Growth Capital for Indian Microfinance Institutions
Lok Capital’s mission is to promote inclusive growth by supporting the development of social enterprises to deliver basic services to serve the BOP segment in a scalable, affordable and commercially viable manner. Lok seeks to partner with talented and visionary entrepreneurs to help take these social enterprises in India to a new level of sustainability, scalability and professionalism.
About You
About You
First Name
Vishal
Last Name
Mehta
Website
Your Organization
Lok Advisory Services Limited
Country
India
About Your Organization
Organization Name
Lok Advisory Services Limited
Organization Website
Organization Phone
+911244709700
Organization Address
12A, 2nd Floor, JMD Pacific Square Sector- 15, Part 2 Gurgaon, Haryana, India - 122001
Organization Country
India, HR
Organization Type
Private Institution
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Your solution
Name Your solution
Growth Capital for Indian Microfinance Institutions
Describe Your Solution
Lok Capital’s mission is to promote inclusive growth by supporting the development of social enterprises to deliver basic services to serve the BOP segment in a scalable, affordable and commercially viable manner. Lok seeks to partner with talented and visionary entrepreneurs to help take these social enterprises in India to a new level of sustainability, scalability and professionalism.
Country your work focuses on
India, XX
If multiple countries, please list them here. If your solution targets an entire region, please select it below
Region(s) your solution focuses on:
South Asia.
Range of turnover in your target firms, in USD
$1-5 Million, $6-10 Million, $11-20 Million, $21-50 Million, More than 50 Million.
Average turnover in USD of your target firm
35365079
Number of employees in your target firms
More than 150.
Average number of employees of your target firm
3136
Specify the size, average and range of expected loans or investments in each target firm
Average equity investment in our investee companies - $ 1872445.
The investee microfinance institutions give income generation or cash flow smoothening loan of average ticket size $150-300 to microentrepreneurs engaged in small scale business activities.
What stage is your solution in?
Operating for 1‐5 years
Innovation
What makes your innovative solution unique?
The microfinance institutions funded by Lok reach out to the low income strata of the spociety who do not have access to formal banking system for raising debt to support their entrepreneurial activities. Through 8 such organizations in the portfolio, Lok has touched the lives of more than 6 million poor households spread across 22 states of India.
How does your proposed innovation leverage public intervention in catalyzing private SME finance?
The equity/growth capital we provide to the microfinance institutions helps these organizations access the capital markets to raise debt from various sources and onlend to the poor households. As per the Indian banking regulations, the microfinance institutions can leverage their capital base by upto 6 times. We also help our portfolio companies develop banking relationships and explore additional sources of debt.
What barriers does your proposed solution address?
Lack of collateral, Lack of financial capacity, Lack of SME access to skills / knowledge / markets, Lack of institutional capacity of financial intermediaries, High transaction costs for financial intermediaries to serve SMEs, Underdeveloped local capital markets (term local currency funding, exit options for SME equity), Lack of financing to women entrepreneurs, Specific barriers to fragile and weak states.
If you checked any of these barriers, describe how your solution addresses them
More than 70% of indian households do not have access to formal banking system. The microfinance institutions funded by Lok reach out to the underserved especially women micro-entrepreneurs and provides them access to debt at reasonable cost and helps them come out of the moneylenders controls and empowers them by enabling them to support their family financially through additional earnings.Lok as a strategy helps the portfolio microfinance institutions to reach out to underserved states, help develop business model and products which addresses the regional challenges and market dynamics.
Impact
Provide empirical evidence of your proposed solution's success/impact at present. If your project is in the idea phase, please provide evidence that speaks to its potential impact
Lok through its portfolio of 8 microfinance institutions has successfully reached to more than 6 million households spread across 22 states of India and has provided more than $ 1.50 billion worth of income generation and working capital loans to women micro enterprises. These loans help women and micro-entrepreneurs in setting up microenterprises and improve their earnings .
How many firms do you expect to reach?
Through 2 funds, Lok expects to support over 20 such microfinance institutions and through them touch the lives of more than 15 million households across the length and breadth of the country. At the same time help these microfinance institutions in instituting the industry best practices and become them a better employer.
What is the volume of private SME finance you aim to catalyze?
Lok has already supported 9 institutions till date and plans to support a dozen more such institutions within next 3 years time.
What time frame will be required to reach these targets?
This is a gradual approach wherein the institutions we have already supported are spreading their wings and reaching out to more and more households who need financial assistance. in next 3 years Lok will be supporting around a dozen more such organizations.
Does your solution seek to have an impact on public policy?
Yes
What would prevent your solution from being a success?
Our offering is already operations and impacting the lives of low income households across the country.
This Entry is about (Issues)
Describe the social impact of your innovation. Please include both numbers and stories as evidence of this impact
Approximately 300 words left (1200 characters).
Sustainability
List all the funding sources that are required for the sustainability of this solution
The microfinance institutions where we provide equity capital, to optimaly utilize the capital need to raise debt from the formal banking system or explore alternate debt raising avenues. Hence a vibrand debt market is necessary to make these ventures sustainable. The financial services space is strongly controlled by regulations and hence the regulatory environment needs to be cohesive for such business entities to flourish.
Given the fact that the indian microfinance instituion is growing at a very fast pace there is a need of self discipline and hence self regulatory organization which defines the best practices and the players in the space honour and practice it.
Demonstrate how your proposed solution has the capacity to graduate from dependence on public finance. What is the time frame?
Approximately 450 words left (2400 characters).
Demonstrate how your proposed solution will survive a potential loss of its largest private funding source
Approximately 350 words left (1600 characters).
Please tell us what kind of partnerships, if any, could be critical to the greater success and sustainability of your innovation
Financial inclusion effectively means making micro-credit, micro-savings and micro-insurance services accessible to the underserved. To achieve real financial inclusion objectives, the instituions need to get into strategic partnerships with various entities in the space to be able to offer all these services to its customers.
Are there non-financial issues that could threaten the sustainability of your proposed solution?
Regulatory issues and socio-political risks are the biggest external factors that can destabilize a microfinance institutions. Strong operational processes, controls, fraud control mechanism and customer engagement are some of the key internal factors which an organizations needs to build strongly to build a sustainable microfinance institution.
Please tell us if your proposed solution aims to scale up through a high growth sector, expand immediately to multiple sectors, and/or scale up geographically
The microfinance model works on the concept of achieving large numbers and reaching out to diverse geographies as well as multiple customer segments to avoid concentration risk.
Lok helps its portfolio microfinance institutions to define the future growth strategy and develop geographic expansion plans effectively reaching out to multiple states/ geographies in line with the organizations mission and objectives.
 | 90 weeks agoVishal Mehta updated this Competition Entry. |
| 90 weeks agoVishal Mehta submitted this idea. |
