THIS PAPER PROVIDES a short introduction to the range and diversity of micro-finance initiatives that are found in India’s cities. It was written for the developing strategy of the Urban Poverty Office of DFID, the Department for International Development (the British official development assistance programme), within urban India, and its major purpose was to provide "ideas and preliminary proposals" to help define and refine this strategy.

The report is divided into four sections. Chapter 1 describes the existing formal and informal financial services that serve low-income residents in Indian cities. It explains the different ways in which people can both save and borrow funds, and a range of examples is given from both inside and outside India. The second chapter looks at the experiences of city authorities in a number of Indian city-based urban poverty reduction programmes currently financed by DFID. The text is illustrated with examples of financial activities from both households and communities within the cities. The third chapter seeks to extend the existing work of the Urban Poverty Office by looking beyond India to a number of different strategies to extend the work of micro-finance agencies working in alternative ways. The final section, the epilogue, focuses particularly on how city authorities can "enable" low-income residents to gain access to financial services. The authors argue that city authorities should not directly provide such services but should seek to understand the services that are currently available and how these might be enhanced through a range of institutional, promotional and legal strategies.