Some 120,000 women in rural parts of northern India now have access to small loans and increased credit, thanks to a partnership between IFC and Utkarsh Micro Finance, a start-up based in the low-income state of Uttar Pradesh. One of those women, Phool Pati Devi, had struggled for 15 years to earn a living by selling food off a cart that she pushed through her village.
She took her first loan, for a little more than $200, from Utkarsh in 2010 and used the money to open a small grocery store in her house. The store’s sales have been brisk, allowing Devi to send her children to a better private school and put $50 in the family savings account each month. Now she is planning her next investment: a refrigerated unit for cold drinks. “I am now able to lead a better life,” Devi says.
The micro loans by Utkarsh, which means “progress” in the local language, are aimed at allowing women borrowers to start or expand their businesses. The microfinance institution aims to expand its reach to 500,000 women over the next five years. IFC has invested $1.7 million in Utkarsh, and with advice has helped the company strengthen its operations and establish a credit- and risk management system to support expansion to the lower-income states in India. With IFC’s help, the company is instituting practices that avoid over-indebtedness, encourage better credit appraisal policies, and promote transparent pricing.
“Very few bankers and private players want to take risks, especially in those markets that have typically not benefited from mainstream growth in the past,” said Govind Singh, Utkarsh’s Managing Director and CEO. “IFC’s support is helping us reach out to women who have not been served traditionally.