A $550,000 investment into start-up microfinance institution Utkarsh Microfinance by the International Finance Corporation has enabled the MFI to reach 60,000 rural women entrepreneurs in North India. With goals of reaching 500,000 over the next five years, Utkarsh Microfinance is putting systems and processes in place from the outset to prevent over-indebtedness, and promote more efficient credit appraisal and transparency.
A partnership between International Finance Corporation (IFC), a member of the World Bank Group, and Utkarsh Microfinance, a start-up based in Uttar Pradesh, India has helped 60, 000 women in rural parts of northern India have access to finance and increased credit. IFC’s $550 000 investment has helped Utkarsh expand access to financial services for women entrepreneurs in rural parts of India.
With IFC’s help, Utkarsh is instituting practices that avoid over-indebtedness, encourage better credit appraisal policies, and promote transparent pricing. Furthermore, IFC’s advisory services have helped establish a credit and risk-management system and strength monitoring.
Phool Pati Devi is one of nearly 60,000 women in rural parts of northern India who now have access to finance and increased credit, which means “progress” in the local language. Phool Pati took her first loan from Utkarsh, for a little over $200 that allowed her to open a small grocery store in her home leaving the cart aside. Her business has been brisk, allowing her to send her children to a better school and put $50 in the family savings account each month. Her next future investment would be a refrigerated unit for cold drinks.
These small loans make it possible for women borrowers to start or expand their businesses. And there’s room to grow: Utkarsh aims to reach 500,000 women over the next five years.
“Very few bankers and private players want to take risks, especially in those markets that have typically not benefited from mainstream growth in the past,” said Govind Singh, Utkarsh Managing Director and CEO. “IFC’s support is helping us reach out to women who need access to financial services and have not been served traditionally.”
Similarly, IFC is also supporting women’s access to financial services through its partnership with the Self-Employed Women’s Association (SEWA) of India. It recently, provided funding to Shree Mahila SEWA Sahakari Bank, an all-women’s cooperative bank founded in 1974 with the specific goal to provide credit for self-employed women. SEWA Bank is pursuing a new business model, by making access to savings, pensions, and insurance- in addition to credit- available to the 1.3 million women who comprise the parent organization’s membership.