In 1991, a household survey in India addressing rural access to finance revealed that barely one-sixth of rural households had loans from formal rural finance institutions and that only 35 to 37 percent of the actual credit needs of the rural poor were being met through these formal channels (Hess 2003). ttese findings implied that over a half of all rural household debt was to informal sources, such as moneylenders charging annual interest rates ranging from 40 to 120 percent. A survey based on the Economic Census of 1998 (Hess 2003) showed that India's formal financial intermediaries reportedly met only 2.5 percent of the credit needs of the unorganized sector through commercial lending programs. In this context, the CRMG, in collaboration with the Hyderabad-based microfinance institution BASIX and the Indian insurance company ICICI Lom bard, a subsidiary of ICICI Bank, initiated a project to explore the feasibility of weather insurance for Indian farmers and to determine if, by reducing exposure to weather risk, it would be possible to extend the reach of financial services to the rural sector.

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