Swadhaar FinAccess was established in Mumbai, India in 2005 as a nonprofit entity offering microcredit. Since then, it has grown and expanded its offerings, and currently operates as a subsidiary of RBL Bank, an Indian commercial financial institution, providing loans and savings products to low-income households and entrepreneurs.
Swadhaar’s founder, Veena Mankar, remembers her parents often saying that she had “an obligation to open doors for those less fortunate.” After four decades of working in the financial services industry, she started Swadhaar to fulfill her dream of using her experience to expand financial inclusion.
Swadhaar started by offering need-based loans with a group guarantee to women microentrepreneurs. In 2008 it sought to also serve the “missing middle,” businesses that are traditionally ignored by larger financial institutions, with a capacity-based individual loan product.
This addition was not easy, as individual lending products were fairly new to the Indian microfinance market. The higher level of risk associated with underwriting individual loans increased transaction costs and interest rates. When a 2010 microfinance industry crisis in the Indian state of Andhra Pradesh led to increased regulation of interest rates, Swadhaar had to halt serving the “missing middle,” as the new requirements no longer made the product it offered viable. It needed to develop a new business model.
Meanwhile, RBL Bank, wanting to build on its success in micro, small, and medium-sized enterprise (MSME) loans by expanding its reach into the microenterprise segment, turned to Swadhaar to form a strategic business correspondent relationship through which it could source microloans.
Faced with so many changes, Swadhaar, which had a longstanding relationship with Accion, asked Accion’s advisory team to help evaluate institutional readiness. Before introducing new products and partnerships, Swadhaar needed to build capacity, standardize its appraisal methodology, and streamline labor-intensive procedures. Creating efficiencies in internal processes was key to lowering operational costs and offering new financial products.