Innovation & Replication

Aajeevika seeks to demonstrate that while there are significant drawback in trying to offer microfinance services to the urban poor, there are several advantages that can be built upon to achieve this objective. For one, microfinance services can be offered at lower cost, given higher population densities. The higher potential of investing in livelihood opportunities in the urban context makes for a stronger link between microfinance and livelihoods, thus ensuring lower loan defaults. Finally we hope to achieve full cost recovery sooner than the average rural MFI. One key innovation to achieve this goal is the partnership model, in which Aajeevika itself works with a lean structure while using the capacity of existing NGOs to deliver social intermediation services. The NGO benefits by increased capacity in microfinance even as Aajeevika takes over the provision of financial services once the groups have reached a certain standard. These are important lessons that can be picked up by government, donors, financial institutions and NGOs for replication.