In India today, approximately 55 percent of Mumbai’s population lives in urban slum areas without access to mainstream financial services. Microfinance has been an effective tool in reducing poverty — bridging the gap between formal financial institutions and the poor. Available microcredit enables families with low incomes to expand businesses, invest in income-generating assets, support their children’s education, and establish financial stability.
The founders of Svasti, a Mumbai-based microfinance company focused on women, believe the right to financial services is fundamental for all people. This includes those who do not have the collateral or proof of income, as is the case for many young people working in the informal sector.
How it helps
From early on, the Michael & Susan Dell Foundation invested and worked alongside Svasti to provide microfinance options to the underserved in India. We met the founder, Arun Padmanabhan, in 2007 when he was first exploring the idea of microcredit and financial inclusion. Arun spent 15 months in the field to research his concept and learn more about local families, market dynamics, and community obstacles.
The research included groundwork and surveys in the slums of Mumbai to better understand customer needs and gauge the potential demand for lending products. From that research, the Svasti team identified productive uses for microcredit, the structure of weekly repayment capacity, and the need for weekly and monthly group meetings. The findings helped them design a product that was different from existing loan services in Mumbai.
Svasti continued to develop and refine its processes and technology, and improved operational efficiencies and data analytics to scale up. In 2010, the foundation provided additional seed capital, and later invested in a bridge round of equity fostering interest from other investors. The company now reaches more than 185,000 customers across 52 branches in four states.
In November 2019, Svasti announced it had again raised funds from new investors and used a portion of the funds to provide exits for early investors, including the Dell Foundation. Svasti continues to expand to more states in north and western India, helping to transform the lives of families from underserved communities across the country.
Investing in companies with the capacity to radically move the needle on social progress in India is at the core of our approach to mission-related impact investing..