DAI Asset Management (“DAI-AM”) has announced an investment in Annapurna, a leading microfinance institution located in Odisha, India. The $10 million investment aims to promote economic inclusion in underserved rural communities, with a specific emphasis on empowering women in the country. Additionally, the investment will help Annapurna expand its services to reach more individuals in rural areas and grow its loan portfolio.
A recent IFC study estimates that 90% of female entrepreneurs in India do not receive financing from formal institutions, with respondents stating that personal resources are their most preferred option for finance. Furthermore, women entrepreneurs seeking to scale-up their businesses must also grapple with challenges such as limited product awareness and/or financial literacy.
Annapurna, which provides financial services to approximately 2.4 million end borrowers, with 99% being female, was founded in 2010 and offers products that include group loans, project-specific micro loans, and MSME loans for small business owners. The company also provides training and other non-financial services to help its clients enhance their entrepreneurial skills and progress toward their business goals.
The company’s average loan size of approximately $400 and their policy of regular monitoring and follow-up on its end borrowers, coupled with financial literacy training, has resulted in re-payment rates of over 99% on its collateral-free loans.
This is DAI-AM’s third investment in Annapurna.
Kausalya Nayak is a resident of Rajpur village in northern India. After her husband passed away seven years ago, she decided to utilize her handloom weaving skills that she received from the government to start a small business making sarees. She applied for a Samarth loan from Annapurna and used the funds to purchase raw materials for her venture.
Kausalya’s saree business has provided her with the means to support her two sons’ education, manage household expenses, and attend to her ailing mother-in-law’s medical needs. Her business has not only provided her with economic benefits but has also increased her reputation in society, making her an inspiration to others in her village.
Kausalya’s elder son is currently pursuing his graduate studies, and her younger son is studying in the 10th grade. Both sons assist their mother in running the business.
During her second loan cycle, Kausalya received a loan of INR 40,000 ($542), which allowed her to increase her raw material inventory, thereby increasing production. She currently produces around 20 sarees per month, which she sells to a retailer who collects them from her home. Kausalya earns between INR 700 ($9) to INR 800 ($11) per saree, depending on the design complexity and fabric quality. She aims to purchase a power loom to further enhance production speed and scale. She recently received a loan of INR 70,000 ($949), which she intends to invest in purchasing a better machine.
Kausalya’s loyalty to Annapurna and her good repayment history have made her eligible for Annapurna’s Pratham Loan, a loan designed for privileged loyal customers.
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