State of the Field of Integrated Health and Microfinance in India, 2012

Microfinance is today primarily understood as
a financial activity, but it actually emerged from
important development considerations. The need
for access to capital was specifically articulated by
women during the United Nations’ Conference on
Women and Development in Mexico City in 1975.
The term “microfinance” came much later, and its
association moved from savings to microcredit to
financial services. However, the primary objective
of microfinance has always been developmental
in nature, aimed all along at removing poverty and
hunger. But these two aims cannot be addressed
adequately without factoring in the issue of health.
All too frequently, the poor default on paying
back their loans because of the ill health of the
borrowers—the accumulated financial strain of health
care and being unable to earn. A poor woman’s
health is the first and foremost asset of her work
and her life. For microfinance to achieve its objective
of providing financial security to the poor, it has to
address health security as a crucial element of social
security. They are, indeed, two sides of the same coin.
When I started organizing informal-sector labor in
the late 1960s and early 1970s, I asked the poor
what they wanted the most. Invariably, it was work
they sought and not charity. Yes, they longed for a
better life but not one without dignity. At the same
time, it was clear that their earnings could easily
be wiped out without support services—most
importantly, health and childcare.
In the final analysis, it is the women of the household
who balance the family budget. They can, therefore,
play a pivotal role in nourishing not just kinship
ties, but the health and well-being of the family as
well. Thus, when she borrows from a microfinance
institution (MFI), she sees it not just as access to
money, but access to an input that will strengthen
her family. To ensure that women continue to play
this pivotal role in MFIs, we must ensure they are
protected through social security and health security.
As this report points out and illustrates with its
examples of MFIs and healthcare providers that are

working together to improve the health of poor
women and their families, an integrated approach
to health that links microfinance with health can be
enormously important for development. Health
financing that includes health micro-insurance, flexible
savings and emergency health loans are helping the
poor to access and manage the costs of health care.
Housing loans and loans to access clean water and
sanitation systems—or even mosquito nets—improve
living conditions and lead to better and healthier lives.
Our experience shows that in isolation microfinance
only partially meets the needs of those who are poor.
Loans can easily become irrelevant in the absence
of appropriate mechanisms to improve health
knowledge, access to appropriate services and to
finance health and insurance or housing needs.
It is my sincere hope that Indian microfinance and
development practitioners, healthcare providers,
policymakers and funders will heed the call to action
imbedded in this report and take the necessary
steps to achieve the promise of greater collaboration
between the microfinance and health sectors.
MFIs should invest in the provision of contributory,
participative primary healthcare, build capacities
at the community level for the delivery of this
service—including the preparation of trained health
workers at the local level—and provide a range of
financing products to enable greater access to health
services and protection from health shocks for their
clients. Healthcare providers need to look to the
important social intermediary role that MFIs play in
local communities and the networks of millions of
women borrowers and savers that can be accessed
through partnership with the microfinance sector.
A government that fails in its duty to provide basic
healthcare services at the local level adds to the
indebtedness of the working poor and weakens
its own ability to advance and grow as a nation.
This is why, finally, it is vitally important that the
Government of India look to the linking of the
microfinance and health sectors as a particularly
promising strategy for harnessing the strengths of two
sectors to improve the health of the most vulnerable.
State of the Field, 2012 3

Integrated Health and Microfinance in India

4 State of the Field, 2012

The idea for this report grew out of a meeting of leaders of the microfinance and
health communities held in Ahmedabad, India in July 2011, thanks to the support
of the National Bank for Agriculture and Rural Development (NABARD), the
Small Industries Development Bank of India (SIDBI), Johnson & Johnson, Ananya
Finance for Inclusive Growth, and the Council for Scientific and Industrial Relation
(CSIR). In an unusual exchange, leaders from microfinance and health—two diverse
sectors—shared information, approaches, impact evidence, and the opportunities
and challenges of combining health and microfinance to reach millions of
underserved poor in India. They urged us to tell the story of this emerging field
more broadly.
Freedom from Hunger, the Indian Institute of Public Health at Ghandinagar, and
the Microcredit Summit Campaign prepared this report to inform and educate
policymakers, microfinance institutions (MFIs), self-help promoting institutions
(SHPIs), private and public health providers, researchers, donors and social
investors, and other stakeholders about approaches to combining microfinance
and health. We hope it will catalyze dialogue and debate and encourage further
exploration of the potential to combine microfinance and health for a low-cost
approach to improve health and productivity of the Indian poor.
We are grateful for the financial support of the Johnson & Johnson Foundation,
NABARD, and SIDBI, who agreed that it was important to share more broadly
the current state of the Indian field of health and microfinance. We especially
acknowledge and thank the many pioneering microfinance and self-help promoting
institutions, healthcare providers, and others who are working across sectors to
improve the health and financial security of vulnerable Indian families. They have
generously shared program information and experiences so that others might learn
about both the opportunities and challenges of linking microfinance and health.
Kathleen Stack, Vice President for Asia and Africa, Freedom from Hunger
Dr. Dileep Mavalankar, Director, Indian Institute of Public Health, Ghandhinagar
Larry Reed, Director, Microcredit Summit Campaign

Preface

Harnessing the Strengths of Two Sectors to Improve Health and Alleviate Poverty

State of the FielD, 2012 5

The microfinance crisis in India has been front-
page news. What many do not know is that India’s

microfinance sector has become a promising
platform for reaching the poor with vital health
information, products, and services. Scores of
microfinance institutions (MFIs) and self-help
promoting institutions (SHPIs) regularly educate
their clients and members on a wide range of health
topics, from child and maternal health to prevention
and management of diseases such as malaria, HIV/
AIDS and diabetes. Some run health camps or have
established health clinics. Others have innovative
partnerships that connect microfinance service users
with healthcare providers through telemedicine.
Some institutions offer healthcare financing through
health loans, health savings and health insurance.

The microfinance environment in India is changing.
MFIs face new regulatory guidelines and more
cautious banks and investors. This has led them
to re-commit to client-centered products and
approaches. National Bank for Agriculture and
Rural Development’s (NABARD) SHG II calls for
strengthening SHPIs and self-help groups (SHGs),
and improving financial products and linkages with
banks for their members. There is a renewed focus
on social performance throughout the sector.
An otherwise difficult situation has created an
opportunity for microfinance to tackle one of the
biggest barriers to economic advancement of the
poor: ill health.

The benefits of combining microfinance and health
are evident from cases presented in this report. MFIs
and SHGs have achieved significant impacts in areas
such as neonatal and maternal mortality and infant
and child feeding (Metcalfe et al., 2012; Tripathy et
al., 2010). Rigorous cost studies have demonstrated
the low marginal costs for MFIs to provide health
services and good indications of a positive impact on
the MFI bottom line (Reinsch, Dunford & Metcalfe,
2011). However, there is much more to learn. We
need to determine the most effective and low-cost
packages of health services that microfinance can
provide. Which delivery systems work best? How
can services be scaled for maximum outreach to MFI
clients and SHG members? What can be done to
educate the health sector about how best to work
with microfinance service providers?
The microfinance sector cannot be a substitute for
the health system. However, where tens of millions
lack access to health information, services and
financing, the microfinance sector—with its vast and
regular contact with the poor—can go a long way to
fill the gaps.

Introduction

An otherwise difficult situation
has created an opportunity for
microfinance to tackle one of
the biggest barriers to economic
advancement of the poor:
ill health

Integrated Health and Microfinance in India

6 State of the Field, 2012
India continues to be the home of the largest
microfinance industry in the world. This global
market dominance has continued since the late
1990s. The State of the Microcredit Summit Campaign
Report 2011 shows that there are a little more
than 93 million microfinance clients in India. This
represents close to one-half of the estimated 205
million microfinance clients reached worldwide
(Reed, 2011).
Since late 2010, however, the sector has faced many
critical challenges, particularly in the state of Andhra
Pradesh where there was a major collapse in the
market. In the fiercely competitive race to expand,
many lenders lost sight of the value in paying close
attention to client needs. Swept up in the intense
competition among MFIs, many clients in this state
took out multiple loans (an average of nine times)
(Maes & Reed, 2012). When some of these clients
couldn’t repay their loans, some MFI loan officers
resorted to coercive collection practices. Several
over indebted clients committed suicide, which
attracted widespread publicity in the press. The
state government responded by enacting a harsh
law that essentially made it impossible for MFIs to
recover existing loans or enroll new customers.
Many MFIs curtailed or suspended their operations
in Andhra Pradesh as a result.
In response, the Microcredit Summit Campaign
(Maes & Reed, 2010) and its partners have called on
the microfinance community to refocus efforts on
what clients most want to achieve: “[Clients] want
regular meals for the whole family, a secure and safe
place to live, and education that gives their children a
better life…. When we design our financial services
and other support systems so that our clients can
achieve these objectives, then we will be providing a
tool that our clients can use to help free themselves
from the shackles of poverty.”
Forms of lending and how they
function
The two most prominent models of delivery
for microfinance in the country continue to be

SHGs, promoted by the state governments, non-
governmental organizations (NGOs) and a few

Regional Rural Banks, and specialized MFIs that use
various models to make both group and individual
loans.

Self-help groups
Self-help groups (SHGs) can in many ways be
considered the cornerstone of much of the
microfinance activity in India. These small groups
(10-20 members each) of predominantly rural
women coming together to form savings and credit
organizations, are well established in the country.
As shown in Figure 1, they represent the largest
vehicle for client outreach. In response to SHG
growth and influence, policymakers took notice and
established a countrywide Self-Help Group Bank
Linkage Programme (SBLP) in the early 1990s. SBLP,
promoted aggressively by NABARD, links mature
SHGs with the formal banking system (commercial
banks, Regional Rural Banks and cooperative banks).
SHGs are linked to Regional Rural Banks (RRB),
commercial banks and cooperative banks to access
microcredit as a source of additional capital for
the group members to supplement their savings.
As illustrated in Figure 2, between 2010 and 2011,
commercial banks serviced 64 percent of all SHGs
with outstanding loans, followed by RRBs at 26
percent and cooperative banks at 10 percent.

India’s Microfinance Sector:
Opportunity Out of Crisis

Source: Microfinance India: State of the Sector Report 2011, Access India.
70
60
50
40
30
20
10
0

Type of Institution
62.5

31.4

Customers in Millions

SHGs
MFIs

Figure 1: Microfinance Client Outreach in India (2010–2011)

Harnessing the Strengths of Two Sectors to Improve Health and Alleviate Poverty

State of the FielD, 2012 7

Source: Microfinance India: State of the Sector Report 2011, Access India.

70
60
50
40
30
20
10
0

The number of SHGs in India is geographically
skewed. The southern part of the country has the
greatest concentration (55.3 percent), followed by
the eastern region (24.3 percent). In the northern
and northeastern parts of the country, where
poverty is the most pervasive, growth of SHGs has
been slow. The Government of India, NABARD
and the Central Bank are making persistent efforts
to facilitate growth of SHGs in those regions that
need them most. NABARD, in particular, is working
to energize SHGs through a reengineering with the
SHG II program and model, which is still emerging.
Microfinance institutions
Microfinance institutions (MFIs) in India have had
phenomenal growth in their client outreach over

the last decade, but it has been very concentrated.
The top 10 Indian MFIs accounted for approximately
76 percent of client outreach and 76 percent of
outstanding loan portfolio as of March 2011. Overall,
MFIs posted growth rates of 6.4 million clients and
about 26.4 percent in loans outstanding during
2010–2011.
Recent challenges and a
prognosis for the future of
microfinance in India
A close examination of the industry growth rates
over the last year shows evidence of slowed growth.
This slowdown can be directly linked to the crisis
in the state of Andhra Pradesh, which accounts for
more than 30 percent of all borrower accounts. The
crisis resulted in a drop of more than 20 percentage
points in the number of new client accounts served
between 2010 and 2011. Growth in these accounts,
while still a healthy 20 percent, was much lower than
the 43 percent growth of the previous year (2009–
2010). Indications are that the industry has stabilized
and commercial banks that had stalled any lending to
the sector are slowly re-entering the market.
There is evidence that in India, and indeed globally,
the microfinance market is changing. One of the
main lessons learned from the Andhra Pradesh crisis
is that customer focus cannot be compromised.
The crisis was a wake-up call to government and
the industry. The two leading industry associations,
Sa-Dhan and Microfinance Institutions Network
(MFIN), have created a unified Code of Conduct
(CoC) intended as a safeguard against similar future
meltdowns and to ensure that microfinance services

Figure 1: Microfinance Client Outreach in India (2010–2011)

Table 1: Progress of MFIs
Source: Microfinance India: State of the Sector Report 2011, Access India.

Type of Bank
62

Percent Market Share

RRBs
Cooperative
Banks
Commercial
Banks
Figure 2: Market Share of Number of SHGs with
Outstanding Loans by Bank Type (2010–2011)

26

10

2009 2010 Growth rate

(percentage) 2011 Growth rate
(percentage)
No. of MFIs reporting 233 264 — 170 —
Customer outreach (million) 22.6 26.7 18.1 31.4 17.6
Outstanding loans (billion rupees) 117.34 183.44 56.7 207.56 13.1
Source: Microfinance India: State of the Sector Report 2011, Access, India.

Integrated Health and Microfinance in India

8 State of the Field, 2012
benefit clients in a holistic, ethical and transparent
manner.
In addition, the Andhra Pradesh statute
triggered a comprehensive response from the
Indian government. The Malegam Committee’s
recommendations and extensive consultations
with the banks, microfinance practitioners and
their networks have resulted in a well-rounded
Microfinance Regulatory Bill that, if enacted, is likely
to help the sector continue to regain its legitimacy
and encourage the banks to resume lending to the
sector, lifting the liquidity bottlenecks.
Indian microfinance is experiencing a historic
shift from a nearly exclusive focus on financial
performance of MFIs to a more active concern
for their clients. Overall we are beginning to see
much more emphasis on the social performance
of the industry, with a focus on client protection
and institutional transparency, especially regarding
the cost of funds. There is also a new openness in
the sector for MFIs to add valuable additional social
services to improve the condition of the poor. In
this context, organizations like SIDBI and other
MFI investors and funders are playing an active
role in impressing upon MFIs the importance of
responsible microfinance practices and the adoption
of microfinance plus activities such as health to bring
about a positive transformation in the lives of their
poor client families.

Harnessing the Strengths of Two Sectors to Improve Health and Alleviate Poverty

State of the FielD, 2012 9
The public health sector in India is at an important
crossroads, with Government spending on health
poised to nearly double from 1.4 to 2.5 percent
of GDP by the end of its twelfth five-year plan
(2017),1
radically increasing its share of overall
health spending. This increased spending will provide
support towards a vision of universal health care,
which will enable every citizen to access preventive,
diagnostic, therapeutic, and rehabilitative services. To
accomplish this, the country is pursuing a plethora
of development programs aimed towards improving
access to healthcare services and reducing the
burden of healthcare expenditures on poor families.
In 2005, India embarked on the National Rural
Health Mission, an extraordinary effort to strengthen
the health systems.

With recognition of the importance of health and
nutrition for national development, the prospects
for improved and equitable health and nutrition are
now better than they have ever been. Yet despite
federal and state efforts to increase access to health
care and to provide greater financial protection,
India’s health sector faces many challenges. National
health indicators have improved somewhat over
the past decade, yet 5,000 Indian children still die
every day from preventable childhood diseases,
accounting for 20 percent of all childhood deaths
in the world. Likewise, overall maternal death rates
have dropped, but the rate is still far above the
Millennium Development Goal, with 78,000 women
(largely the poor) dying annually in childbirth. The
underlying cause of insufficient progress is weak

health systems and substantial inadequacies in
planning, financing, human resources, infrastructure,
supply systems, governance, and monitoring (Paul et
al., 2011). Both the delivery of care and its financing
are highly privatized, and most of the costs are
out-of-pocket payments. About 70 percent of all
health expenditures are funded from out-of-pocket
payments, most of which—about 87 percent—are
for medicines and out-patient care (Garg & Karan,
2009). While infectious and preventable diseases
remain a significant burden for poor Indian families,
non-communicable diseases such as diabetes and
cardiovascular disease are a steadily rising and
looming threat to health and livelihoods (Ministry of
Health and Family Welfare, 2005).
It is well-documented that health and poverty are
inextricably linked. The Multidimensional Poverty
Index estimates that about 54 percent of India’s
population lives in poverty, with large variations from
state to state.2

For example while only 10 percent
of the population in Kerala lives in poverty, over
81 percent of Bihar’s people are poor. Poor health
contributes to the persistence of India’s high poverty
rates, with health expenditures driving 39 million
families into poverty each year (Selvaraj & Karan,
2009).
The poor generally have worse health outcomes and
access to care compared to the non-poor. Infants
in the poorest two quintiles are twice as likely to
die before their first birthday compared to infants
in the richest quintile. Even as the Indian economy
has grown rapidly, the nutritional status of children
has remained stunted, suggesting that wide income
disparities are preventing the poor from becoming
the beneficiaries of growth. The revelations from
the National Family Health Survey (NFHS-3; 2005–
2006) are a cause for grave concern: 40.4 percent
of children under 3 years of age are underweight;
78.9 percent of children between 6 and 35 months
are anemic, and only 43.5 percent of children are
fully immunized. Maternal anemia remains rampant.

India’s Health Sector:
Cause for Both Celebration and Concern

Women in India are three times
more likely than men to go
without treatment for long-term
ailments.

1
Press Release, 29 February 2012, PMO. http://pmindia.nic.in/press-details.php?nodeid=1378
2
UNDP Multidimensional Poverty Index, 2011. http://hdr.undp.org/en/statistics/mpi/

Integrated Health and Microfinance in India

10 State of the Field, 2012
Tuberculosis, malaria, and HIV/AIDS are infections
still to be controlled. New public health threats
are emerging in the form of cardiovascular and
respiratory diseases, diabetes, cancers, mental
illnesses, and traffic injuries. India is now estimated to
have about 120 million persons with hypertension
and 40 million with diabetes.
Profound gender inequities in access to health
services also exist. In rural India, women are three
times more likely than men to go without treatment
for long-term ailments, a trend that persists even
among the non-poor. When treatment is sought,
significantly smaller sums of money are spent on
treatment of women than on men (Iyer, Sen &
George, 2007).

Harnessing the Strengths of Two Sectors to Improve Health and Alleviate Poverty

State of the FielD, 2012 11
MFI and SHPI leaders and field agents report that
the failure to repay loans or to build and sustain
successful income-generating activity is most often
the result of poor health and sometimes from even
a single, but devastating, health event. A number of
MFIs and SHGs have responded by adding one or
more health services to the financial services they
provide to clients. An analysis of desk research shows
that of 134 MFIs in India (2009), approximately 25
percent had provided some type of health services
to clients (Saha, 2011). Freedom from Hunger, the
Indian Institute of Public Health at Ghandinagar, and

the Microcredit Summit Campaign also collected
information from 19 self-identified MFIs and
SHPIs providing health services in 2011. Although
this survey does not represent a comprehensive
mapping of the practice of health and microfinance
in India, it does provide a rich overview of the
types of organizations that are engaged in linking
microfinance and health, client needs, the types of
services provided, and some approximations of costs.
Table 2 lists these programs, their locations, total
active borrowers and reach of the health program.
Current Landscape of Microfinance
and Health Practitioners

Table 2: MFIs Reporting Active Health Programs (2011)

MFI Registered Office MFI Est. Active
Borrowers

Health
Program Est.

Access to a
Health Program
Bandhan West Bengal 2002 3,227,864 2007 345,750
BWDA Tamil Nadu 2003 159,684 2003 400,000*
Cashpor Uttar Pradesh 1997 377,987 2010 45,000
Community
Development Society Maharashtra 1988 5,720 1996 12,000*
ESAF Kerala 1995 295,270 1995 200,000
Equitas Tamil Nadu 2007 1,300,000 2007 700,000
Gram Utthan Odisha 1990 53,142 2004 25,000
Gram Vidiyal Tamil Nadu 2003 1,046,497 2008 68,933
Kajila Janakalyan Samiti West Bengal 2000 8,255 2007 5,000
Kotalipara
Development Society West Bengal 1992 60,648 1992 NA
Mahasemam Trust Tamil Nadu 1999 102,345 2002 200,000*
NEED Uttar Pradesh 1995 30,751 1997 20,000
Nidan Bihar 2009 4,614 1997 25,000*
OAZOANE Tamil Nadu 1998 6,398 1997 3,000
PioneerTrad Tamil Nadu 1993 22,000 2006 NA
PMD Tamil Nadu 1975 NA 2009 5,300
SERP Andhra Pradesh 2000 8,000,000 2005 100,000
SKDRDP Karnataka 1995 1,400,000 2004 1,690,000*
Star Youth Association Andhra Pradesh 1997 25,499 2007 6,430
TOTALS 16,126,674 3,851,413

NA: Data Not Available
*Reporting reaching community members with health programs beyond their clients

Integrated Health and Microfinance in India

12 State of the Field, 2012
MFIs in India and globally strive to design health
products and programs to address a range of client
health needs. As Table 3 below shows, the MFIs
in our survey indicated that maternal care and

childhood illnesses were two of the highest priorities,
followed by malnutrition, HIV/AIDS, and hygiene
sanitation.

Health Needs

Programs

Maternal
Care
Childhood Illness
Malnutrition
HIV/
AIDS
Hygiene and
Sanitation
NCD
Adolescent
Malaria
Respiratory
Illness
Others:
Dental,
Ophthalmic,
Family Planning
Bandhan l l l l l l
BWDA l l l
Cashpor l l l l l l l l l l
Community
Development Society l l l l l l l l
ESAF l l l l l
Equitas l l
Gram Utthan l l l l l l l
Gram Vidiyal l l l
Kajila Janakalyan Samiti l l l l l l
Kotalipara Development
Society l l l l
Mahasemam Trust l l l l l
NEED l l l
Nidan l l
OAZOANE l l l l l
Pioneer Trad l l l
PMD l l l l l
SERP l l l l l l l l l
SKDRDP l l
Star Youth Association l l l l l l
Frequency 14 14 13 11 11 9 7 5 4 6
Health Needs Addressed by
MFI Health Programs

Table 3: MFI by Type of Health Needs Addressed

Harnessing the Strengths of Two Sectors to Improve Health and Alleviate Poverty

State of the FielD, 2012 13
Almost all of the MFIs reported that they provide
a combination of approaches to address these
needs (see Table 4). While health education was the
most commonly reported intervention, MFIs are
also venturing into the provision of health services
through health camps, linkages to health providers,

and the direct provision of services through clinics
and health product distribution. The MFIs also
reported providing health financing tools that include
health loans, health savings (for those institutions

that are allowed to take savings), and health micro-
insurance.

Table 4: MFI by Type of Health Interventions Provided

Programs

Health Interventions

Health
Education Healthcare Services and Products Financial Products Group Individual Health Promotion

Direct
Delivery
Contracts with
Healthcare Providers
Negotiated
Discounts
Referrals
Mobile Health
Community Health
Workers or
Volunteers
Distribution of Health
Products
Telemedicine
Health Loans
(Individual)
Health Loans (Group)
Health Savings
Health
Micro-insurance

Bandhan l l l l l l l l
BWDA l l l l l l l l
Cashpor l l l
Community
Development Society

l l l l l l l l l l
ESAF l l l l l l
Equitas l l l
Gram Utthan l l l l l l l l l
Gram Vidiyal
Kajila Janakalyan Samiti l l l l l l l l
Kotalipara
Development Society

l l l l l

Mahasemam Trust l l l
NEED
Nidan l l
OAZOANE l l
Pioneer Trad l
PMD l l
SERP l l l l l l
SKDRDP l l l l
Star Youth Association l l l l l
Frequency 15 5 10 7 5 4 3 1 6 5 1 8 3 6 6

Integrated Health and Microfinance in India

14 State of the Field, 2012
What’s in it for the MFIs?
The rationale for adding health
programs
The MFIs reported that they had developed their
health programs for a variety of reasons. Many—
about 50 percent— indicated that the lack of client
knowledge about health, client inability to afford
care, and lack of access to preventive care were
very important considerations for developing health
interventions. An equally important consideration
was that the MFIs believed that addressing client
health issues was a strategy for advancing their
social mission. Somewhat less important was that
the MFIs viewed health as a factor in client loan
repayment and for ensuring a competitive advantage
in attracting and retaining clients.
Data on program cost were shared by 10 MFIs. The
information needs to be viewed with caution given
the uneven rigor in reporting the cost figure, the
absence of independent verification and because
these are costs over a wide range of programs and
services. Total costs provided by the MFIs were
divided by numbers of clients reached by the health
program to get an estimated average cost per client
per year that ranged from 0.12 to 3 USD.
Interestingly, this rough estimate of per-client costs
is consistent with more rigorous cost analyses
conducted by Freedom from Hunger in India as
part of its work to support the development of
integrated health programs with MFIs. Cost analyses
of three programs operating in West Bengal (Reinsch
et al., 2011) and Odisha (internal Freedom from
Hunger document) estimated total costs that ranged
from 1 USD to about 2 USD per client per year.
Even with a caveat about comparability, the costs
to an MFI of adding on health services such as
education and access to health products through
community health volunteers appear to be low and
especially so given the findings of positive client
impact and indirect social and business benefits to
the MFIs themselves (Reinsch et al., 2011).

Harnessing the Strengths of Two Sectors to Improve Health and Alleviate Poverty

State of the FielD, 2012 15
Health information through
education
Multiple studies from around the world show that
adding health education alone improves knowledge
and health behaviors (Leatherman, Metcalfe,
Geissler & Dunford, 2012). As seen in Table 4, health
education is by far the most common health service
offered. This is likely to be true for several reasons:
(1) the relative ease of implementation; (2) the
availability of numerous adaptable delivery models;
and (3) the existence of supporting technical guides,
curricula, and evaluation tools. Health education
can be integrated into regular MFI and SHG group
meetings by staff trained to deliver simple but
interactive and effective health messages. Or it can
be provided through regular community-based
education sessions often provided by non-credit staff
or trained volunteers.
Ekjut: Empowering women to reduce
infant and maternal mortality
Ekjut, an NGO based in Jharkand and Odisha, uses
an SHG model to empower women to reduce infant
and maternal mortality. To improve maternal and
infant health, Ekjut community facilitators conducted
meetings with SHGs using games, puppet shows
and story-telling to help the women prioritize
their health problems, identify the cause, and learn
together for implementing measures to improve

health. Using a randomized control study over
three years (2005–2008), Ekjut found a 32 percent
reduction of neonatal mortality rates, a 20 percent
reduction in maternal mortality and a 57 percent
reduction in postnatal depression (Tripathy et al.,

2010). Ekjut has replicated this intervention in new
areas and is now evaluating a possible replication
through ASHA (Accredited Social Health Activists)
volunteers in five more districts.
Bandhan: Community-based health
education
Bandhan’s comprehensive health program provides
community-based health education and access to
health products from community health volunteers

to over 382,000 beneficiaries in West Bengal and
Tripura (January 2012). In a non-experimental study

conducted pre- and post-delivery of community-
based health education on infant feeding and

maternal health, the percentage of respondents who
reported breastfeeding an infant within one hour
of birth increased from 61 to 96 percent, and the
percentage who reported initiating complementary
feeding at six months or older increased from 39
to 55 percent. There was further evidence that the
Program Examples: Improving Health
Knowledge, Behaviors and Access to Care

Ekjut found a 32 percent reduction of
neonatal mortality rates, a 20 percent
reduction in maternal mortality, and a 57
percent reduction in postnatal depression.

Respondents who reported breastfeeding an
infant within one hour of birth increased
from 61 percent to 96 percent, and
initiation of complementary feeding at six
months or older increased from 39 percent
to 55 percent.

© Ekjut

Integrated Health and Microfinance in India

16 State of the Field, 2012
positive impacts extended beyond just the Bandhan
clients, as the number of women who reported
providing advice to others regarding breastfeeding
and malnutrition also increased substantially
(Metcalfe, 2012).
Access to appropriate and
affordable health services and
products
Direct delivery of healthcare services, including
health products by microfinance providers and/or
the linkage of clients to independent care providers,
is less common than health education. Likely, this
results from the severe shortage of locally available
modern health services, especially in rural areas and
urban slums where many MFIs and SHGs operate.
A number of MFIs are responding with programs
that include the training and supervision of lay
community health volunteers who provide affordable
over-the-counter medicines and health supplies, the
development of linkages and referral relationships
with public and private providers, the organization of
regular health camps, and even through telemedicine
that links rural clients to doctors using technology.
Equitas and Apollo Hospitals:
Telemedicine centers
Equitas, a microfinance organization based in
Chennai, has set up “telemedicine centers” in three
of its branch offices in partnership with Apollo
Hospitals. Located in urban slums, the centers are

staffed by nurses and stocked with medical testing
equipment and a laptop with video-conferencing.
Women and their families who take loans through
Equitas can schedule an appointment at the

center and consult with a doctor through video-
conferencing about symptoms and care. Center-
based nurses measure vital signs such as blood

pressure and heartbeat rate through equipment that
transmits readings directly to the doctor and into
a patient’s computerized medical file. The per-visit
cost to the patient is 50 INR (.96 USD). Following
the successful pilot, Equitas plans to scale the
telemedicine centers to more of its 300 branches
that provide financial services to over 1 million
clients.

NEED and FHI 360: Increasing access and
use of family planning methods
The Network of Entrepreneurship and Economic
Development (NEED) and Family Health
International (FHI) 360 are partnering in rural
Uttar Pradesh to improve access to family planning
methods among MFI clients. FHI 360 is providing
content technical assistance and training to a cadre
of 35 community-based outreach workers called
Village Health Guides (VHGs). The VHGs deliver
bimonthly sessions over eight months that provide
information about the benefits and available
methods of family planning (FP) to 70 villages.
Although the VHGs do not directly distribute FP
methods, they actively assist clients in accessing
family planning services based on a locally developed
referral resource directory. Research that will be
completed later in 2012 will look at the effect of
education and facilitation of referrals on increased
awareness of options, use of family planning methods,
client and VHG satisfaction and program costs.
Equitas, a microfinance organization
based in Channai, is setting up
“telemedicine centers” in 300 of its offices
in partnership with Apollo Hospitals.

© Bandhan

Harnessing the Strengths of Two Sectors to Improve Health and Alleviate Poverty

State of the FielD, 2012 17
Gram Utthan: Affordable healthcare
products at the doorstep
Gram Utthan, an MFI from Odisha, provides
microfinance and other development services to
over 100,000 clients. Gram Utthan’s health program
includes health education, regular health camps
staffed with public and private doctors, health savings
organized through SHGs, and community “medicine
points” that make a range of generic medicines
and health supplies available in small villages. The
“medicine points” are operated out of the homes
of 100 village health volunteers (VHVs), who also
provide health education and facilitate the formation

of health savings groups with organized village SHGs.
The VHVs make visits to client homes and earn 20
percent commission on the sale of a selection of
most commonly needed generic medicines. Training
and careful supervision of the VHVs are provided
by Gram Utthan health professionals, including a
licensed pharmacist. The net cost of the program to
Gram Utthan is estimated at less than 1 USD per
client per year and cost has declined as sales have
increased and new products have been added.

Financing for health
The direct costs of health care, when needed, as well
as the indirect costs in lost productivity, represent
risk and vulnerability for the poor in India and
worldwide. The poor use a variety of mechanisms for
financing direct health costs—depleting their savings,
borrowing from family and moneylenders, selling
assets, and using their business loans—but often with
untoward consequences. Evidence also indicates that
the poor often put off or forego care altogether
because of cost. Microfinance clients want and can
benefit from health savings, health loans and health
microinsurance to improve access to health services
and products, and to help manage and protect them
from the risks of healthcare shocks.

SERP: Health savings, loans and
microinsurance
The Society for Elimination of Rural Poverty (SERP)
is an autonomous organization set up in 2000 by
the Andhra Pradesh state government to implement
rural development projects in a professional and
accelerated manner. Working through networks of
SHGs and their federations, SERP programs reach
3 million poor households. Health improvement is
a primary component of SERP’s holistic approach
to community development and poverty alleviation
as it strives to break the link between poverty and
poor health and reduce the use of SHG member
loans to cover health expenses. SERP provides health
education, operates child feeding and maternal
health centers, and has established health savings
and a low-interest loan that aim to provide financial
support for health emergencies and assist clients
to save ahead and prepare for health needs. SHG
members save 10–30 INR (0.20–0.60 USD) per
As of July 2011, 253,000 SHG members had
established health savings accounts and
about 38,000 had availed loans through
the health-risk product.

The net cost of the program to Gram Utthan
is estimated at less than 1 USD per client per
year.

© Karl Grobl for Freedom from Hunger

Integrated Health and Microfinance in India

18 State of the Field, 2012
month and after six months of savings may access
health loans at 6 to 12 percent interest with flexible

repayment terms. SERP also provides a community-
managed insurance product called Sanjeevani

that works with public and private hospitals and
interfaces with the Andhra Pradesh Aarogyasri public
insurance scheme. As of July 2011, 253,000 SHG
members had established health savings accounts
and about 38,000 had availed loans through the
health-risk product. As of March 2011, 70,000 SHG
members had been enrolled.
Spandana and PATH: In-home water
filtration devices
PATH’s Safe Water Project (SWP) and Spandana
piloted the sale of durable water filters to

households through Spandana’s MFI network. The in-
home water filtration devices were promoted during

the MFI’s group meetings and clients could access a
loan to finance the purchase of the units, which were
priced at INR 2000 (40 USD). After 6 to 12 months,

12 percent of clients had taken a loan, with a take-
up rate of 30 percent in one branch. Two different

repayment plans were tested: weekly payments over
50 or 25 weeks. Clients strongly preferred the longer
repayment period. Program evaluation revealed
that clients often stopped using the device when
the units required a replacement filter (required
after 1,500 litres) and cited difficulty with affording
purchase of the new filter (INR 350, or 7 USD).
This suggests that the availability of financing for
replacement filters may also be important to sustain
access to clean drinking water for poor families.
Spandana was able to realize full cost-recovery for its
role in promoting and financing the devices and has
continued the program.
BISWA: Loans for mosquito nets
BISWA (Bharat Integrated Social Welfare Agency) is
a rural micro-lending and development organization
that provides a range of integrated financial and
non-financial services to over 380,000 clients in
rural Odisha where existing markets and public
distribution had not been successful in achieving
widespread coverage of insecticide-treated bednets
(ITNs) to prevent malaria. From 2007–2008,

BISWA was involved in a randomized control trial
to evaluate the extent to which loans provided by
the MFI would increase ownership of ITNs among
poor households. The provision of MFI loans to
purchase ITNs at market rates was compared to
both free distribution and a control group (with
no interventions). Education was provided to all
clients about the use of ITNs to prevent malaria
and to encourage regular retreatment of nets. The
ownership of ITNs increased substantially in the
group that had micro-loans for net purchase, with
52 percent of the sample households purchasing
at least one net. The increased ownership was also
associated with large increases in use (Tarozzi A,
2011).

These findings add to those from the PATH-
Spandana initiative and support the importance of

the role that MFI financing may have to increase
uptake and use of higher-priced health-protection
products and interventions with proven health
benefits.
Fully integrated solutions
As indicated in the survey of the 19 MFIs in Table 4,
most of the institutions offer multiple types of health
services, and several of the examples presented above
provide packages of related health interventions.
Development organizations such as SEWA serve as
effective and trusted integrators of a range of health
and other services needed and valued by clients.
Another strategy for MFIs and SHGs aspiring to
© Karl Grobl for Freedom from Hunger

Harnessing the Strengths of Two Sectors to Improve Health and Alleviate Poverty

State of the FielD, 2012 19
a more holistic approach is to seek opportunities
to link with healthcare and/or healthcare-financing
organizations such as the innovative IKP Centre
for Technologies in Public Health (ICTPH) and
Sughavazhvu Healthcare in Tamil Nadu.

SEWA: Integrated healthcare delivery and
financing by and for women
The Self Employed Women’s Association (SEWA)
is an Indian trade union registered in 1972 that
provides financial and many other development
services to over 1.3 million members in nine states
of India. Since 1990, SEWA’s Lok Swasthya SEWA
Cooperative has provided a comprehensive set of
health services that includes health education, TB
detection and treatment supported by community
health workers, mobile health camps, and primary
healthcare services delivered through partnership
with government and other NGOs.
SEWA also provides members and communities
access to high-quality, low-cost medicines and
SEWA-branded Ayurvedic medicines sold through
community pharmacies and by the community health
workers. The pharmacies offer medicines at costs
below market rates yet are profitable and have had
the effect of influencing other retailers to reduce
prices. Health insurance products are available to
SEWA members through the National Insurance
VimoSEWA Cooperative. Future plans include the
development of a low-cost laboratory, providing
women-centered health and hygiene products,

and the creation of new insurance products for
marketing with MFIs and NGOs.
ICTPH and Sughavazhvu Health Care:
Managed care for rural communities
The IKP Centre for Technologies in Public Health
(ICTPH) and partner Sughavazhvu Health Care are
demonstrating an innovative managed healthcare
model designed to provide high-quality, cohesive
and low-cost health services to rural populations.
The program operates six village-based Rural Micro
Health Centers (RMHC) in Thanhavur (Tamil Nadu)
that provide nearby access to primary medical care
and diagnostic services, dental care, eye exams and
eyeglass-dispensing to 15,000 families.
The RMHCs are staffed by nurses, community
health workers, and locally hired doctors with
undergraduate degrees in Ayurveda, Unani, or Siddha
systems of medicine. The doctors are trained and
recertified in an ICTPH year-long program. The
clinic doctors and staff work with clearly developed
protocols that have a technological interface with the
organization’s medical information system, providing
real-time monitoring of services provided and
performance. Service provider costs and medicines
are covered with a small per-visit fee (INR 50, or 1
USD), with no charge for some community residents
identified as being at high risk for non-communicable
diseases.
ICTPH and Sughavazhvu are working with IFMR

Rural Finance, the KGFS network of small branch-
based village banks and insurance partners, to design

and market a product that will couple fixed-price,
pre-paid primary care and insurance mechanisms
to pool risk for secondary and tertiary care. The
goal is to demonstrate an affordable, fully integrated
managed healthcare model to enable the poor to
reduce the impact of high out-of-pocket spending
and the risk of catastrophic healthcare needs.
Although still emerging, the Sughavazhu model is
an innovative and comprehensive approach that, if
replicated, will offer opportunities for linkages with
MFIs and SHGs seeking to improve access to quality
care in rural communities.
© SEWA

Integrated Health and Microfinance in India

20 State of the Field, 2012
These short case examples from India are an
important addition to our knowledge about the
value of the established, self-sustaining MFI sector
and SHG networks as unique, relatively low-cost
and underutilized opportunities for delivery and
financing of health-related services to poor families.
Increasingly, the microfinance sector is exploring the
addition of other non-financial services critical to the
well-being of the poor that can be delivered on the
platform of microfinance—most notably, the delivery
of simple but life-saving health services.
MFIs not only have compelling business reasons to
attend to their clients’ health needs, they are often
uniquely positioned in the communities they serve
as trusted intermediaries between community
members and the outside world. Early evidence
suggests that a range of health services can be

provided by MFIs and SHGs for relatively low-per-
beneficiary cost. For the health sector, working with

MFI and SHG networks of women and families
provides a relatively unexplored opportunity to
address the need and demand for dependable,
affordable and quality health services for millions
of low-income and poor families. The integration
of health and financial services can harness and
complement existing governmental programs in
health and development and private providers, to
have a synergistic impact on health and poverty.
Yet despite this promise for benefit to multiple
stakeholders, acceptance of this integrated approach
remains low, and more evidence of impact and
examples of sustainable business models are
needed. Evidence from current programs is indeed
promising, yet perhaps insufficient to motivate the
significant shift in thinking, practice, and policy that is
needed to reach substantially more of the 93 million
MFI and SHG clients and families. MFIs and SHGs
understandably fear the added costs that come with
the integration of microfinance and health and the
inability of their staff to take on what they perceive
as competing tasks. The development of more
alliances between healthcare providers, MFIs and
SHGs similar to the ones we observe in the case
studies is impeded by a lack of expertise to forge
successful alliances, and by policymakers and donors

whose preferences for support lean towards more
vertically integrated strategies and programs.
Given both the potential and the barriers to
integration of microfinance and health, there is a
need for policymakers, researchers, donors, social
investors, and practitioners to come together to
endorse and support the integration of these
services. Of highest priority is the need to support
larger-scale demonstration, documentation and
dissemination of program-development methods
and operational processes. Financial support in
the form of grants, social capital, government
sub-contracts, or other incentives is needed to
encourage MFIs, SHGs, and healthcare providers
to make initial investments in program design and
implementation, to establish the monitoring and
evaluation systems to capture data on the impact
of this integrated approach, to support further
innovation in the areas of healthcare financing and to
address the emerging threat of non-communicable
diseases. Additionally, there is a need to find effective
ways to bring practitioners together to disseminate
and share information on best practices and impact
findings, and to collectively address the ongoing
barriers. Along with livelihood generation, national
programs such as the National Rural Livelihood
Mission have an increased responsibility to create
capacity among the poor, particularly women, to
enable last-mile service delivery for health and
nutrition.
As a nation, India is increasingly committed to the
further reduction of poverty and the improvement
of the health, well-being and productivity of its
citizens. With the potential to reach a higher
proportion of the 93 million clients engaged by MFIs
and SHG-bank linkage programs, India could take the
international lead on testing the methods and impact
of integrating various strategies for microfinance and
health. Such an initiative, with active support from
international donors and national programs for rural
health and livelihood generation, has the potential to

make a very substantial contribution to the well-
being of the poor in India and lead the way with

valuable insight and knowledge for the global health
and development communities.

Leave a Comment

Your email address will not be published. Required fields are marked *