Financial Inclusion

DSC_2402A groundbreaking scheme gives slum dwellers the chance to take control of their finances. Unlike microcredit schemes, which form self-help groups and have ‘middlemen’ dealing with banks on their behalf, Asha’s approach allows slum residents to have direct relationships with banks. They can open accounts with zero balance and can benefit from loans at extremely favourable rates, enabling them to greatly increase their incomes and improve their quality of life.

The Problems

Hard work for little reward

The slums of Delhi contain a large proportion of the city’s workforce. Many people are employed in low-paying jobs, and are responsible for sending money to support their struggling relatives in rural areas. Typical jobs are rickshaw-pulling, driving, domestic cleaning or cooking, labouring, and working in or running small businesses such as tailor shops, tea stalls or cigarette shops.

Some people are able to earn a reasonable income, but they can still only live from day to day. It’s difficult for them to save money due to family commitments (many people send much of their earnings home to their families in villages), a lack of security (their homes may not even have doors, so theft is a big risk) and problems such as illness that can leave them without an income for weeks.

Prey for loan sharks

People who need to buy a form of transport, pay for a son or daughter’s wedding, start or expand a business, or just get themselves out of financial difficulties have nowhere to go for help. They often feel that banks are only for more privileged members of society, or they may have approached a bank and been turned away. The only option left is loan sharks who charge interest of up to 10% per month – 120% per annum – and who often resort to violence and intimidation if repayments are overdue.

Slum residents open bank account for the first time

Slum residents open bank account for the first time

Asha’s solution

We worked with the Ministry of Finance, Government of India, and 9 national banks to devise a scheme that allows slum dwellers to manage their money and become bank customers like other members of society. Most importantly, the scheme gives people a real chance to escape from poverty.

Asha staff and community volunteers are perfectly placed to speak to thousands of individuals in slum areas each day. They encourage residents to open bank accounts, and make sure that everyone who could benefit from a loan is aware that the option is available.

The then-Finance Minister, Mr P Chidambaram, presents cheques at an event to launch the loan scheme

The then-Finance Minister, Mr P Chidambaram, presents cheques at an event to launch the loan scheme

In the past, complex procedures and discrimination prevented slum dwellers from using financial services. Now, they can deal with local banks directly, open bank accounts and take out low interest loans to renovate homes, expand businesses and educate children. We seek out people who could benefit from these services and help them to apply – transforming the financial opportunities for thousands of slum residents.

The scheme was launched in June 2008, and already several people have repaid their first loan and are able to take out another, larger loan. Millions of rupees in loans have been put to good use.

Some have tripled their incomes, and everyone is happy that they are no longer denied the basic financial services which so many of us take for granted. On top of these positive results, the bankers have been pleasantly surprised at the reliability of loanees from slum areas – 99% make their repayments on time, in contrast to the 95-96% repayment rate the banks report of their other customers!


Slum residents have strengthened and repaired their homes, paid for their children’s education, bought vehicles, and started or expanded a wide variety of businesses