Proparco partners with Pahal Financial Services to support financial inclusion and expand access to microfinance in India

India, home to a rapidly growing economy, continues to face challenges in financial inclusion, particularly for micro and small entrepreneurs. Access to affordable credit remains a crucial driver for economic empowerment, especially in rural and semi-urban areas. Pahal Financial Services has been at the forefront of this transformation, enabling micro-entrepreneurs and small businesses to access credit and build sustainable livelihoods.

Founded in 2011, Pahal Financial Services has grown into a trusted financial partner for over 550k women borrowers across 11 states in India. With a focus on responsible lending to women led borrowers and customer-centric financial solutions, Pahal provides micro and MSME loans tailored to the unique needs of low-income households, helping them invest in businesses, education, and healthcare. Besides, Pahal is one of the early institutions to design innovative solutions on climate finance keeping the vulnerability of this segment to climate risks in mind.  

The investment aligns with Proparco’s 2023–2027 strategy to reduce inequalities and is expected to sustain over 300,000 jobs, create more than 700 new ones, and enable more than 140,000 micro-loans. Pahal’s initiatives directly support several UN Sustainable Development Goals (SDGs), including SDG 1 -No Poverty, SDG 8 -Decent Work and Economic Growth, and SDG 10 -Reduced Inequalities.

Pahal’s gender-inclusive leadership and client base qualify the deal under the global 2X Challenge for women’s economic empowerment.

 “We are excited to welcome Proparco as an equity partner in Pahal. Proparco’s expertise on climate and ESG aspects will help propel Pahal’s growth over the coming years. This funding will play a pivotal role in accelerating our growth, expanding our geographic presence, and strengthening our ability to serve more micro-entrepreneurs, particularly women, who are the backbone of rural economies,” said Kartik Mehta and Purvi Bhavsar, Co-founders of Pahal Financial Services. “With Proparco’s support, we aim to deepen our social impact and reinforce our commitment to responsible and sustainable finance.”

Proparco’s investment in Pahal underscores its commitment to supporting financial institutions that drive economic and social development in emerging markets. Emmanuelle Riedel-Drouin, Global head Lending Operations of Proparco, stated, "This marks a significant step forward for women’s empowerment in India. By supporting Pahal’s expansion, we aim to unlock financial access for underserved communities and promote long-term economic resilience and sustainable growth. Our support for Pahal’s expansion is a direct reflection of the shared India–France commitment, as outlined in the Modi–Macron joint statement, to foster inclusive growth and improve financial access for underserved populations."

Commenting on the deal, Luca Torre, Co-founder and CEO of Gawa Capital said-"We are delighted to continue our partnership with Pahal Financial Services as they expand their critical role in fostering financial inclusion across India. This investment reaffirms our commitment to supporting responsible and sustainable microfinance institutions that empower underserved communities, particularly women entrepreneurs. Pahal’s strong governance, customer-centric approach, and focus on impact-driven lending make them a key player in driving economic resilience and social progress. We look forward to seeing their continued growth and positive impact on the lives of micro-entrepreneurs across the country."

With this fresh capital infusion, Pahal plans to enhance its digital lending capabilities, expand into underserved regions, and introduce innovative financial products that cater to the evolving needs of its customers. The company remains committed to maintaining high standards of governance, transparency, and customer-centricity while driving financial inclusion at scale.

Unitus Capital acted as the exclusive financial advisor to Pahal Financial Services for this transaction.