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Annapurna Finance: microfinance helping to empower Indian women
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The Indian microfinance institution Annapurna Finance, specialising in social loans, has long been supported by Proparco. It serves a predominantly female population in rural areas where there is a low level of financial inclusion. In this report from the state of Odisha in north-east India, we meet up with some women beneficiaries.
Annapurna Finance was founded in 2007 and is one of India's leading microfinance institutions (MFIs). Thanks to its strong rural network, it serves an overwhelmingly female public a long way from traditional banking systems. It is present throughout the country and serves 2.3 million customers, 99% of whom are women.
In 2022, Proparco invested US$ 15 million in a financing drive for Annapurna Finance. This investment drive, for a total amount of US$ 100 million, will enable this MFI to grow its loan portfolio, invest in new technologies, expand its geographical footprint and pursue its vision of large-scale financial inclusion.
680 euros
The average amount borrowed by each Annapurna Finance customer at the Begunia branch in the Indian state of Odisha.
The branch covers a region of 240 villages and has more than 5,000 customers, the vast majority of them women.
ANNAPURNA, THE XXL MICROFINANCE INSTITUTION
At Annapurna’s headquarters in Bhubaneswar - the capital of the north-eastern Indian state of Odisha - a charter summarises the Company’s integrity and transparency-based rules. Annapurna Finance's primary mission is "to serve low-income customers and their families by providing ethical, dignified, transparent, fair and effective financial services”.
“The financial and social impacts of microfinance in India are very significant, especially for women. By 2027, our goal is to support 4 million women who are far removed from traditional banking systems.”
In Hirapur, a remote village in Odisha, six women have formed a collective to benefit from this micro-credit programme that plays a vital role in empowering women. Their names are Mina, Jharna, Nirmala, Ranjita, Sulochana and Sosmita and they are weavers, fisherwomen and sellers... Thanks to the support of Annapurna Finance, they are able to create and develop income-generating activities, often from their own homes. Encounters.
MINA AND SULOCHANA: MICRO LOANS FOR ESCAPING FROM EXTREME POVERTY
With a precise movement she has repeated a thousand times, Mina slides the shuttle insertion device into a loom, set up in a room in her house. Using her expert hands, in time to the rhythm of the machine, the contours of a red, white and black squared sari are gradually coming together - a fabric she will be able to sell for between 400 and 800 rupees a piece (roughly 5 to 10 euros).
@ Proparco
This particular day, this 46-year-old mother of two will spend eight hours putting together three pieces of this long draped fabric, a symbol of Indian feminine beauty and elegance. As she explains, pointing to her electric loom, "It is a hard and demanding job but, thanks to this investment, I have trebled my output”. So Mina was able to escape her previous situation of extreme poverty. "I used to work on a handloom, which was a lot less reliable. Two years ago, I was able to buy this model thanks to a 30,000 rupee loan (about 370 euros) from Annapurna Finance. I pay it back each month, without any problem.
Beside Mina, her face lit up by a bindi - the red dot that Indian married women wear between their eyebrows - Sulochana tells her story. "Six months ago, I learned that Annapurna Finance was helping women in our community. I contacted [the MFI] and got a loan of 50,000 rupees (about 550 euros)," she says, holding her infant child. "I was also using a manual loom. With this electric one I have just bought, my output has increased dramatically. I used to earn 200 rupees a day (less than 3 euros). Now I can expect to earn five times more.”
JAHRNA: “I WAS TOO POOR TO GET A TRADITIONAL BANK LOAN”
In front of her house with its aqua-blue coloured walls at the entrance to the village of Hirapur, Jahrna lays out the day's catch: a few kilos of shrimps plus a handful of garfish, a long, needle-shaped fish. "My husband catches them a few kilometres from the village and I sell them," explains the 38-year-old woman, wrapped in a bright, golden sari.
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"When I started my business, I used to cycle to the market in Belugaon, over 60 kilometres away. I would return home exhausted.” Until the day she was able to invest in a three-wheeled vehicle and then acquire a van with the help of Annapurna Finance. "Without Annapurna, I would not have been able to grow my business. I was too poor to get a traditional bank loan.” Transaction costs often prevent commercial banks from taking on small accounts and micro-businesses. “Annapurna helped me to break out of this impasse" adds Jarhna, who initially borrowed 50,000 rupees (about 610 euros) from the MFI, and then 300,000 rupees (about 3,700 euros) in social loans.
"I recently built my own fish storage unit – again with support from Annapurna. My business is growing and I am financially independent.”
WHEN MICRO LOANS EQUAL DIGITALISATION
“Access to our digital services is key”, explains Radharani Barik, who heads up Annapurna Finance’s Begunia office (covering 240 villages, including Hirapur). "Digitalisation strengthens our interactions with our customers". This practice, based around mobile payments, is a key component in financial inclusion, eliminating geographical distance and integrating as many people as possible into the banking system through low transaction costs.
@ Proparco
"60% of our customers use digital solutions to manage their cash flow," continues Ms Barik. In India, this takes place via Google Pay or local solutions such as Phone Pe, Bhim UPI or Paytm. "The challenge is to generalise this practice," she notes. "We are raising awareness and training all our beneficiaries.”
In the village of Hirapur, this digital technology is already well established. Soshima is able to track her most recent transactions directly in the Annapurna Finance app. “It's simple, practical and efficient" explains the young woman in her twenties with a broad smile.
“In India, microfinance has a major financial and social impact”
Interview with Dibyajyoti Pattanaik, Director, Annapurna Finance
key figures
- 1000 agencies throughout the country
- 2.3 million customers
- $US 1 billion in assets under management