In India, however, it has been applied to the sale of derivatives by banks to corporate customers.
In mid-2009, a little over a year since we had started Pudhuaaru Kshetriya Gramin Financial Services (Pudhuaaru KGFS), a rural financial institution in Thanjavur district of Tamil Nadu, we were confronted with a situation that re-defined our approach to financial services delivery. A customer of ours had died in a road accident on her way to the paddy field where she worked as a daily wage labourer. It turned out that she was the sole breadwinner for a family of five, including two young children. A few months previously, she had borrowed about 50,000 from us against gold as collateral for some household expenses. While the Pudhuaaru KGFS branch had spoken to her about availing term life and personal accident insurance, neither she nor they followed up rigorously on this. The family, therefore, lost not only the future earnings of the breadwinner but also a significant asset that got accumulated through past savings. They were very likely about to experience severe financial distress.
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