest in these improvement areas.

Parinaam helps these communities gain access to bank accounts and, just as importantly, educates them in saving, budgeting, and investing in appropriate plans to better their future circumstances. Parinaam has already reached 67,000 slum dwellers with its financial literacy program, and according to Ghosh, the program has seen great success: "We have families that we found doing hard labor, and at the end of the program they can access microfinance, they have bank accounts, they are sending their kids to amazing schools. The change we've seen in these women will not let us stop."

Photo credit: waterdotorg

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