Commonwealth Development Corporation (CDC), world’s oldest development finance institution owned by the UK, together with Lok Capital, one of the largest dedicated venture capital funds in India for businesses focused on serving the bottom of pyramid (BOP) customer segment, have announced Series D investment of $21 million in Utkarsh Micro Finance Private Ltd.
The Series D funds will be utilised to help the company diversify its portfolio of services and products as well as grow in existing geographies while expanding in others. Existing investors IFC, NMI and Aavishkaar have also participated in this round of funding.
Founded in 2009 by Govind Singh, Varanasi-based Utkarsh offers microfinance products to the underserved population in the northern and central parts of India where access to formal source of finance has been historically underpenetrated as compared to the states in the east and south India.
Utkarsh has tapped into this large opportunity through credit and pension products and by launching Micro Enterprises Loans and Micro Pension. The company’s customer base is predominantly women focused; the joint liability group loans are specifically designed for lower-income women. Over four lakhs financially excluded women have been impacted in the states Utkarsh operates in.
Utkarsh Micro Finance Private Limited is registered with Reserve Bank of India as a Non Banking Finance Company-MFI (NBFC-MFI). It provides financial and non-financial services in its area of operations to the unbanked population who has the skill but is in need of capital. Initially it had started with credit under joint liability structure and insurance, but subsequently added Micro Enterprises Loan and Micro Pension.
It also works with Samutkarsh Welfare Society to provide vocational training and market linkages, green energy (solar) initiatives, health initiatives and financial awareness training.
The company has strong focus in 56 districts of UP, Bihar, Uttarakhand, Delhi, Haryana, Madhya Pradesh, Maharashtra and Himachal Pradesh. It has 213 branches with an active customer base of over 4.8 lakhs and an impressive loan portfolio of Rs. 552 crore as of November 2014.
Speaking on the funding, Govind Singh, Managing Director & CEO, Utkarsh, said, “We are delighted to have CDC and Lok Capital on board as investors. We are also encouraged to see our existing investors participating in this round, reflecting their continued confidence in team Utkarsh. Through this infusion of funding, we plan to impact more districts, diversify products and services and enhance our responsible finance initiatives, social interventions and client engagement initiatives.”
Lok Capital manages two funds with $86 m under management. The funds have invested in 19 social enterprises so far and are the central entity of the group’s structure. Lok Capital’s goal is to promote inclusive growth by supporting the development of social enterprises to deliver basic services in a scalable, affordable and commercially viable manner. Lok Capital seeks to partner with talented and visionary entrepreneurs to help take these social enterprises to a new level of sustainability, scalability and professionalism.
Announcing the funding, Vishal Mehta, Co-founder and Managing Director, Lok Advisory Services, said, “These are progressive times for the financial inclusion space and with the kind of regulatory support MFIs currently have, they have the option to transform into more robust institutional structures. With this in mind, it becomes important for us to fund institutions that have the vision and capacity to be able to leverage the current environment and we believe Utkarsh is one of them. Govind and team have built a strong institution in a difficult geography with focus on processes and funding relationships.”