Adding Value to Clients in Financial Inclusion: Equitas and Sonata
Equitas Small Finance Bank Ltd (formerly Equitas Holdings) has long had a focus helping women with disabilities to establish their own businesses by providing microfinancing solutions without collateral and specialized training on business development and finding new marketing opportunities. In 2016, Equitas was selected among 1000 models studied by Zero Project, for its model of helping women with disabilities. Each year, the Zero Project studies innovative practices from 70 countries in a particular theme chosen from the UN Convention on the Rights of People with Disabilities (UN CRPD) and recognizes the top 50 innovative, scalable and impactful practices at an annual conference and award ceremony. At this year’s conference in February, Equitas was recognized for its Innovative Policy/Practice 2017 on Employment, Work and Vocational Education and Training. Read more at https://zeroproject.org/practice/india-equitas/.
Caspian has backed Equitas since 2008, participating in the company’s early investment rounds, continuing to provide equity and active board participation when Equitas was a private non-bank finance company, and supporting Equitas through its initial public offering in April 2016 and now as a Small Finance Bank.
Another Indian microlender, Sonata Finance Private Ltd., has been working with Caspian for over a decade. Caspian facilitated the acquisition of its operating license and was the first institutional equity investor in early 2006, has participated on the Board for ten years, actively assisted in reorganizing senior management in 2009, and has helped with recruiting other senior staff.
Sonata offers microfinance services to economically active poor women from marginalized communities. The company’s operations are centered in Uttar Pradesh and other Northern states of India with significantly higher poverty levels than other regions of the country. To maintain its focus on poor clients Sonata was one of the first microfinance institutions in India that used the Progress out of Poverty Index for client selection, and has been developing products and services to better serve these remote customers.
In 2014, Sonata and Grameen Foundation India, a nonprofit organization that helps poor households and communities access financial services and information on agriculture, piloted a mobile payment service for Sonata clients to repay their loans. By replacing collections in cash with a digital payment service the company reduced transaction costs and increased convenience and security for its customers and staff. This mobile finance collaboration was chosen as a finalist for the Wall Street Journal’s The Financial Inclusion Challenge 2016. After the conclusion of this successful pilot, Sonata is planning to scale-up/roll-out the tested business model across a wider geography. For more on this innovative digital financial service, see this blog series.
We are proud to see that Sonata and Equitas are recognized for their achievements in serving remote and vulnerable populations with cutting-edge services and hope these positive results encourage other financial inclusion institutions to leverage their distribution platforms to meet the diverse needs of their client base.