Building resiliency through disaster risk reduction: an assessment of India’s microfinance sector

Building resiliency through disaster risk reduction: an assessment of India’s microfinance sector This report aims to develop an understanding of the existing disaster risk reduction (DRR) practices of microfinance institutions (MFIs) in the Indian market and to map out the disaster-related vulnerabilities of clients affected by crisis in order to assess opportunities for more effective disaster preparedness. The study found that the Indian microfinance sector is in a very nascent stage of development with regard to disaster risk reduction. Though MFIs have the potential to play a significant support role, there is very little awareness and knowledge of disaster management and planning practices. Currently, MFIs offer only limited support during the response and recovery phases. MFIs do, however, capture client risk exposure at the loan application stage, and many use technology platforms to collect real-time data on cash collection and loan disbursements. There is an opportunity for the information collected in the application stage to be used to identify and categorize clients and locations into vulnerable groups. There is also widespread evidence of robust operational and financial risk mitigation mandates and practices within MFIs. This indicates that these institutions would be capable of scaling these practices to the disaster context, provided there is capacity building and orientation from the perspective of disaster preparedness. Though the institutions abide by the regulatory body guidelines and are committed to poverty reduction, there remains a lack of a concrete vision of their role in disaster management.