Integrated Health and Microfinance in India: Harnessing the Strengths of Two Sectors to Improve Health and Alleviate Poverty

The report demonstrates how microfinance can be further leveraged to provide a powerful tool to address one of India’s persistent barriers to the economic advancement of the poor: ill health caused by lack of access to health services.

Indian microfinance institutions (MFIs) currently serve 71 million rural poor. Pairing financial services with access to life-saving health interventions, such as health financing, telemedicine, and other innovations, has tremendous potential but requires further commitment of effort and resources to reach scale.

Surveys of the sector in India conducted in 2009 show that of 134 MFIs in India, approximately 25% provide some type of health services to clients. The report also presents the findings from a more recent study of the same MFIs, outlining the range and frequency of the different health needs being addressed and the type of interventions provided to their clients. This new data shows that, together, these MFIs are reaching some 3.8 million clients with health protection services with the potential to reach many more. 

This is welcome news against the backdrop of the last two years of political turmoil surrounding microfinance in India. The image of microfinance has suffered considerable damage and the sector has seen a profound political backlash, the result of over-indebtedness resulting from high-growth microfinance run amok. 

The report and recent quantitative studies show that combining microfinance with health programs results in “significant impacts” on maternal and child health as well as contributing to the financial performance of MFIs. Studies funded by The Bill & Melinda Gates Foundation in 2011 indicate that, on average, it cost microfinance organizations $1.59 per client per year to provide health protection products.

The report is part of an ongoing Health and Microfinance Alliance effort to promote dialogue and encourage further exploration of and support for multi-sectoral approaches that integrate microfinance and health. Research indicates that this low-cost, sustainable strategy shows tremendous potential for improving both the health and financial status of India’s poor and marginalized populations.