THEY ARE BANKABLE : Reaching out to People with Disabilities

Ms. Vardhani Ratnala, knowledge manager, Leonard Cheshire International

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It is a well-known fact in South Asia that Microfinance is an effective way to reach out to the poorest. Even formal financial institutions like banks are competing with each other to cater to the needs of the poorest, who they have realized, are bankable. However, a look at the clientele of these microfinance service providers (MSPs) shows that there are still groups who are considered credit unworthy and are excluded from their services, one such group is that of people with disabilities. The main aim of any microfinance programme is to reach out to the unbankable i.e. the poor. By excluding persons with disabilities who are among the bottom 20 percent of the poor, this purpose is lost.

Current Practices in Financial services to persons with disabilities

There are several myths associated with provision of financial services to persons with disabilities like  they are unbankable, microfinance to these groups is not cost effective and such interventions need separate programmes or specialist inputs. Therefore, it is no wonder that participation of people with disabilities in microfinance programmes is negligible. Even when they are involved in such programmes, it is mostly those with mild disabilities or who are economically well off and hence, would anyway, have access to financial services. Ask any MSP about inclusion of persons with disabilities in their programmes and the standard response is “if they meet our criteria they are welcome to join”. Unfortunately, their client selection criteria are such that persons with disabilities do not qualify in most cases.

Barriers to accessing Microfinance services

Due to constraints like restricted mobility, inaccessible infrastructure and negative attitudes towards disability, persons with disabilities have lower education and income levels. This means low savings and almost nil assets. In developing countries, it is estimated that 82% of persons with disabilities live below poverty line, and 20% of them belong to the poorest of the poor. In most cases, household assets would be in the name of an able-bodied person rather than a person with disability. In case of persons with intellectual, visual impairment, mental illness and those with severe and multiple disabilities, income would be almost nil or taken by the family on their name. Thus, MSPs who are inclined to pledge assets as collateral, or have savings as a mandatory criterion to avail their services, tend to exclude persons with disabilities. For a majority of the physically challenged population, saving or repaying loans of sums varying from Rs30-150 per month is very difficult. This, along with a negative perception among lenders that physically challenged persons are not worthy ensures that they are left out of microfinance programmes. Another criteria through which some MSPs operate, is that of forming self help groups (SHGs) which exert peer pressure. Here again, for persons with disabilities it might be difficult to form such groups as ‘mobility’ is a big issue for them. Some of the problems encountered in gathering persons with disabilities at a common place are – mobility is difficult for persons with severe and multiple disabilities, the path leading to the meeting venue could be inaccessible (uneven), the venue itself could be inaccessible, sitting for one to two hours is difficult for those with locomotors, spinal and hip problems. Another issue is that of peer pressure; persons with disabilities are regarded with sympathy in the communities and it is considered unethical and inhuman to exert pressure on them. This is also one of the reasons why, regular self help groups refuse to accept persons with disabilities into their group. In case of credit, physically challenged people find it difficult to get a guarantor or provide collateral for their loans. Assets like houses which can be pledged are usually in the name of able bodied in the house; as a result, physically challenged people cannot provide them. All these factors ensure that persons with disabilities, who are among the poorest, are left out of microfinance programmes.

The way ahead – addressing barriers

The key to inclusion of persons with disabilities in microfinance is to be flexible. Physically challenged people need financial services which help fulfill their educational, health, social, livelihood and security needs. For poor persons with disabilities, financial services should serve two main objectives – it should help them come out of poverty and reduce vulnerability by protecting them against seasonality of incomes, health risks, disasters/conflicts etc. As many persons with disabilities do not meet the eligibility criteria set by MSPs, a “starting impetus” is needed to include them. This could be in the form of lowering of eligibility criteria like – providing loans initially and then linking them up with savings rather than the other way round, smaller size loans, increased moratium period etc.

MSPs can give collateral free loans or accept as collateral assets which are in the name of an able bodied member of a household. Depending on the density of the physically challenged population, their needs and constraints, and feasibility of operation, an MSP should either have a group or an individual banking approach to service delivery. Regular meetings can be made optional. To represent persons with severe and multiple disabilities there should be a provision to allow their caregivers to participate in group meetings. The MSP should lay emphasis on making physical and information infrastructure accessible to persons with disabilities. As far as possible inclusion of physically challenged people should be done in existing microfinance groups rather than forming separate groups for them. This would foster positive attitudes towards disability and physically challenged persons in the community.

Additional services by an MSP

Microfinance is the best way to address the financial needs of persons with disabilities because of features like doorstep delivery and product flexibility. The thumb rule for offering financial services to them is to have a “mix of short/immediate, mid and long term products” to ensure that the entire life cycle of the target group is covered and their various needs met. Emphasis should be laid on asset building specially, short-term or in-kind assets like livestock etc. Like other persons in the community, persons with disabilities also need a “basket of financial services” not just credit and savings. In reality however, due to negative attitudes they do not have access to a basket of services. Therefore, to ensure that a person with disability truly benefits, a MSP should consider offering other traditionally available financial services like rent/lease, bargains, social security etc. Rent/lease services – As mentioned earlier, the general perception in the community is that persons with disabilities are not credit worthy. They are not capable of handling an enterprise or agriculture on their own. Therefore, it is very difficult for a physically challenged person to get access to rent/lease services at a good price. An MSP can help facilitate access to rental or lease services to ensure that physically challenged people are not duped or sidelined.  For eg: renting of machines, tractors, in case of agriculture – leasing land, etc. Bargains – it is seen that some SHGs pool money and buy groceries so that they get them at lesser i.e. wholesale prices. Such a service can be offered by an MSP. The service not only helps persons with disabilities get a best price for the products but also ensures door-step delivery. Similarly, items produced by them can be sold through this mode.

Social security – although this is a long term savings product, it needs a special mention as a separate financial service, specifically, to cater to vulnerable groups among physically challenged people like persons with severe/profound disabilities or in case of persons with intellectual disabilities. MSPs can offer a special social security product like ‘pension’ that enables members to guard their future even when their guardians are no longer around to take care of them. A MSP could think of a matching contribution to the pension fund.

Insurance for the physically challenged

At present many physically challenged people are left out of the insurance system. Even government owned insurance companies offer very limited services to physically challenged people. MSPs can tie up with insurance companies and work out specific policies or modify existing insurance policies to include physically challenged people. They should also facilitate persons with disabilities access to insurance under government schemes.

Special considerations while implementing microfinance programme for physically challenged

The key to ensuring microfinance reaches to physically challenged persons is by sensitization [of MSPs to the needs of people with disabilities. They should be encouraged to adopt a flexible approach to service delivery. It is essential that a MSP focuses on inclusion of all types of disabilities. In case of severe/profound/mental or intellectual disabilities, their representatives should be allowed as members. Wherever possible, a MSP should also work towards removal of access barriers like information should be available in Braille, sign language interpreters, physical access like ramps etc should be provided. Physically challenged people might not be aware of various financial services; therefore, awareness generation is an important part of providing microfinance. They also need to be sensitized to move away from grants or charity, towards a credit or repayment mode. Finally, the MSP should work towards ensuring sustainability by introducing a service charge component so that the programme sustains itself in the long run. By ensuring financial access, an MSP not only provides for the immediate needs of persons with disabilities, but also, ensures they have opportunities to access education, livelihoods etc. all of which helps them move away from poverty and lead a better quality of life.

[Vardhani Ratnala is a development professional from India. She has been involved with the health, Microfinance and disability sectors. Currently, she is working as Knowledge Manager in the South Asia Office of Leonard Cheshire International, a well-known disability NGO based in UK. Prior to this, Vardhani has been working as a freelance consultant with various NGOs and was also been associated with a national level study on “Impact Assessment of Microfinance in India” conducted for SIDBI bank in 10 microfinance institutions.]