NEW DELHI, INDIA (4 February 2019) — The Asian Development Bank (ADB) today undertook an equity investment of approximately $20 million (in equivalent Indian rupees) in Annapurna Finance Private Limited (Annapurna), one of India’s largest microfinance institutions (MFIs), to increase its capital base and enhance its lending operations by offering finance to women and micro and small enterprises in the country’s rural areas.
“Women, particularly in the rural areas in India, still have difficulty in accessing capital, which limits their potential and prevents them from contributing significantly to inclusive and sustainable growth,” said ADB Principal Investment Specialist for Private Sector Operations Mr. Paul Flegler. “ADB’s support to Annapurna will expand its lending portfolio, helping ensure that rural women and micro and small enterprises needing capital can have better access to finance.”
“We are very excited to partner with another global and reputed investor like the Asian Development Bank,” said Annapurna Finance Private Limited Managing Director Mr. Gobinda Chandra Pattanaik. “We are at an enlivening juncture, where the business model has been proven and is also scaling well. Annapurna has succeeded to attract renowned global investors portraying its increasing augmentation in this sector. We look forward to leveraging ADB’s experience to strengthen our product and our reach to people in need of financing solutions.”
Access to credit in India is limited. Only 16.5% of borrowers in rural areas access credit through formal channels, with the figure even lower for women. Businesses owned by low-income women often can’t obtain credit as they lack collateral and financial documents and may be unfamiliar with paperwork and procedures.
ADB’s financing to Annapurna will allow the MFI to expand its lending operations, extending microfinance loans to women members of self-help groups—associations of up to 20 members mainly composed of women—and joint liability groups typically composed of 4 to 10 women formed with MFI help to obtain loans without collateral.
The financing will also enable Annapurna to provide loans to individuals, micro and small enterprises, as well as women looking for affordable housing loans in semi-urban and rural areas of lagging states. Unitus Capital acted as the exclusive investment advisor for the transaction.
Annapurna joined ADB’s Microfinance Risk Participation and Guarantee Program in 2014 and has 89% of its portfolio in lagging states and about 85% in rural areas. At the end of June 2018, Annapurna operated in 14 states through 451 branches, spread across 199 districts with more than 1.26 million clients.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 67 members—48 from the region.