Live Blogging: The Urban Casino and Rural Bingo Hall

Yesterday at the Microfinance India Summit, I attended a session on the needs of the urban poor. The impetus for this session is microfinance’s historical focus on the rural poor as opposed to the destitute who populate India’s cities. I was particularly impressed with the presentation by Samit Ghosh, the CEO of Ujjivan Financial Services. He enumerated a number of subtle differences in the lifestyles between the urban poor and rural poor that raised significant questions about product design and repayment schedules, among other implications. Some of the most striking rural-urban distinctions he mentioned included:

· A large portion of the rural poor are unemployed, while many of the urban poor are already employed (or underemployed) in the informal sector

· Urban poor have significantly less time (perhaps due to their existing employment) than rural poor to attend weekly repayment meetings

· Urban microfinance faces a much higher risk of “infiltration” by moneylenders and thus raises the risk of over-indebtedness

· While much of the urban poor are stationary, the existence of migrant workers in cities should be addressed, along with their unique financial needs

· Urban poor live in ethno linguistic enclaves and loan officers and microfinance staff should pay attention to these characteristics to make inroads into the communities

Mr. Ghosh closed by comparing the Indian urban slum to a casino, where a constant flurry of entrepreneurial activity occurs, and that microfinance institutions would do well to understand their unique needs as they move towards serving them in the future.