Advancing Financial Inclusion – Ujjivan
Challenge: India’s economy has been steadily growing in recent years, but vast wealth disparity still exists in many parts of the country. Access to finance remains limited for small business owners, small-scale merchants, shopkeepers, farmers, and entrepreneurs – particularly women entrepreneurs. Large banks often overlook lower-income borrowers, and a lack of a formal, documented financial history compounds the hurdles for this underbanked sector of the economy. .
Solution: In 2014, OPIC provided $3.9 million in financing to Ujjivan, a microfinance institution with an established presence of nearly 500 branches across India. Alongside fellow lender Citi Inclusive Finance, OPIC financing allowed Ujjivan to expand its portfolio to small-scale borrowers across the country. Ujjivan offers a range of loans, from individual loans as small as $30, to group loans to support networks of self-employed women, and home loans upto $15,000. In 2015, OPIC expanded its support to Ujjivan with an additional $3.9 million in financing.
Impact: Ujjivan’s impact stems from its broad reach across India’s geography and economic spectrum. With small-scale entrepreneurs often living outside of large cities, Ujjivan’s branch offices provide easy access for growth microfinance. Loan officers can visit borrowers in person and with mobile technology perform initial loan consultations.
The majority of Ujjivan’s loans are to women, and Ujjivan branches are set up in rural areas, typically underserved by larger lenders. For example, in largely agricultural and relatively poor Bihar state, Ujjivan loans have allowed Neelam Devi (pictured above) to grow her family’s home screenprinting business from just a few local clients to a full roster of orders to clients as far as 100 miles away. She and her husband can provide for their family and continue to grow their business thanks to Ujjivan’s help.
And also in Bihar, Nandakisur Prashad used to earn just a few dollars a day selling textiles door to door. But with an Ujjivan loan of only $150 was able to purchase vastly more inventory and rent a market stall, allowing for a tenfold income increase. Nandakisur went on to purchase a home using Ujjivan financing and now enjoys a steady income from the textile shop.
Small amounts of capital are often the only obstacle between subsistence work in agriculture, retail, or service industries and thriving small businesses that offer stable and healthy incomes for families to boost their livelihood. With OPIC support, Ujjivan is offering this crucial capital to promising entrepreneurs, sparking inclusive economic growth across India.