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CIFD to launch ‘Pregnancy Financing’ product

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Childbirth ushers with it a ray of hope and joy for the family. Pregnancy, birth and motherhood, in an environment that respects women, can powerfully affirm women’s rights and social status without jeopardizing their health. The enabling environment for safe motherhood and childbirth depends on the care and attention provided to pregnant women and newborns. Despite various initiatives, the maternal mortality rate (MMR) and infant mortality rate (IMR) in India is alarmingly high at 450 deaths per one lakh live births and 55 deaths per 1000 live births respectively.

Image_PF_CifdAccess to finance to acquire improved health care, quality reproductive health services, emergency obstetric and neonatal care and nutrition for the mother and her child is pivotal to addressing the issues of high mortality rates in India.

Centre for Innovative Financial Design (CIFD), IFMR, has developed the ‘Pregnancy Financing’ product that allows poor pregnant women to meet expenses related to child delivery and ante and post-natal care. ‘Pregnancy Financing’ is centered on the premise of Behavioral Collateral; where a particular behavior is treated as collateral for providing financial service.

The rationale behind this is:

  • Some women belong to the marginalized section of the society and hence would be unable to form groups that can underwrite each individual’s commitment.
  • The women are too poor to possess tangible assets that could serve as physical collateral.

Women are encouraged to enroll in this product as early as possible during their pregnancy. Women who take-up the product, save regularly over the course of their pregnancy, with the amount of saving left open for the borrower to decide.

Two weeks prior to delivery, the savings accumulated by the woman is given back to her along with the loan since the savings behavior and not the amount of savings, works as collateral. The underlying principle behind this idea is that if a poor woman can forgo some of her current consumption for savings, then she can also forgo certain part of her consumption in future periods for repaying the loan.

CIFD has entered into collaboration with The Guntur District Cooperative Bank Limited in Andhra Pradesh and The Banswara District Central Cooperative Bank in Rajasthan for offering the pregnancy financing product. As part of the understanding, CIFD will design and develop the product and the associated processes for rolling it out. CIFD will also design the branding and marketing campaign to launch the product. The Bank from its end shall offer the necessary infrastructure and customers, also, it would extend the local level support required for the implementation. The product will be launched during the 2ndweek of August 2010.

What’s your take on the product?

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23 Responses

  1. Brilliant. The same concept can be extended to other spheres wherein group of underprivileged women are involved.

  2. Excellent initiative. You could probably tie up with some NGO's working with women to increase the reach of this programme. Been through the detailed report and it could really work wonders if taken up on a large scale.

  3. absolutely fantastic. should have been implemented some time ago .. but never too late.. very good initiative.

  4. Awsome!
    Awareness about the product could also be created by making use of the different social networking sites.

  5. Interesting idea. In most parts of India, pregnancy related expenses are borne by a woman's family atleast for the first born. But wages earned by women are to handed over to her husband and his family. Does the scheme permit a mother enrolling on behalf of her pregnant daughter? Does it permit father-to- be saving for his wife's delivery expenses ?That would be really progressive.
    Rajasthan is great choice- marriages of girl children continue to be prevalent. We have seen really young mothers (15 year old mothers) in villages .
    Iam really keen to know demographics of mothers who would enroll- pregnant mothers expecting their second/ third child / age of mother/ and so on.

  6. Brilliant. i hope insurance agencies can be roped in to provide life cover. that may be beginning of socially meaningful insurance. normally they want to insure only those people who actually dont need insurance!

  7. Hi Viji,

    Currently, the product is restricted for the first two childbirths only, though there were requests from women for third child also.

    Permitting the 'father-to-be' and the parents to save for their daughter is a great idea.

    Harsha–we are looking at enrolling the ASHA workers for the marketing of this product since they are already in charge of the various government schemes. Most women trust the asha worker when it comes to considering a product. Didn't come across an NGO with that kind of outreach. If you have any in mind, please let us know.

  8. While the saving amounts are of the client's choice, the expenses on the arrival of the new-born may far exceed what had been accounted for by the expectant couple. How do you ensure that the savings behaviour exhibited initially is fairly representative of repayment behaviour after a new expense account has been added to the family? Is there any counselling or loan amount calibration based on future repayment capacity?

  9. Hi Shobha,

    You are right about the uncertain amount of expense that can accrue on account of delivery (normal vs C section). All along, we have maintained that the savings would be made by foregoing some current expenses. Similarly, we believe that the repayment also will be made by foregoing other expenses and by giving the repayment a priority. We believe so, since a healthy baby should serve as a reminder to repay.

    The tenor of loan is structured as 3 times the number of months the lady saved, which again creates an incentive for the woman to start saving early in her pregnancy.

    The loan amount is capped at 5000 max (based on expenses of a C section)

    We haven't taken the loan repayment capacity in consideration since we wanted to test the self discipline (or lack of it) on part of the borrower to repay. This loan is available to anyone who demonstrates the consistent savings behavior irrespective of any other consideration. A disciplined savings behavior, we believe, should take away the need to screen and filter out borrowers.

    Hope this answers your query.

  10. Hi.
    Nice initiative. Kudos.
    I have the same doubt as Shobha.
    The underlying assumption is that the women curtails certain expenses to save and the same discipline is expected during the post-delivery period. Im not sure if this premise will cover the risk of the additional expences for the new-born child ( Like extra amount for food, medication for mother & child, vaccinations, etc) Are they accounted for ? The repayment capacity not being taken as a criteria, assuming that the women curtails some of her expenses, there is a high probability that these savings might be channelised to the new expenses rather than being used for repayment. How is this risk mitigated ?

  11. Hi,

    You are right. The choice of using the funds any which way always remains with the borrower (and the challenge to monitor end use for the financier).

    Our attempt is to study if there is (and how strong it is) a correlation between the savings behavior (before childbirth) and repayment behavior (post childbirth). The assumption being foregoing expenses to save and to repay, requires the self discipline to prioritize these two activities high on the woman's P&L.

    If there is indeed a correlation, it could well become the third type of collateral, after physical, social (SHG), this would be the third type–Behavioral collateral.

  12. super initiative — just one thought regarding collateral — does not the saving pattern change after the birth of a baby — i think there will be more consumption, so unlikely that she or her household will save enough to repay the loan. Seek you response pls.

    1. Hi Rajasekharan,
      The assumption is that the consumption has no pattern for the poor. It is high at all times, because of several factors. We believe, the discipline that the lady/household will display to forgo consumption during pregnancy will also come into play (with more force) after the delivery. The product is really a test in how individuals behave when they are faced with a choice of foregoing consumptions to save (pre-childbirth) and to repay (post childbirth).

      Just to elaborate on the point further. Prior to the delivery, the woman may have to undergo checkups or may lose her productivity. The first one causes increase in the expenditure while the second one means loss of earnings. Both the situations have an adverse impact on the savings. The product design, however, asks the lady to save regularly, irrespective of the two situations mentioned above. If she is successful in saving regularly, that would mean that she was able to figure out ways of keeping some money aside despite her situation.

      After the child birth, she will be in the same situation again (she can't be productive immediately and thus, loss of earnings. Also, neonatal care/vaccines etc, would mean expenditure). Hence, from the surplus money point of view, there won't any material difference in the hardships or lack of it.

      Hope this answers your query. If you are further interested in other aspects of design, please email me at and I shall be happy to share those with you.


  13. Hi Ajay,

    Pension Fund Regulatory Development Authority (PFRDA) last year started offering NPS to people working in un-organised sector through its NPS-Lite scheme. The challenge in front of them was in reaching people working in remote rural locations where formal financial services have traditionally found it difficult to be accessible, especially due to high costs attached with small value high volume transactions.

    To manage these operational challenges while keeping the costs low they came out with the concept of Aggregators (Accredited Intermediaries) who can help increase the distribution of pension plans. These aggregators as per regulation need to have a sound understanding of financial lives of people, must have prior experience of working with potential clients, must be credible, and should have the capability of managing and moving electronic information and cash.

    The regulation is neutral to legal form and the focuses on the quality of the institution, rather than on its legal form.

    These high quality aggregators which have fast growing networks, the additional costs of offering NPS-Lite along with other services will be negligible. Therefore, the existing networks of MFIs (Or cooperative banks, self-help promotion institutions, and regional rural banks) can be leveraged to expand coverage of this scheme. These give NPS Lite the opportunity to leverage existing networks to reach out to even the remotest corners of the country, and cater to retirement financing requirements of people with very small savings.

    1. Thanks Arun, for the lucid explanation. MFIs really need more such channels to broaden their reach. Also association with government sponsored schemes will add to their credibility.

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