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FMO and Finnfund back SATYA to empower India’s female entreprenuers

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Published: 20 June 2023

Microfinance institution SATYA has secured debt funding from the two European institutions to expand their reach and improve outcomes for millions of low income households in India.

Millions of female entrepreneurs from India’s rural and semi-urban areas are excluded from traditional banking channels because of their low, irregular, and unpredictable income | District Katani, India by Naturecreator.

FMO, the Dutch entrepreneurial development bank, and Finish development financier and impact investor Finnfund, have committed to a $35m debt funding of SATYA MicroCapital, a Delhi-based microfinance institution supporting women from low-income households across the rural areas of India.

SATYA was established in 2016 and today provides affordable micro credit services to almost 1.5 million female entrepreneurs from India’s rural and semi-urban areas who are excluded from traditional banking channels because of their low, irregular, and unpredictable income.

According to World Bank, only 10% of Indian women have borrowed for a formal financial institution. Female recipients of SATYA’s loans have been able to increase their annual income by 11%.

On announcing the investment, Aleksandra Gazy, investment officer at FMO, said, “We are thrilled to be supporting together with Finnfund our new MFI client SATYA with this high-impact transaction. Labelled as 100% Reducing Inequalities and 20% Green, the funds have been earmarked to fund women and youth financing, thereby promoting gender equality and female empowerment.”

Kyaw Latt, Finnfund’s investment associate, described SATYA as “an important enabler of financial inclusion”. He added: “The company’s commitment to social mission and empowering women is well aligned with Finnfund’s aim to promote gender equality and strengthen women’s financial independence, especially among the traditionally underserved population in India.”

Finnfund and FMO’s investment is classified as a 2X Challenge-eligible gender investment. The 2X Challenge, overseen by 2X Collaborative, is a G7-backed initiative to promote lending that specifically benefits women. It was initially set out to mobilise $3bn of investments by DFIs and MDBs in 2018-20 that qualified under its criteria, but it surpassed that figure, as reported by Impact Investor.

Expanding reach

SATYA provides group loans, where family or friends are acting as co-borrowers for the loans. Like many other financial institutions in India, in the past it required that borrowers should be married and widow members needed to have their son acting as a co-borrower.

This year, the MFI has made progress on removing the marital status from loan eligibility. “Including the previously underserved groups like unmarried women and widows is a big step both culturally and business-wise”, said Finndfund’s Latt, adding that expanding the client base will help SATYA achieve their aim to be a catalyst for the socio-economic improvement of 5 million households in India by 2025.

SATYA’s CEO & CIO, Vivek Tiwari, said the capital raised will be used to expand their operations to a broader client base. “We are extremely grateful for the unmatched belief Finnfund and FMO have bestowed in our organisation,” he said.

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