World Trade Organization Organisation Mondiale du Commerce Organización Mundial del Comercio

The objectives of SHG Bank Linkage are as under:

1. 
   to evolve supplementary credit strategies for meeting the credit needs of the poor by combining the flexibility, sensitivity and responsiveness of the informal credit system with the strength of technical and administrative capabilities and financial resources of the formal credit institutions;
   
2. 
   to build mutual trust and confidence between the bankers and the rural poor;
   
3. 
   to encourage banking activity, both on the thrift as well as credit sides, in assessment of the population that the formal financial institutions usually find difficult to cover.
   

Egypt 7:

7- Page 151 paragraph 98

How did the Micro Insurance Regulations 2005 affect the micro insurance sector positively and what were the policies pursued to achieve this?

Reply: To provide a hedge against unforeseen risks, micro insurance is widely accepted as one of the essential ingredients of financial inclusion packages. Micro insurance regulations issued by IRDA have provided a fillip in propagating micro insurance as a conceptual issue. With the positive and facilitative approach adopted under the micro insurance regulations, it is expected that all insurance companies would come out with a progressive business approach and carry forward the spirit of regulations thereby extending insurance penetration to all segments of society.

In India, a large proportion of the population lives below poverty line and therefore importance of micro insurance is undeniable. Most of the people in this segment are not only illiterate; their level of awareness about insurance is also very low. In order to facilitate penetration of micro insurance to the lower income segments, IRDA has formulated the micro insurance regulations. Micro Insurance Regulations 2005 provides a platform to distribute insurance products which are affordable to the rural and urban poor and to enable micro insurance to be an integral part of the country's wider insurance system.

The main thrust of micro insurance regulations is protection of low income people with affordable insurance products to help cope with and recover from common risks with standardised popular insurance products adhering to certain levels of cover, premium and benefit standards. These regulations have allowed non-government organisations (NGOs) and self help groups (SHGs) to act as agents to insurance companies in marketing the micro insurance products and have also allowed both life and non-life insurers to promote combined micro insurance products.