The Pursuit of Complete Financial Inclusion: The KGFS Model in India
This paper examines the Kshetriya Gramin Financial Services (KGFS) model in India built by the Institute for Financial and Management Research (IFMR) Trust on three core operating principles: complete coverage of the population in a focused geographic area, customized client wealth management services, and a broad range of products. The paper studies five separate KGFS institutions working in very different regions of the country which serve a total of 200,000 clients. Some branches of these institutions have become profitable, though none of the five KGFS institutions has attained break-even on a consolidated basis. Achievements of this model include:
- Over 50% of clients enroll within the first 18 months of a KGFS branch opening nearby;
- Clients have begun to use multiple financial services from KGFS institutions, especially insurance and pensions;
- More than 60% of enrolled clients across all KGFS institutions use insurance services;
- Credit remains important, with slightly more than 55% accessing a loan product.
The model's customized wealth management approach starts with identifying household needs and goals to provide services centered on client needs, and without biases to sell one product or another. The ultimate aim of the model is meaningful improvement in the financial well-being of households, an outcome KGFS is evaluating with external research help.