Basix
Financial Inclusion
Case Study: Basix
| | | | |
Done By: Group E, Masters in Finance
Members:
Rafael Alvaro Fernandez De Simon
Vinita Ramesh Gulabani
Govind Vijayakumaran
Lello Della Ragione
Kamal Valikhanov
Tendai Mwanyisa
Jacob List
Done By: Group E, Masters in Finance
Members:
Rafael Alvaro Fernandez De Simon
Vinita Ramesh Gulabani
Govind Vijayakumaran
Lello Della Ragione
Kamal Valikhanov
Tendai Mwanyisa
Jacob List
1. What fundamental problem do BASIX ‘s customers face? How exposed are they to weather risk and how do they cope with risk?
BASIX has a huge rural agrarian client base. A major source of income of the clients came from agriculture. Agriculture, as an activity, greatly depends on the monsoons since alternative means of irrigation are not well developed in India. This makes their income highly vulnerable to weather conditions. The monsoons have been poor in the previous three years.
Most of the clients have limited wealth. They borrow to purchase various inputs for farming or basic needs such as food, clothing etc. A large part of the income of farmers from the harvest was spent in paying off these debts.
Not all farmers were eligible to receive finance from government agencies, and only those who were, received crop insurance policies. However, majority of BASIX’s clients remained ineligible to borrow and hence did not hold a policy.
Not all clients who had policies received insurance claims in case of losses, and those who were entitled to receive any compensation, did so after a long wait, even upto 2 years.
In order to cope with weather risks, given the aforementioned problems, farmers amassed wealth in the form of assets such as gold, livestock etc. that could be sold when the weather went against their crops and they did not realize enough income.
2. What is special about a rainfall shock and how well did BASIX’s earlier efforts to offer insurance fare? Why?
India, being an
Case Study: Basix
| | | | |
Done By: Group E, Masters in Finance
Members:
Rafael Alvaro Fernandez De Simon
Vinita Ramesh Gulabani
Govind Vijayakumaran
Lello Della Ragione
Kamal Valikhanov
Tendai Mwanyisa
Jacob List
Done By: Group E, Masters in Finance
Members:
Rafael Alvaro Fernandez De Simon
Vinita Ramesh Gulabani
Govind Vijayakumaran
Lello Della Ragione
Kamal Valikhanov
Tendai Mwanyisa
Jacob List
1. What fundamental problem do BASIX ‘s customers face? How exposed are they to weather risk and how do they cope with risk?
BASIX has a huge rural agrarian client base. A major source of income of the clients came from agriculture. Agriculture, as an activity, greatly depends on the monsoons since alternative means of irrigation are not well developed in India. This makes their income highly vulnerable to weather conditions. The monsoons have been poor in the previous three years.
Most of the clients have limited wealth. They borrow to purchase various inputs for farming or basic needs such as food, clothing etc. A large part of the income of farmers from the harvest was spent in paying off these debts.
Not all farmers were eligible to receive finance from government agencies, and only those who were, received crop insurance policies. However, majority of BASIX’s clients remained ineligible to borrow and hence did not hold a policy.
Not all clients who had policies received insurance claims in case of losses, and those who were entitled to receive any compensation, did so after a long wait, even upto 2 years.
In order to cope with weather risks, given the aforementioned problems, farmers amassed wealth in the form of assets such as gold, livestock etc. that could be sold when the weather went against their crops and they did not realize enough income.
2. What is special about a rainfall shock and how well did BASIX’s earlier efforts to offer insurance fare? Why?
India, being an