1. 1 Centre for Micro Finance at IFMR Research Access to Finance in Rural Andhra Pradesh, 2009 Doug Johnson and Sushmita Meka

2. The Survey First survey of household access to finance which: –includes information on microfinance –is representative of an entire state’s (Andhra Pradesh) rural population –discloses data publicly

3. Objective We wanted to learn more about: –The state of financial inclusion in rural areas –The number of people reached by various types of financial service providers. –The demographic and economic characteristics of the clients of various financial service providers (as well as the unbanked).

4. Methodology Survey details: –8 districts (randomly selected from 22 districts of AP) –64 villages (randomly selected from these 8 districts) –1920 households (randomly selected from the 64 villages) Survey conducted in June to November 2009 using a rigorous random sampling methodology

5. BORROWING 5

6. Indebtedness by Source 6

7. Share of Total Loan Outstanding by Source 7

8. Usage of Loan Money by Lender Type 8 BankSHGMFIInformal Buy agricultural inputs58%19%13%20% Consumption27%50%32%25% Repay old debt15%20%25%7% Health11%19%11%25% Home improvement10%13%22%14% Start New Business2% 3%1% Marriage4%2%5%12% Other festival1%4% 5% Education4%6%4%5% Purchase stock for existing business3%4%10%3% Buy livestock3%6% 2% Purchase land1%

9. Multiple Borrowing 9

10. Share of Households with Multiple Loans from a Given Source 10

11. Multiple Borrowing by Active Clients of a Given Source 11

12. Multiple Borrowing Multiple borrowing also prevalent among the better off (represented by higher PPI scores) Many cases of multiple borrowing appear to be driven by an inability to obtain sufficient credit from a single source –A large share of households with multiple loans outstanding took two or more loans in the same month for the same purpose indicating that they are unable to fulfill their credit needs from one single source 12

13. Share of Total Outstanding from MFI Loans 13

14. SAVINGS 14

15. Share of Rural AP Households with a Savings Account by Bank Type Share of Households with a Savings Account Share of Households with a Savings Account (excluding 0 and Rs 50 balance accts)* Private Sector Bank1% Public Sector Bank41 %36 % Regional Rural Bank14 %13 % Cooperative Bank14 %12 % Post Office42 %11 % Any of the above78%61 %

16. Stated Reasons for Opening Savings Account

17. Reasons for Not Having Savings Account Reason% Households Citing Reason No or not enough savings for bank account 37 Don’t want/need 24 Save through other means 1 Bank/Procedure related 49  Have no idea about banks or bank products 28  Don’t have proper documentation 16  Fees/expenses 5  Applied but rejected 3  Procedures/application too difficult to understand 2  Takes too much time 1  Banks not trustworthy 1  Branch officials not friendly/courteous 0.5  Branch too far 0.2 Other reasons 2 17

18. 18 Thank you

19. Districts Selected for Surveying 19 District Share of poor from NSSO Poverty StratumMFI penetrationMFI stratumAdjusted MFI Stratum Final Stratum Selected for Surveying? Medak9.3Not so poor11.3High penetration 1YES Nalgonda5.4Not so poor14.5High penetration 1YES East Godavari3.3Not so poor12.5High penetration 1NO West Godavari4.4Not so poor12.3High penetration 1NO Krishna2.8Not so poor18.7High penetration 1NA Guntur3.9Not so poor13.2High penetration 1NO Vizianagaram4.7Not so poor4.7Low penetration 2YES Cuddapah5.4Not so poor9.9High penetrationLow penetration2YES Karimnagar7.2Not so poor5.5Low penetration 2NO Warangal0.9Not so poor6.1Low penetration 2NO Srikakulam6.0Not so poor4.4Low penetration 2NO Nizamabad23.1Poor9.1High penetration 3YES Visakhapatnam18.9Poor10.6High penetration 3YES Khammam13.1Poor10.1High penetration 3NO Nellore14.1Poor10.9High penetration 3NO Kurnool24.6Poor8.6Low penetrationHigh penetration3NO Mahbubnagar11.8Poor2.9Low penetration 4YES Prakasam9.9Poor7.7Low penetration 4YES Adilabad26.1Poor4.0Low penetration 4NO Rangareddi10.9Poor6.0Low penetration 4NO Anantapur20.2Poor4.1Low penetration 4NO Chittoor15.9Poor8.4Low penetration 4NO