The pandemic crisis has severely impacted the lives of low-income households. The poor not only have unequal access to employment. They also have unequal access to financial tools, starting with credit. As debt becomes an integral part of livelihoods and crises recur, it is crucial to understand how financial supply can adapt to crises, including among the poorest. The Covid-19 pandemic and the lockdowns have revealed and probably reinforced pre-existing inequalities between borrowers regarding access to credit in terms of price, flexibility, and penalties for non-repayment. The crisis has also strengthened disparities among financial service providers, which have also had to ensure their own financial sustainability. While various policy measures were implemented (moratorium, refinancing debt, specific SHG programs, etc.), their distribution and effects have been uneven. It is necessary and urgent to build fair and inclusive financial services that are truly a source of protection and avert situations that lead to over-indebtedness and financial vulnerability.
Dvara Research and French Institute of Pondicherry are organizing a joint workshop to discuss these themes. By bringing together academics, practitioners, investors, and policymakers, this workshop aims to take stock of the crisis's effects and propose ways forward. Our aim is to arrive at a set of ideas on (i) how the microfinance sector can meaningfully serve the poorest or most vulnerable, especially during times of extreme distress and (ii) principles that the government, regulators and practitioners should be guided by when designing policies to mitigate debt distress for low-income households.