With about 190 million adults without a bank account, India has –after China– the second-largest unbanked population in the world (World Bank). The microfinance sector has become a key instrument to fight financial exclusion in the country by providing financial and non-financial services to people excluded from the banking system. The sector has shown spectacular development: it reaches 60 million borrowers, for a total portfolio of 27 billion euros.
To support the development of microfinance in India, Grameen Crédit Agricole Foundation has granted a loan of 3 million euros over 3 years to Pahal Financial Services Private Limited, an Ahmedabad (Gujarat) based microfinance institution. Since its creation in 2011, Pahal has served nearly 750,000 customers, mainly women borrowers, across 167 branches with total assets under management of 81 million euros. Today, Pahal is one of the fastest growing microfinance institutions in India thanks to innovative and diverse product offering for low-income people.
“With this new partnership, the Grameen Crédit Agricole Foundation strengthens its action in favour of financial inclusion and women empowerment in India. This funding is our first direct exposure in India, using the External Commercial Borrowing channel recently opened by the Reserve Bank of India. The company has shown in many occasions its resilience and we trust that Pahal, its clients and the whole industry are recovering fast from this crisis”, said Caroline Brandt, Senior Investment Manager at the Foundation.
“Grameen Credit Agricole Foundation’s debt line is a validation of Pahal’s business model and displays the resilience of the microfinance sector in India”, said Kartik Mehta, Co-Founder and Managing Director. “We at Pahal are determined to be a part of financial inclusion agenda for the vulnerable sections of the society. This money will be used to onlend to the women borrowers of Pahal”, added Purvi Bhavsar, Co-Founder and Managing Director.
The Foundation’s financial support comes at a time when the microfinance sector is emerging out of the Covid-19 crisis. After lockdown relaxation, the anticipated microcredit demands are expected to trigger swift recovery of the sector. Pahal, in partnership with the Foundation, will support its borrowers to help them restart their businesses.