Driving transformative financial inclusion across India’s aspirational blocks by unlocking the power of last-mile convergence

Posted on by Nashrah Shareef

Kiran Devi comes from a remote tribal village in Gumla district in Jharkhand. Recently, her village hosted a community outreach camp to help residents access key government services, such as ration cards and Ayushman Bharat health cards, and open bank accounts. Kiran Devi needed these services, yet she could not participate in the camp due to apprehensions.  

Her hesitation stemmed from fears about several challenges, which include procedural uncertainties, documentation gaps, and prior difficulties with know-your-customer (KYC) processes. This was not a case of a lack of demand, but a delivery failure caused by fragmented processes and weak follow-up. 

Many households in India’s aspirational blocks and particularly vulnerable tribal group (PVTG) areas share Kiran Devi’s experience. They face barriers to prerequisite processes, such as Aadhaar updates or bank account requirements, which affect access to multiple welfare programs. Government departments and financial service providers have made significant efforts to promote the use of formal financial services through enrollment drives and financial literacy campaigns. However, these also leave a proportion of the population underserved.  

Lessons from the ground show that when we integrate the delivery of services with regular follow-up and provide consistent guidance, people participate easily, and inclusion is more effective.​ ​These insights often lead to a shift from isolated service delivery to coordinated, people-centric approaches. To operationalize this shift, the ALIGN framework provides a simple pathway for local governing bodies to design and deliver convergence-led financial inclusion efforts.  

 The following examples clearly demonstrate this shift. 

Expansion of financial services access through integrated camps: A case study from Gumla district, Jharkhand 

The district administration in Gumla, Jharkhand, redesigned its approach and built customer centricity into its service delivery model, particularly for financial and social inclusion. It recognized that lasting impact comes from convergence, where banks, government departments, self-help groups (SHGs), and frontline workers coordinate over time. With MSC’s support, the administration organized and integrated one-stop camps that combined awareness, enrollment, and troubleshooting (A-E-T).  

Unlike regular camps that focus on single services or one-time enrollment, these camps address multiple needs together. They resolved documentation issues on the spot, provided step-by-step guidance, and ensured follow-up after the camp. This approach reflects a structured model of awareness, enrollment, and troubleshooting (A-E-T), ensuring residents complete processes rather than return repeatedly without resolution.  

Figure 3 links:

Aadhaar
Ayushmaan
PMJDY
Direct benefit Transfer 

The District Program Manager of SRLM Gumla reflected on the issue of convergence and noted that “without coordinated, doorstep delivery of services, many would remain excluded or less engaged with financial services. This integrated approach has helped build community trust and ensured that no one is left behind due to procedural barriers.” 

Kiran Devi’s story proved that meaningful inclusion takes time, coordination, and commitment in making service delivery more customer centric. MSC has supported district administrations across aspirational blocks and districts in several states to apply similar convergence-led approaches to financial inclusion. 

Lessons from dedicated efforts in Kaushambi district, Uttar Pradesh 

In Uttar Pradesh’s Kaushambi district, a collaborative approach​​ ​to design and implement financial literacy camps helped drive greater financial awareness and access, with the involvement of the district leadership, financial institutions, and local governance. ​This inter-departmental collaboration brought together key stakeholders to align priorities and drive collective action for the effective delivery of outreach activities. Participants included representatives from the district administration, Bank of Baroda (the lead bank), the National Bank for Agriculture and Rural Development (NABARD), the State Rural Livelihoods Mission (SRLM), and local governance institutions. 

The collaborative initiative led to critical actions that strengthened the delivery of outreach camps. For instance, the sensitization and training of Gram Panchayat Pradhans, the elected heads of a village council, to strengthen community participation. This initiative shows how targeted financial literacy initiatives can effectively reach unserved or underserved regions when backed by institutional coordination and local leadership. As part of the initiative, a month-long financial literacy campaign was conducted to activate bank accounts, link beneficiaries to programs, and enroll them in insurance products. The campaign covered the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and the Pradhan Mantri Suraksha Bima Yojana (PMSBY). The campaign involves participation of more than 5,000 citizens and emphasized on ways to translate access into usage. It moves beyond mere awareness and ensure that beneficiaries opened accounts and services and used them actively. The campaign focused on specific goals, which includes account enrollment, KYC completion, insurance coverage, and promotion of digital transactions.  

The camps brought together all the key local stakeholders under a single platform through departmental convergence. The convergence addressed local needs, promoted trust-building, and supported practical usage of financial services through collaboration with banks, insurers, financial literacy counselors, and Gram Panchayat Pradhans. 

 It demonstrated how well-coordinated, goal-oriented efforts, supported by multi-stakeholder partnerships, can bridge gaps in access and usage and move the financial literacy drive into pathways for sustained financial empowerment.  

Addressing service gaps in remote areas: Convergent approach in Narayanpur district, Chhattisgarh 

The Orchha block in Narayanpur district of Chhattisgarh has long faced unique challenges in terms of access to formal financial services due to its location, security concerns, and limited infrastructure. These factors often mean that services take longer to reach communities and require additional effort from residents. 

The convergence approach has led to measurable results across India’s underserved areas. From March 2024 to March 2025, the effort led to the addition of more than  40,000 new banking touchpoints (bank branches/ Business Correspondents (BC)/India Post Payments Bank (IPPB) centres) in the aspirational blocks. Over the same period, Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts increased by 7%, while Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) enrollments expanded by 38% and Pradhan Mantri Suraksha Bima Yojana (PMSBY) enrollments grew by 22%. These changes reflect growth in access to and uptake of these schemes, with all values expressed per 100,000 population. across some of the country’s most underserved regions. This effort highlights how sustained collaboration can transform financial access into meaningful usage that ensures that women, low-income families, and remote communities are included and empowered through active participation in the financial ecosystem.  

Convergence as a strategy for inclusion 

Financial inclusion is not a one-time intervention but a continuous process of building access, usage, and trust. Experience from India shows that progress is most effective when local governments, financial institutions, and communities work in coordination, rather than in isolation. These efforts demonstrate that convergence across stakeholders is essential to make financial systems accessible, responsive, and sustainable, particularly for underserved populations. 

In each case, the fundamental enabler was not a single program, but multiple parts of the system. The availability of Aadhaar, ration card, and bank services at the same location meant that one missing document no longer halted progress. Additionally, the presence of SHG members, local leaders, and frontline workers bolstered confidence, provided guidance, and encouraged participation. 

Convergence remains a highly effective strategy to bridge financial inclusion gaps and create lasting change. It works best when a single coordinated approach integrates government initiatives, financial institutions, and community participation to improve access, promote active usage, and build trust in financial services. Convergence is most effective when it appears seamless to the person who receives the service. Joint planning and delivery across departments ensure that beneficiaries receive multiple services in one visit. Simple, technology-enabled tools streamline the process, while trusted local actors promote trust and engagement. 

As a result, sustained coordination and local follow-up are essential to transform initial access into long-term financial inclusion. This coordination enables millions of people, such as Kiran Devi, who live in India’s more remote corners, to participate in the economy and live a life of dignity. 

A district-led model for advancing financial inclusion from the ground up

Posted on by harshita

Shanti Devi had been waiting for her usual pension payout for the past three months. Yet, the 64-year-old widow from Kaushambi district, Uttar Pradesh, was left waiting. Her pension, however, had not stopped. Instead, the withdrawal services in her Jan Dhan account had been deactivated due to incomplete know your customer (KYC) data. No one had explained this to her. 

The issue surfaced only when she raised it during a self-help group (SHG) meeting, which revealed a wider pattern across villages. Shanti recalled, “I did not know something was wrong. I thought perhaps my pension had stopped, so I just gave up.” Shanti’s case was one among many that emerged across nearby villages. Community functionaries flagged this pattern during routine block-level reviews and escalated it to the district administration. 

The District Magistrate (DM) of Kaushambi, Madhusudan Hulgi, reviewed these cases and found that the incomplete KYC had led to frozen bank accounts across multiple villages. He positioned financial inclusion as a district governance priority and the foundation for access to welfare, education, and livelihoods to fix this problem. 

The Viksit Kaushambi Abhiyan marked a shift from fragmented efforts to a unified, district-led approach. The DM appointed a nodal officer to drive cross-departmental action. The district received technical support from MSC (MicroSave Consulting) under the NITI Aayog’s Aspirational Blocks Programme. The nodal officer embedded FI across planning and delivery systems active in the region through this support.  

Based on this mandate, the district launched coordinated actions to strengthen local capacity and reach communities at the last mile. The district also drove coordinated action from the district to the village level and improved access to quality digital financial services to underserved households. 

Enabling frontline workers to strengthen last-mile financial service delivery 

Kaushambi district bridged the last-mile gap by placing its trust in resource persons already embedded in community life. The district administration used existing frontline workers under the Viksit Kaushambi Abhiyaan, rather than create new structures. Rehana, an anganwadi worker who supports maternal and child development services, was one such example. 

Rehana’s efforts show how frontline workers can strengthen service delivery when supported through capacity building and sensitization. The district administration could reach households that had quietly fallen out of the system through existing frontline networks. This included building their understanding of schemes and guiding people on using digital payments. 

Design and execute a structured village-level financial inclusion campaign 

The district administration launched a structured financial literacy and enrolment campaign across Manjhanpur and Kaushambi aspirational blocks in coordination with local banks and the Lead District Manager (LDM). At the core of the campaign was a dedicated camp planner to ensure complete gram panchayat coverage rather than sporadic outreach. The planner mapped villages, sequencing door-to-door mobilization with village-level camps over a two-month period, and clearly assigned roles to banks, frontline workers, and district teams to avoid overlaps and gaps.  

SHG accredited social health activists (ASHAs) and local champions, such as Rehana, who conducted outreach in familiar settings and supported beneficiaries through enrolment and follow-up. This structured approach ensured that awareness and enrolment were delivered systematically at the gram panchayat level, rather than as stand-alone activities. The LDM played a catalytic role by aligning banks to the camp calendar, which ensured staff availability and prioritized key products, such as savings, insurance, and digital transactions. This alignment transformed isolated banking efforts into a coordinated, district-wide campaign anchored in the district’s broader financial inclusion vision. 

As a result, the campaign directly engaged more than 15,000 residents through village camps, group meetings, and household visits, while district-wide Information, Education and Communication (IEC) efforts extended awareness to an estimated 400,000 people. Beyond awareness, the gram panchayat-saturated approach translated into measurable uptake.  

During the campaign period, the district recorded 44,000 new Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) enrolments, 129,000 Pradhan Mantri Suraksha Bima Yojana (PMSBY) enrolments, and 35,000 Atal Pension Yojana (APY) enrolments, largely driven through village-level camps and SHG-led facilitation. In addition, 856,762 bank accounts were Aadhaar-seeded, which strengthened beneficiaries’ ability to receive Direct Benefit Transfer (DBT) and access services seamlessly. Banks also reported higher first-time transaction activity during this period, indicating increased engagement with formal financial services. 

Increase village-level banking access through targeted touchpoint expansion 

The district administration shifted its focus to improve last-mile access as awareness and demand for financial services increased. In coordination with banks, business correspondent (BC) agents, and postal banking services, the district administration expanded and revitalized inactive outlets. Priority went to underserved gram panchayats with limited or non-functional banking touchpoints, where residents had to travel long distances for basic transactions. These efforts strengthened local access to essential banking services and made routine transactions more convenient and affordable.

As a result, the number of banking touchpoints increased by 62%, from 415 to 674, between March 2024 and September 2025. This substantially expanded access to nearby banking services for residents in remote and underserved areas. The DM’s office regularly monitored and reviewed progress through direct leadership oversight, enabling timely course correction while ensuring steady implementation within routine administrative processes. 

Frontline workers as a channel for gender-sensitive service delivery 

A key element of Kaushambi district’s financial inclusion strategy was to strengthen the communication and engagement skills of frontline workers who interact most closely with women and vulnerable households. The district administration trained more than 84 frontline workers and officials across rural development, health, women and child development, education, and Panchayati Raj departments, focusing on gender-sensitive communication, trust-building, and practical facilitation skills needed to support access to financial and welfare services. 

In parallel, the LDM sensitized and oriented more than 100 Gram Pradhans, or the elected heads of a village council, on the importance of financial inclusion. These village heads were encouraged to discuss banking and savings at village-level meetings to help resolve local banking issues and include financial inclusion targets in their village development plans. This buy-in from the local leadership ensured that the push for financial literacy and access was not seen as a standalone campaign from “outside,” but rather as an integrated part of each village’s own development journey.

Way forward  

Kaushambi’s experience suggests that financial inclusion outcomes improve when managed through routine district processes rather than driven by one-time, short-term campaigns. Accountable delivery systems with clear task allocation, regular reviews, and follow-up at block and gram panchayat levels helped address access gaps more consistently. Sustaining gains will also require continued focus on how people use services, especially women and households in remote areas. Assisted support through frontline workers and familiar community platforms can help ensure that expanded access gradually translates into regular and confident use of financial services. 

For other districts, the priority is to institutionalize regular tracking within existing systems. Existing block and district review forums can be used to regularly review banking access, basic usage indicators, such as active accounts or transaction activity, and recurring service gaps. Simple dashboards can use block- and gram panchayat -level data to help officials identify where access has expanded, but usage remains low, and prioritize follow-up with banks and frontline staff.

Through such measures, financial inclusion can reach the doorsteps of people like Shanti Devi, who need it most to build a better life for themselves across India’s far corners. 

How community-led MSMEs and women entrepreneurs can rebuild rural distribution networks

Posted on by Nashrah Shareef

A village story that reveals a national problem 

When Meera Devi’s husband died suddenly in rural Odisha, she knew her family had insurance. Every year, the bank automatically deducts a small premium from their account under government schemes, such as the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), the Pradhan Mantri Suraksha Bima Yojana (PMSBY), and the Ayushman Bharat card. However, when Meera tried to claim the benefit, she was lost. She did not know which policy to apply, whom to approach, or what documents were required. The bank branch was far away, the agent who enrolled her was no longer available, and the process felt intimidating. Eventually, she gave up.  

A few kilometers away, another woman, Nita, faced a similar crisis but had a different experience. Nita reached out to a local MSME woman owner in her neighborhood, who helped her identify the right policy, collect documents, and follow up with the insurer. The MSME owner patiently explained insurance and support claims, thanks to her training by a financial institution. Within weeks, the family received the payout. The difference here was not the insurance product but the presence of a trusted, trained local intermediary. 

This is a problem that remains all too common across India’s hinterlands, where millions of households have insurance but lack protection due to gaps in distribution and service. 

The last-mile gap: When insurance exists but protection remains out of reach 

Today, banking outlets reach 99.7% of India’s villages through more than 550 million Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts, two-thirds of which are in rural areas, while UPI powers 87% of transactions among rural youth. Yet, insurance coverage continues to lag. Life insurance penetration and density remain disproportionately low at 10% in rural geographies, with protection levels significantly below risk exposure levels. This leaves most households financially vulnerable to shocks.  

Despite growing access to financial services, households have poor understanding of insurance, underuse it, and often distrust it. Complex products, weak post-sale support, and low trust in claims processes mean that many households continue to rely on savings, informal borrowing, or asset sales during shocks.  

Within this broader landscape, rural women experience risks more severely due to lower asset ownership, income volatility, and limited access to formal support systems. Their experience with insurance is often as bundled coverage linked to bank accounts, credit products, or government schemes. Enrollment happens automatically and offers little understanding of benefits or claims procedures. Insurance models that prioritize enrollment volumes over suitability assessment, disclosure quality, and post-sale servicing have resulted in low persistency or renewals, grievance escalation, and erosion of trust.  

Global research from the Centre for financial inclusion, Accion reveals that complex products, opaque communication, and cumbersome claims erode trust, which pushes households toward savings or informal loans during crises. These factors underscore how flawed last-mile engagement and incentive designs undermine insurance’s protective potential. To address these challenges, regulators and the industry are beginning to rethink insurance distribution.  

For example, the Insurance Regulatory and Development Authority of India (IRDAI) recognized the need to strengthen last-mile insurance distribution. It introduced the Bima Vahak Guidelines 2023. The initiative seeks to place trained bima vahaks at the gram panchayat level to serve as local insurance intermediaries. These agents help communities with policy enrollment, proposal, and KYC processes, premium payments, and claims support through digital devices. The guidelines embed accountable, locally trusted representatives within villages to close long-standing gaps in awareness, accessibility, and post-sale service that traditional insurance channels have struggled to address.  

The pan-India insurance gap for rural women 

As per government sources, enrollment under the Jan Suraksha schemes remains 47% among low-income women, yet effective utilization during income shocks remains negligible. Voluntary retail insurance penetration among rural women remains limited at 18-20% as per Department of Financial Services (DFS) report. These numbers indicate weak demand-side confidence despite high scheme-based enrollment. Many first-time policyholders perceive insurance as less of a tool for protection and more as a routine bank deduction, with a limited understanding of benefits, exclusions, or claims processes.  

Community-led MSMEs as last-mile champions 

 

Community-driven MSMEs make insurance more relevant, accessible, and effective 

Community-led MSMEs are micro and small enterprises owned, operated, and trusted within the communities they serve. These include agri-input shops, self-help groups, and women collectives that provide advice, informal credit, and solve the local issues.  

They offer a structurally different architecture rooted in embedded trust networks and livelihood-based engagement. Embedded within communities, they can act as educators, suitability filters, premium collection points, and claims navigators. They support customers across the insurance lifecycle, and help reduce information gaps, reduce customer acquisition costs through existing networks, and ease claims processes through documentation support and follow-ups. This shifts insurance from transactional sales toward sustained engagement and practical protection. 

The insurance customer lifecycle: From enrollment to claims 

Women entrepreneurs as last-mile risk intermediaries  

Women entrepreneurs as a last-mile champion 

Within this ecosystem, women entrepreneurs play a vital role as insurance intermediaries. Their credibility stems from strong social capital and reputational accountability, where failure to support customers can affect their community standing and core livelihood activities. Through regular interaction with households, they simplify communication, explain insurance in local contexts, and help with enrollment, renewals, and claims. Their proximity and familiarity with digital tools improve customer understanding, strengthen policy persistence, and build confidence in insurance as a reliable risk management tool. 

How women entrepreneurs differ from conventional insurance agents 

The differences between community-led women intermediaries and conventional insurance agents are structural, not merely operational. They reflect fundamentally different incentive systems, accountability mechanisms, and relationships with customers, as outlined below: 

An inclusive, community-driven insurance distribution model 

Experience from rural insurance markets shows that access without trust weakens protection. When customers do not understand products or lack post sale support, coverage remains underused. Addressing this requires a distribution model that is designed to build confidence, reduce friction, and sustain engagement. 

Structured certification and modular training linked to performance-based incentives can equip women entrepreneurs and microbusinesses with product knowledge, suitability assessment capability, digital onboarding proficiency, and claims facilitation skills. The use of simplified products, supported claims processes, and a ‘phygital’ model that integrates assisted digital tools with human advisory can further improve onboarding accuracy, enhance documentation quality, and foster trust among first-time users. 

The scalable model where coordinated pillars reinforce resilient rural insurance systems 

Benefits beyond insurance sales 

Beyond insurance enrolment, community-led distribution strengthens market conduct, household resilience, and women’s economic participation. When women entrepreneurs and community-based MSMEs act as insurance intermediaries, they also create income diversification opportunities, as it adds a new service line to their existing livelihoods. Commissions, renewal incentives, and service-based payments can provide supplementary income and simultaneously strengthen their role as trusted financial resources within their communities. 

The outcomes below highlight why distribution design matters as much as product design in rural insurance markets 

Recommendations for scaling across India 

The benefits women entrepreneurs and community-based MSMEs bring about when they work as agents is abundantly clear. In this context, we propose a set of actionable recommendations for key stakeholders to enable scalable and sustainable adoption across India. 

  • Partnership ecosystems: Build alliances between insurers, SHGs, local microenterprises, and government programs for cohesive outreach 
  • Localized product innovations: Customize micro-insurance offerings to reflect regional risks and socioeconomic contexts 
  • Effective agent training: Continuous, gender-sensitive capacity building for women agents that focuses on communication and trust-building 
  • Awareness and literacy campaigns: Deploy community campaigns with familiar social networks and media suited to rural audiences 
  • Technology enablement: Introduce accessible digital interfaces enhanced with human support for trust and ease of use 

Conclusion 

While Meera Devi gave up, Nita could access timely support, thus highlighting that India’s rural insurance gap is driven less by product availability and more by weaknesses in distribution and market conduct. In the absence of accountable last-mile engagement, high enrollment can mask significant protection gaps. Misaligned incentives, weak separation between advice and sales, and limited post-sale support have historically eroded trust, prompting regulators to strengthen norms around suitability, disclosure, and intermediary accountability. 

Expanding insurance coverage alone will not close this gap. What matters is trusted, continuous engagement at the last mile. Women entrepreneurs and community-led enterprises, when embedded within insurance delivery systems, can bridge this divide by transforming enrollment into understanding, claims into confidence, and coverage into meaningful financial protection. 

Why female agents are the litmus test for Nigeria’s new agency banking guidelines

Posted on by harshita

In Lagos’ bustling Balogun Market, Yetunde begins her day before dawn. A mother of three and a market trader, Yetunde balances trays of zobo, a popular Nigerian drink made from dried hibiscus flowers. Her point-of-sale (POS) devices sit ready beside her stall. She earns a small commission of about NGN 100 (~USD 0.07) to NGN 500 (~USD 0.3) per transaction on OPay and Moniepoint. Over a month, she earns NGN 90,000–360,000 (~USD 66–263). Yet, after she pays for data, float, rent, and electricity, what she retains falls below NGN 50,000 (~USD 32). 

Please note that the figures are illustrative and based on stated assumptions. Actual income and costs will vary. USD equivalents reflect the prevailing CBN official rate as of the time of publication and are subject to change. 

While the individual amounts may appear minimal, their cumulative effect is significant. Over time, these earnings contribute meaningfully to household expenses, school fees, and her family’s day-to-day financial stability. However, the reliability of her earnings depends on several factors. Yetunde must maintain adequate liquidity to meet withdrawal requests. Network connectivity must remain stable to process transactions without interruption. Customer demand must also remain steady to sustain transaction volumes. 

Yetunde’s case illustrates the fragile economics that underpin the nearly 2 million POS agents in Nigeria. The sector has expanded access, especially in areas without banks. Yet, many agents operate on razor-thin margins. Their business hinges on stable cash flow, reliable connectivity, and steady customer traffic. A single outage or cash shortfall can wipe out their income and customer trust overnight. 

Across emerging markets, agency banking has become a vital channel to reach women and other underserved populations. Regulators tighten their controls as these systems mature. Nigeria’s new agency banking rules intend to boost oversight, but their success hinges on protecting the agents who built inclusion. Female agents, who connect women to finance, are the true litmus test of whether the system becomes more inclusive or more exclusionary. Can new rules strengthen oversight without weakening the very agents that made inclusion possible? 

Nigeria’s new agency banking guidelines test this question. The Central Bank of Nigeria (CBN) released new guidelines for agency banking operations. These guidelines introduced measures on exclusivity, geofencing, and transaction limits. The measures offer meaningful benefits to the financial ecosystem. They also significantly help financial service providers (FSPs) and the Nigeria Inter-Bank Settlement System (NIBSS) to monitor agent activity in real time through geo-fencing and transaction data. These systems flag anomalies when agents attempt to breach transaction limits or geo-fenced boundaries and sanction non-compliant agents to enforce compliance. However, these guidelines have unintended consequences for the very agents who built financial access from the ground up. Female agents are particularly exposed to the consequences, which include, but are not limited to, income loss, reduced flexibility, and a higher risk of dropping out. 

This exposure has adverse effects on an already underrepresented group. As per a CBN-commissioned situational analysis published in April 2023, women accounted for just 15% of Nigeria’s 700,000 registered agents. Besides being a minority in the network, they also face structural constraints that make it disproportionately harder for them to meet the new requirements.  

Female agents, such as Yetunde, play a critical role in this ecosystem. These agents are not just participants but catalysts for financial inclusion. The 2025 Breaking Barriers report by MSC (MicroSave Consulting) finds that female agents generally provide higher-quality service and build stronger trust with customers.  

In Northern Nigeria, women often avoid bank branches because the nearest one may be too far, transport is unaffordable, or because social norms make women’s interactions with male staff uncomfortable. In Nigeria, this is a core issue, not a side effect. Female agents reduce these barriers and bring banking services into spaces where women feel comfortable, which addresses both distance and cultural barriers to access. EFInA reports that only 70% of women are financially included, as against 79% of men. Female agents are therefore not just part of the network but are central to closing Nigeria’s gender inclusion gap. 

At the same time, female agents operate under more constrained conditions. Safety concerns, harassment, and security risks influence where and when they can work, which often limit their work hours or compel them to avoid certain areas. These factors directly affect income stability and business continuity. Female agents report higher exposure to threats when they handle cash. Many cut business hours or drop out entirely because of these risks. These constraints determine who survives a tightening regulatory environment. 

Nigeria’s new CBN guidelines have been introduced in this context. They are meant to improve oversight, but each guideline also impacts agents differently: 

This new framework opens opportunities, but mostly for those already capable. Geofencing can protect a fixed-location agent from random interlopers. Exclusivity can deepen agent–bank partnerships if the bank invests in its agents. Transaction caps can push agents to sell higher-value services, such as bill payments, account opening, and loans that carry higher fees. Yet, these upsides will mostly help agents with capital and support, not the micro-operators on the margins. 

Scale alone does not mean stability. Beneath this rapid expansion lies a fragile and sensitive business model. This fragility does not affect all agents equally. Those with stronger capital buffers can manage peak demand and absorb short-term shocks. However, smaller agents, particularly female agents with limited working capital and additional constraints, are the least equipped to absorb these shocks. 

In effect, these rules tighten control at the system level but create shocks at the agent level. Female agents work with lower margins and have fewer buffers. Hence, they feel that shock more sharply.  

Nigeria’s broader inclusion trends underscore the stakes. Financial inclusion increased  from 68% in 2020 to 74% in 2023, but women still lag. Progress is uneven, and women often gain last. If the new guidelines make it harder for female agents to survive, inclusion could stall or even reverse. 

The critical question now is how to manage this transition. The rules that help some may force out the most vulnerable without targeted support. The regulator should ensure the new framework strengthens inclusion rather than undermines it. We propose the following policy recommendations for regulators to protect vulnerable agents and strengthen the system. 

Regulators can introduce a micro-agent tier that exempts low-volume, single-location agents from strict exclusivity and higher caps, based on Tanzania’s model:  

  • The Bank of Tanzania’s agent banking guidelines document that agents shall not be exclusive to a Financial Service Provider. MSC’s report states that female agents in Sub-Saharan Africa operate across multiple locations. These include homes and market stalls to serve clients safely and in culturally suitable spaces. Regulators can allow flexible geofencing, such as registering multiple approved locations at home and market stalls, or a small service zone per agent. A rigid single-location geofence would therefore directly undermine this operational reality. 
  • Regulators can require gender-disaggregated data and a formal post-implementation review. The review will mandate that providers report agent activations and attrition by gender. EFInA’s Access to Finance survey shows the value of gender-disaggregated financial data in Nigeria. The same rigor should apply to agent network monitoring. 
  • Regulators can provide liquidity and float support that includes dedicated float loans or cash pools for female agents to meet peak demand. MSC’s report establishes that female agents face greater liquidity constraints than their male counterparts, partly due to smaller starting capital and limited access to credit. Providers and the CBN should explore targeted float credit facilities for female agents. 
  • Regulators can offer female agents tailored training and support, capacity-building in fraud prevention, liquidity management, and diversified services, such as bill payments and microcredit. The GSMA’s report shows that structured training for female mobile money agents meaningfully increases their transaction volumes and retention rates. The CBN and licensed operators should make such training a formal requirement of the new agent certification process. 
  • Regulators can pair strong regulation with dedicated support for female agents. Otherwise, the system may become more regulated yet less inclusive. 

For Yetunde and thousands of women like her across Nigeria, these guidelines will determine if they can continue to serve their communities. Nigeria’s agency banking success was built on trust and flexibility. If female agents thrive, inclusion wins. If they falter, the gains of the past decade may unravel.

Leveraging the currency of trust: How social commerce data can inform risk management and bring formal finance to women-led MSMEs

Posted on by harshita

Across emerging markets, millions of women entrepreneurs operate in trust-based economies invisible to formal finance. From street food vendors in Kenya to home-based traders in Bangladesh, these businesses rely on their social reputation — customer networks and relationships built through reliability and consistency — to survive.

In Indonesia, these trust-based enterprises are common, and MicroSave Consulting (MSC) assessed their experiences, challenges, and usage of credit and other financial services in our recent report “The Landscape and Financial Access of Social Commerce Sellers in Indonesia.” The study draws on survey data and qualitative interviews with 458 sellers across seven provinces, offering grounded insights into how informal women micro-entrepreneurs operate and access finance in practice.

This article shares quantitative analysis and in-depth interviews from the report to examine the platform journeys, business practices and financing gaps of social commerce sellers, with a special focus on women sellers.

Empowering Trust-Based MSMEs: Government efforts vs. lived realities

One of the entrepreneurs we interviewed is Suryani, a 45-year-old mother of two from Balikpapan. She supports her family by reselling children’s toys and selling homemade snacks. But though she has been engaged in this business activity for decades, her business remains unregistered, and her only experience with formal credit has been through a cooperative.

Suryani does not sell her products on formal e-commerce platforms. She relies on Facebook and WhatsApp to reach customers within her community, a form of social commerce that remains largely invisible to formal credit systems. Her experience mirrors that of millions of Indonesian women micro-entrepreneurs, who are widely recognized in policy rhetoric yet whose operating conditions and constraints are not fully reflected in existing policy design.

Indonesia’s commitment to the empowerment of micro, small and medium enterprises (MSMEs) has been impressive. Recognizing that the country’s 65.5 million MSMEs are the backbone of its economy, the government has deployed a wide range of policies, financing schemes and public–private partnerships to expand their access to credit and markets. Flagship initiatives, such as the Kredit Usaha Rakyat (People’s Business Credit) and Ultra-Micro Financing programs, have sought to empower entrepreneurs, particularly women, by boosting their access to finance. More recently, in June 2025, the Ministry of MSMEs and the Ministry of Women Empowerment and Child Protection launched the Laksmi incubation program for women entrepreneurs, which combines capacity building with supervised financing. But though Indonesia’s MSME support ecosystem appears advanced and enabling on paper, in practice, this architecture is built primarily around formal business, as the eligibility criteria for these programs create barriers for those operating outside traditional structures.

Meanwhile, for entrepreneurs like Suryani, who have operated informally for over a decade, the reluctance to seek formal credit persists. MSC’s study on social commerce sellers in Indonesia helps quantify this dynamic: Only 15% of these sellers have accessed formal credit, and just 18% hold a business identification number. Most of these entrepreneurs operate on WhatsApp, Facebook or Instagram, rather than formal e-commerce platforms.

This pattern reflects not a lack of a growth mindset, but the constraints under which many informal businesses operate. Rather than pursuing rapid expansion, many prioritize predictable cash flow, manageable exposure and stable customer relationships, particularly in contexts where repayment risk is salient. As one seller put it, “I prefer what is certain.” For these entrepreneurs, formality, both in financing and in their broader business structure, does not guarantee stability — on the contrary, it can disrupt the trust-based systems that sustain their livelihoods.

In terms of credit, these concerns are driven not by an inherent distrust of formal finance among women micro-entrepreneurs, but rather by the fact that existing loan products are not well-aligned with how they often operate in practice. Many of these sellers work in fast-moving or seasonal consumer segments with fluctuating input costs and irregular cash flows — while also juggling significant household care obligations. Yet formal loans tend to assume stable cash flows and fixed repayments, while few products are designed around the realities of informal women-run businesses. Additionally, this borrowing often takes place through community-based channels such as microfinance institutions and cooperatives operating group-based (Grameen-style) models, where repayment outcomes are highly visible. As a result, a single default can erode credibility, sever customer ties and dismantle fragile safety nets. Formalization and credit thus become double-edged swords, promising growth while threatening the continuity these businesses have worked hard to preserve. In a trust-driven ecosystem, reputation is considered both an asset and a liability, so for these women entrepreneurs, informality is not resistance to growth: It is a strategy for stability.

In Suryani’s case, her first experience with an informal lender intensified her wariness toward credit providers. Her loan culminated in the loss of her warung (a small, informal, family-run retail or food stall that operates at the neighborhood level), and triggered gossip about her loan within her community, shaping perceptions of her repayment reliability, business competence and standing as a community member. This raised the perceived cost of borrowing and reinforced her decision to avoid further loans.

Drawing on our recent study, 74% of social commerce sellers rely solely on personal savings — a pattern that is seen among other small enterprises across the nation. Their avoidance of credit, despite this clear need, shows that many of these entrepreneurs consider self-funding to be a pragmatic response to the trade-off between stability and risk that loans represent.

When trust meets risk management and the gender gap

By contrast, the formal financial system is governed by a different logic — one centered on risk management. Banks lend only when risk is documented, verified and priced. Yet this risk-averse approach often clashes with the lived realities of women entrepreneurs whose informal businesses thrive on relationships, reliability and trust.

Banks in Indonesia are lending large volumes to MSMEs: Last year, the government injected Rp 200 trillion (~US 11.9 billion) of state funds from Bank Indonesia into five state-owned banks to accelerate MSME financing. By July 2025, the People Business Credit program had expanded to IDR 300 trillion (~ US 17.9 billion), with IDR 131.84 trillion (~ US 7.8 billion) or about 46% disbursed in the first six months. Yet this lending has largely been directed toward formal MSMEs that already meet banks’ underwriting requirements, such as having business registration, financial records and clear operating structures. And even for these MSMEs, results remain uneven: Financial system statistics recorded an MSME non-performing loan (NPL) ratio of 4.14%, already approaching the Indonesia Financial Service Authority’s 5% supervisory risk threshold. Since banks operate under ongoing pressure to maintain NPL ratios and portfolio quality, they have limited ability to extend similar risk tolerance to informal entrepreneurs whose performance is not as easily documented through conventional indicators.

The core issue, therefore, is not that banks refuse to lend, nor that MSMEs irrationally avoid loans. The issue is a structural mismatch between prudential, document-based banking logic and trust-based, informal business models.

Banks, nonetheless, remain the most trusted financial institutions among MSMEs. Among the surveyed sellers in MSC’s study, we found that 73% of male and 69% of female borrowers prefer banks to pawnshops, leasing firms or cooperatives. Yet this trust is rooted in perceived legitimacy more than real accessibility. In this space between expectation and experience, the double-edged nature of formal finance becomes apparent: When banks’ risk-based logic meets entrepreneurs’ informal realities, exclusion can become systemic.

This exclusion is not just operational, it is also gendered. Women-owned MSMEs in Indonesia and other developing economies typically receive smaller loans and face stricter collateral requirements. And they often must secure spousal consent, creating structural filters that reinforce financial dependency on household decision-makers — most often spouses — and limit women’s financial autonomy. Even when women entrepreneurs show reliability through their digital footprints, such as steady social commerce sales, repeat customers and positive testimonials, these signals remain invisible to traditional credit models. As a result, lenders rely on narrower indicators such as collateral and formal documentation, pushing women entrepreneurs toward smaller, informal or higher-cost financing, and shifting risk back onto borrowers whose reliability is demonstrated through relationships and reputation.

From trust to creditworthiness: Moving toward gender-intelligent and inclusive lending

Since banks and micro-entrepreneurs such as Suryani rely on different signals to establish trust and creditworthiness, gender-intelligent lending must serve as a translation layer between them. Without such an approach, existing financial design risks reinforcing exclusion by overlooking how women actually participate in and sustain economic activity. Research on platform livelihoods helps explain this gap, showing that for many women entrepreneurs, social media functions as core business infrastructure, where responsiveness, social relationships and community reputation shape daily operations. These are therefore not “soft” data, but measurable indicators of credibility and reliability grounded in lived practice.

Alternative credit scoring provides a structured way to incorporate behavioral and transactional data into formal risk assessment where conventional documentation is limited. In practice, these alternative credit scoring approaches are typically AI-enabled, using automated models to process non-traditional data sources. CGAP’s work on gender-intentional credit scoring shows that incorporating gender-relevant behavioral indicators can improve the accuracy and relevance of credit assessment for women entrepreneurs by aligning lending models more closely with observed repayment behavior — including data points that are often not reflected in existing credit assessment standards — without weakening existing prudential standards. As the Asian Development Bank cautions, the use of AI-driven and other automated credit assessment systems must be intentionally designed and governed to avoid reinforcing existing gender bias. But when applied with transparency, bias monitoring and human oversight, these approaches can complement prudential assessment by taking women-led MSMEs’ reliability into account, instead of simply redefining risk to avoid excluding them.

In line with this evolving understanding of risk and creditworthiness, our study examines how granular behavioral and transactional data can strengthen credit assessment for women micro-entrepreneurs in social commerce, as summarized in the table below:

Across the nine indicators identified, we observe that the signals most relevant to women sellers can complement rather than substitute for traditional evaluations. These indicators capture how enterprises are sustained in everyday practice, including communication responsiveness, transaction consistency, digital payment usage and customer feedback. Together, they reflect operational commitment, sales stability and business reputation, offering observable signals of reliability and discipline that extend beyond formal identifiers such as business registration certificates or documented transaction histories. Viewed through a gender lens, these behavior-based signals can inform lenders’ assessments of entrepreneurs’ reliability and discipline, illustrating how trust is practiced in women-led enterprises.

The integration of these data points could allow lenders to develop a more complete picture of their potential borrowers. Based on these assessments, financial institutions can move beyond rigid templates to design products grounded in women’s lived realities, with the potential to broaden access while remaining consistent with banks’ existing credit assessment requirements, including documentation, verification and internal risk controls.

However, our platform analysis also reveals a structural visibility gap, whereby businesses that rely more on private messaging and informal practices leave fewer observable trust signals. This limits data-driven inclusion — unless social commerce platforms and financial institutions collaborate. Where platform data is incomplete, self-reported business information may temporarily improve visibility, but it cannot replace verified transaction data or platform-level integration.

Together, these findings point to an opportunity for collaboration between digital platforms, alternative credit scoring providers and financial institutions, where each actor contributes a distinct function. Platforms would capture behavioral footprints that reflect how women transact and build trust, alternative credit scoring providers would interpret these signals into risk insights, and financial institutions would apply them within credit products and prudential frameworks.

AI could improve the efficiency of these efforts and enable further innovation, but its outcomes would depend on the underlying data and design choices. When trained on incomplete data or data biased toward formal businesses, AI algorithms can reproduce existing exclusions by disadvantaging borrowers whose businesses operate outside formal systems. Bias detection, transparency and human oversight are therefore essential to ensure that efficiency gains do not translate into exclusion, and that inclusion is embedded within the rigor of risk management.

From risk management to shared value

When used responsibly, AI-enabled alternative credit scoring can expand the range of data considered within prudential credit assessment. For banks, this means expanding their underwriting framework. For digital platforms, it means transforming their MSME users’ behavioral data into a source of shared value, rather than simply using it for their own proprietary advantage. For policymakers, it means enabling data-sharing frameworks that protect users while fostering inclusion. And for women entrepreneurs like Suryani, it means being recognized as credible economic actors whose trustworthiness has long been established, even as it has remained invisible to traditional lenders.

Financial inclusion is not about relaxing risk management. It is about redefining evidence through data points that reflect the lived realities of informal women micro-entrepreneurs. If inclusion is treated as a deliberate design choice, financial systems can improve the accuracy and relevance of risk assessment without compromising prudential discipline, building an economic infrastructure that supports the business continuity, resilience and reliable operations of informal micro-enterprises.

This was first published on 12th Februrary 2026 by NextBillion.

From borrowers to builders: Women and India’s evolving credit market

Posted on by harshita

In this report, we examine women’s role in India’s formal credit ecosystem and trends in access, product diversification, digital adoption, and entrepreneurial behavior. The analysis traces women’s shift from microfinance to business lending and identifies opportunities to strengthen financial inclusion, improve digital engagement, and support enterprise growth. The report also examines women’s credit uptake, loan preferences, regional patterns, and self-monitoring behavior within a diverse customer segment.

This analysis is complemented by a second report, “From Borrowers to Builders, Women’s Role in India’s Financial Growth Story,” which focuses on women as a diverse customer segment. It provides a comprehensive view of women’s participation in the retail credit market and explores trends in credit uptake, loan preferences, regional variations, and self-monitoring. NITI Aayog first published this report on 8th April 2026.

The report’s findings were published by the PIB and covered by The Times of India in articles examining the rise of women in India’s credit market and the role of digital platforms in driving this growth.

Tune in as Sonal Jaitly discusses women’s evolving role in India’s financial ecosystem and why trust, usability, and relevance matter beyond just access.
Watch Senior Advisor at NITI Aayog, Anna Roy, reference MSC’s report findings in her DD News interview and their impact on the national conversation.