Facebook Instagram Twitter
Facebook Instagram Twitter

Tag: Blended Finance

The Blended Finance Continuum: A Catalytic Pathway for Financial Inclusion

In India, the informal sector represents a significant portion of the workforce, employing more than 90% of workers and contributing around 50% to the country’s GDP. However more than 160 Million Indians remain underserved by formal credit systems

Access to formal credit, economic growth, and financial inclusion are critical for the development and empowerment for entrepreneurs in underserved communities. The lack of credit score and credit history is an impediment for getting credit opportunities, as many lenders are hesitant to extend credit to consumers without any credit history or score.

The innovative approach of a blended finance continuum can be a catalyst and pathway towards accessing future formal credit, driving economic growth, and providing financial inclusion for underserved communities.

In this blog, we will explore how the Returnable Grants, in conjunction with a pre-credit score, and credit guarantee, has the potential to create opportunities to transform lives for those in the informal sector.

 

Blended finance continuum: Opportunities or graduation into the formal economy

Blended Finance Continuum

The blended finance continuum offers a progressive pathway for participants to move up the chain of financial instruments from grants to commercial debt. As participants repay grants, they build a credit history and become eligible to unlock more capital from mainstream financial institutions.

Using Blended Finance to sustain informal workers during Covid-19

According to the International Labour Organization, more than 400 million informal sector workers in India are at risk of falling into severe poverty due to the COVID-19 pandemic. This situation is exacerbated by the fact that informal workers have no health, social, or legal protections to fall back on. Without access to formal financing, their ability to survive serious economic shocks is handicapped.

This is the challenge that the REVIVE Alliance aims to address at its core. By bringing together industry leaders and philanthropic capital, REVIVE provides zero cost Returnable Grants and skill training to help India’s workers bounce back from the most severe economic crisis of the 21st century. 

To know more about how REVIVE and it’s parters are helping families and communities build sustainable livelihoods, read this article by our co-funder USAID. 

Read

You will be redirected to the US-Aid article page

Can the Microcredit Model Be Improved?

The problem here is not a lack of microcredit programs or their execution but rather something in the model itself. This leads us to ask: Can we modify or extend certain aspects of the microfinance model to achieve better outcomes for recipients?

Vikas Dimble, Director of Knowledge and Research at Samhita and Ahmed Moshfiq Mobarak, Professor of Economics at Yale University write on how microcredit can be used to help poor communities pull through unexpected shocks if the microcredit model is modified to incorporate inclusivity and flexible lending practices.

Click here to read the article

Innovative lending practices can improve traditional microfinance

Research on the traditional microfinance model reveals the alterations that can be made to further small businesses and welfare gains. Vikas Dimble, Associate Director of Knowledge and Research at Samhita, and Ahmed Moshfiq Mobarak, Professor of Economics at Yale University emphasize the importance of flexible lending models, using local information to select eligible beneficiaries and allowing beneficiaries to make use of microcredit beyond entrepreneurial purposes.

Click here to read the article