Parvati sells vegetables in the weekly market of Mhaswad in Satara, Maharashtra. She has a savings account with the Mann Deshi Sahakari Bank. But whenever she needs money, she takes a loan from the local moneylender. One day, while buying vegetables at the weekly market, I struck up a conversation and asked her why. She responded, “Yes, I know I am paying Rs 10 interest per day on every Rs 100 I borrow from the moneylender, which is exorbitant. But I do not want to take a loan from your bank because I require a loan in the morning and want to repay it in the evening or maybe next week. I also would like to take the second loan immediately. And all this flexibility is given to me by the moneylender and not by your bank.”
Parvati’s situation is not unique. Her business is one of the 63.4 million MSMEs in India, 99 per cent of which are micro enterprises with less than Rs 10 lakh in investment. These tiny businesses are run by nano-entrepreneurs, a burgeoning segment that is absolutely critical to the growth of our rural economy.
What is being done to bring these businesses into the formal economy? If we assess our progress against the definition of “financial inclusion”, which refers to the accessibility of banking and availability of credit, we can congratulate ourselves on significant progress. However, if we question the adequacy of the financial products that they find access to, we fall short. Parvati might be financially “included” but she is not financially “integrated”. The journey from inclusion to integration is not only about making products available and accessible, but also about making them relevant, applicable, and acceptable.