Institute for Money, Technology & Financial Inclusion

The overarching objective of the present study is to assess the need for using pre-paid card technology for delivering added financial services like insurance claim settlements including death claim benefits in a transparent manner for the customers of Micro Finance Institutions (MFIs) in selected regions of the state of Uttar Pradesh of India. We try to elicit the factors determining such need, not met at present, by surveying actual and potential beneficiaries of Micro Finance Institutions and the providers including insurers, pre-paid card providers, and MFIs. The major findings of the study indicate the following. On the supply side this innovation by Bajaj Allianz Insurance India, M2P Solutions and Utkarsh Micro Finance has been successful in including those excluded earlier due to lack of access to formal banking. The cards have facilitated smooth settlement of insurance claims for these micro finance clients meeting the current regulatory requirements by both the Reserve Bank of India (RBI) and Insurance Regulatory Development Authority of India (IRDAI). The results of factor analysis and insights from in-depth interviews suggest few factors such as access, perceived ease of use, perception of financial risk protection, and societal image to be important in designing such innovative products. The financial literacy efforts made by the Micro Finance Institution has been enhanced by this pre-paid card innovation.  There is enough potential for scaling up this innovation in the micro finance sector in India at present.