Through the Dignity in Labour Platform, KOIS is bringing together a consortium of service providers, lenders & donors that will together develop and deploy systemic financial solutions to increase access to affordable credit for informal user groups in India. It also focuses on enabling social security mechanisms to build resilient livelihoods.
Persistant
informalisation
results in an unserved, unprotected, and invisible workforce.
It traps workers in a low-skill low-productivity trap, and hampers access to fit-for-purpose financial solutions.
push the credit market into disequilibrium
Risk, low readiness and rigidity
Lack of access to formal credit
Reluctance of formal lenders to lend to informal segments due to higher risk perception and transaction costs hamper access to credit. Lack of collateral, documentation also act as entry barriers.
Lack of fit-for-purpose products
Rigid ticket sizes, short tenures, and unfavourable terms and pricing result in lack of fit-for-purpose loan products that cater to informal workers’ business cycles.
Low readiness for formal credit
Low levels of financial literacy, digital literacy, awareness of government credit schemes, suboptimal business capabilities and low willingness to take risks pose as obstacles on the demand-side.
Higher borrowing costs for women
Women may be required to provide a higher share of collateral for their loans and mostly get shorter-term loans compared to their male counterparts.
Blended finance can catalyse the flow of credit capital
It reduces risk, enables product customisation and generates evidence for systemic changes.
