Financial Engineering training

The Financial Engineering for Low Income Households (FELIH) course, conducted on the 30th of April and the 1st of May for the newly joined Trusters, was the last task of the 2-week long induction exercise. Intended to familiarize the participants with fundamental concepts and tools of finance, the session began with a brief introduction to the core functions of finance, current approaches to delivery of financial services and the conceptual issues in financial inclusion.

Over the two days Bindu Ananth, Amit Shah and Shilpa Sathe elaborated on these topics with a focus on their applications to low-income households, keeping in mind the varied background of participants and the limited time available.

• Amit Shah of IFMR Rural finance takes a session

• Shipa Sathe of InnerWorlds, making a point

The fundamentals consisting of preference theory, human capital, probability distributions and game theory were covered on the first day to ensure that all participants were on common ground. On the second day the focus was on learning how these concepts can be applied to real-life issues being faced by financial institutions today. Other topics covered included pricing an insurance contract and understanding how the Joint liability group behaves as an effective collateral substitute. Nachiket Mor led the discussion on asset allocation and portfolio choice and summed up the teachings of the two days.

The last assignment given to the participants was to develop a financial plan for a low-income household based on a real-life case study of one of the KGFS customers, which brought out innovative ideas on how to improve the customer’s financial well being based on the learning from the two days of training.

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Shilpa Sathe of InnerWorlds team contributed to this post.