Livelihood
Strategy
Microfinance
AIF also believes that Micro-finance—financial services for the poor –will continue to play an important role in meeting the challenges of eliminating poverty in rural and urban areas. Access to collateral-free credit, well in time, and made available a rate that corresponds to and is convenient with poor people’s earning patterns, is one of the key inputs for sustainable livelihoods for the poor in rural and as well as urban areas. The self-help group model which organizes women into groups that begin by saving small amounts and then go on to lend to each other from these savings is the preferred approach AIF partners follow. After a point, when small savings turn into a large enough lump sum and groups attain some degree of maturity and have some feasible livelihoods plan ready, they are linked to formal banking systems to avail of additional credit.
AIF likes to focus on those microfinance models that marry the advantages of both the Grameen and SHG types, are inclusive in nature, and are not too restrictive on repayment and sustainability. Our focus areas are on the relatively poorer northern and eastern geographies which have still remained underserved by microfinance. AIF engages with those partners who demonstrate scale, forge strategic linkages with the formal banking system, as well as bring a balance between microfinance, women’s empowerment and livelihoods. However, AIF also believes that while access to collateral-free credit is important, equally critical are a range of non-financial services beyond credit or “credit-plus services” as AIF likes to call it. These include the self-help and collectivization process, access to markets, equipping poor people with relevant and marketable skills, and information and other support services which are an integral part of promoting and sustaining poor people livelihoods or generating additional livelihoods. These “credit-plus” supports are essentially the building blocks for any livelihoods to be sustainable from the perspective of poor people in urban and rural settings.