Strengthening the economic performance of women in South Asia
Annapurna was founded in 1992 as a non-profit organization committed to social development in Odisha, one of the poorest states in India. In 2007, Annapurna was transformed into a for-profit company. Today, the company is one of the five largest microfinance institutions in India with a loan portfolio of USD 859 million. Annapurna has continuously expanded its presence: The company's over 9,000 employees, most of whom work in rural regions, now serve over 2.35 million female borrowers throughout India.
Annapurna grants unsecured group loans to women in rural areas who otherwise have no access to financial services. Four to ten women join together to form an informal group of borrowers, whose members vouch for each other. They all have limited credit histories but need cash to finance their short-term working capital requirements. Since the members of the group have no physical collateral to offer to lenders, the borrower group is a powerful mechanism that helps members borrow against the social capital of their group. This model has proven to be an effective lending mechanism over the past three decades.
Strengthening the economy in rural regions of India through microfinance and investments in agriculture
Annapurna's loans are used to finance the economic activities of borrowers, often in the form of working capital for local businesses (such as small stores, tailors or confectioners), but also for investments in livestock, which is a productive asset for millions of rural households. The livelihoods of borrowers depend on rural consumption, agriculture and related activities that are 'decoupled' from economic cycles. As of June 30, 2022, the average loan amount per borrower was USD 363.
More than 84% of Annapurna's borrowers live in rural India and over 98% are women. Annapurna is based in Odisha (~25% of the total loan volume), one of the poorest states in India with a nominal GDP per capita of just over USD 1,500. Odisha also scores poorly in the Human Development Index. One-fifth of the state's population belongs to tribal cultures or indigenous peoples.
98% of borrowers are women
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Group loans for women in rural areas
Strong development impact per USD 1 million invested
Annapurna's typical borrower is a rural, economically active woman who does not own land. Due to her lack of credit history, she has no access to formal sources of finance, only to unregulated moneylenders. Annapurna's first loan is her entry into formal lending.
Through several cycles of on-time loan repayments, she is able to raise higher loans from various financial institutions that can access her credit history in seconds through one of India's national credit bureaus. In 2021, Annapurna financed 15 percent more female borrowers than in 2020, while the gross volume of loans to women grew by 17 percent in the same period. In 2021, Annapurna also launched three products/services specifically aimed at women.
Number of loans granted
Average loan amount
Beneficiaries reached with USD 1 million
The story of Rajani, borrower since 2015
Rajani Srichandana, Odisha
My name is Rajani Srichandana and I live in the village of Orbarsingh in the state of Odisha. My husband Shatrughna is a farmer. We have a family of ten and, like most families in rural India, a small piece of land. Farming used to be the only stable source of income for us. The income from farming was enough to secure our livelihood, but not enough to put some money aside at the end of the month. In 2015, at a village meeting organized by Annapurna Finance, I heard for the first time about how the company helps women in rural areas.
In the same year, I joined the Gangotri self-help group founded by Annapurna Finance, which consists of about 15 women. The Annapurna Finance staff also taught us basic financial literacy and made me realize the importance of saving, budgeting and income generating activities. In our group, we started saving 50 rupees per head every month and I opened a bank account with Odisha Gramya Bank. In the same year, I got a loan of 20,000 rupees (~USD 250) and opened a small grocery store at my home.
Over time, my family was able to increase their regular monthly income by a further 10,000 rupees. In the second loan cycle, I received 40,000 rupees and used it to buy more items for my store. Later, I applied for an individual dairy loan and received an amount of 130,000 rupees, which I used to buy three cows for my family. The other members of my family supported me in every possible way and we now have a total of 14 cows. We produce around 100 liters of milk every day. I keep 3 liters of this for my family's own use. I sell half of it to local dairy traders and the rest to my neighbors, or I use it to make dairy products that I then sell.
Annapurna Finance has helped to increase my family income and has led us on a path of development over the past few years. Thanks to the training offered by Annapurna Finance, my family and I have improved our savings rate and credit habits. Now we no longer depend on the local moneylender because our savings are sufficient for all emergencies. We have set up a joint fixed deposit account for the family and use a small portion of our farmland for fodder production. Last year, this initiative was recognized at a local level for its uniqueness and importance in the dairy industry. Thanks to the opportunities that Annapurna Finance has given me, the organization has become a kind of 'mother' to me and I hope that we will continue our collaboration in the long run to promote the development of my family.
