Overview
Investment
Recognizing the success of microfinance in rural India, we saw an opportunity to adapt this proven model to urban areas, where poverty rates had been rising due to rapid migration.
By enhancing access to financial resources, we addressed the unique challenges faced by 17.3 million borrowers in urban communities—often women working from their homes—helping them grow their businesses, increase their income, and achieve financial independence.
Our partner organizations provided small loans ranging from $100 to $1,000 to help small urban businesses build inventories, expand their businesses, and stabilize family incomes. By combining group and individual loan options with personalized disbursement and collection services, we made credit more accessible for those without traditional banking.
This approach not only offered much-needed financial support but also helped individuals build credit histories, access essential capital, and boost local economic growth. loans, offering high
After entering the market in 2006, we supported several microfinance institutions to offer loans to underserved customers in urban areas, such as small mom and pop stores, street vendors, tailors, and roadside mechanics.
What started with 115,000 urban microfinance borrowers grew to 52.3 million by 2024. By offering business loans and supporting local job creation, microfinance contributed to the development of urban communities, improving living standards, creating new jobs, and fostering economic empowerment.
The foundation supported eight early-stage microfinance institutions ultimately serving over 17 million customers, strengthening communities and building more resilient cities.
The foundation made its first investment in a microfinance institution (MFI) after an in-depth study in Mumbai to understand customer needs and how they could be served. At the time, urban microfinance made up less than 5% of the total market, and myths around the high risk of serving a migratory urban population prevented its growth. Our customer research revealed significant demand – and a meaningful opportunity to empower small business owners.
The portfolio expanded to seven microfinance institutions, each with its own product offerings, value-added services, geographical coverage, and use of technology. This made it possible for the partners to learn from different models and continuously improve their offerings.
Rising confidence in microfinance attracted more investors including some prominent commercial investors. More than half of the foundation’s portfolio companies were able to raise additional capital. Recognizing that the sector was now set for sustained growth, the foundation stopped making new investments in urban MFIs.
The foundation collaborated with global stakeholders to refine the social performance reporting metrics for MFIs, aiming for improved transparency and impact in the sector.
The foundation made a partial exit from an investment, demonstrating confidence in the long-term sustainability of MFI institutions with support from diverse funding sources.
Two partner MFIs, Ujjivan and Janalakshmi Financial Services, were among the eight institutions granted licenses as small finance banks, a new category aimed at serving the under-banked population with comprehensive financial services.
By 2018, the portfolio had positively impacted over 10 million people, expanding access to microfinance solutions for entrepreneurs and small business owners across urban India.
