“We Routinely Borrow to Survive”: Exploring the Financial Capability of Income-Poor People in India

Publication Date

8-30-2016

Summary

A lack of financial capability—financial opportunities and abilities—and poverty are highly interlinked. Over 65 percent of people in India are excluded from any financial services. This article explores income-poor Indians’ experiences with financial capability through a qualitative study. Purposive sampling was used to collect data from 658 individuals, through focus groups (n = 566) and face-to-face interviews (n = 92). Findings show that 97 percent of respondents had the opportunity to earn an income, and 55 percent earned through financial inclusion programs, but 87 percent of respondents earned less than U.S. $2 a day. Although almost all saved and needed to borrow, 46 percent were eligible for formal savings and only 23 percent for formal loans. Financial abilities or knowledge and skills related to income, savings, and loans were higher among the few who had a stable income or had medium and high income in relation to those who had unstable and low income. Respondents experienced many challenges with their financial capabilities, including borrowing to save, fearing formal loans, and lacking clarity about loan and interest rate; banks miscalculating interest rates; and political parties influencing access to loans. Implications for social policy and social work practice are discussed.

Document Type

Article

Category

Financial Inclusion

Subarea

Financial Capability

Original Citation

Banerjee, M. M. (2016). “We routinely borrow to survive”: Exploring the financial capability of income-poor people in India. Social Work, 61(4), 349–358. doi:10.1093/sw/sww045

Project

Financial Capability and Asset Building

Keywords

financial capability, poverty, India, income, inclusion, savings, financial literacy, financial knowledge, policy, saving, social policy

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