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Innovative Financial Services for Rural India

This paper outlines an integrated crop loan insurance and risk management product for Indian rural finance and agriculture. This monsoon insurance for crop loans—combined with the risk management account proposed in this paper—could significantly improve farmers’ access to crop loans and their capacity to manage risk. The paper is organized into the following sections:

1.the first section defines the problem of access to financial services, how monsoon risk affects that access and how the India government is currently addressing the problem;

2.the second section describes the concept of monsoon-indexed lending and risk management accounts for smallholders; and

3.the final section describes the findings of a modeling exercise applying the service in India.

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