Responsible Finance Forum

For Women in India, Small Loans Have a Big Impact

13 Nov 2018

Photos by Dominic Chavez/IFC

HARHUA, India—In this sleepy village on the outskirts of the ancient city of Varanasi, Irawati Devi stands proudly under the bael tree that shades her home. Goats scour the ground around her mint-green food carts, searching for traces of the fried noodles and samosas she sells.

“When we first moved to Harhua,” Irawati, 58, recalls, “we wrapped saris around bamboo poles until we could afford to build walls.” With one small loan after another, averaging $290 at a time, she gradually managed to replace her home’s makeshift partitions with brick walls. She then bought the food carts, pots, and utensils to start the business that now supports her family.

Irawati’s story of using small loans to lift herself and her seven children out of poverty is one that could be told by millions of people across India. Lending to microfinance borrowers, mostly women in rural areas, has increased by 900 percent over the last six years—from $2 billion in 2012 to $20 billion 2018. With these funds, millions of marginalized families have started and expanded businesses, purchased essentials during emergencies, and supported their children’s education.

With small loans, Irawati Devi managed to make improvements to her home and start a small business.

Over the past decade, IFC has helped create a market for microfinance in India by investing $564 million in equity and debt—including $5 million in Utkarsh, which now has 400 micro-banking offices that serve 1.7 million borrowers, including Irawati. Today, IFC has investments in more than a dozen financial institutions that together represent nearly half of all micro-lending in the country—reaching up to 70 million people, directly and indirectly.

The numbers are impressive, the stories inspiring. That was why, on a recent day, Utkarsh’s Chief Executive Officer Govind Singh appeared on Irawati’s doorstep. He spent part of Utkarsh’s ninth anniversary in Harhua, the village where he and 11 employees began issuing the company’s first loans. In 2010, when Utkarsh consisted of little more than three chairs in a dusty room, Irawati was one of its first customers.

“Thank you for your money,” Irawati says, standing beside her youngest son.

“It’s not my money. It’s yours,” Singh replies, thanking her for using the loans to support her family.

Improving the Governance of a Growing Sector

At the time of Utkarsh’s founding, a crisis of confidence had struck at the heart of India’s microfinance industry. Amid allegations of abusive practices by some lenders in the southern state of Andhra Pradesh and a campaign encouraging borrowers to default on loans, the central bank in 2010 introduced restrictions and regulations that virtually shut down the industry—lending to microfinance institutions decreased from $2.4 billion in 2011 to $835 million in 2012. IFC adopted a comprehensive view of the sector during this period. Investing in and providing advisory support to several well-managed microfinance institutions, including Utkarsh, helped restore confidence among market players.

“During the crisis, IFC not only supported us; they also created structures that could be used by all microfinance institutions,” says Singh.

One of IFC’s most significant contributions to the fledging sector was a framework to manage risk. It focused on borrower welfare and provided new protections to help ensure that clients understood the terms of their loans. Before this, “there was hardly any focus on risk management for microfinance institutions,” Singh recalls.
IFC also worked with the World Bank to develop a code of conduct that established a common framework for responsible finance; more than 90 percent of the microfinance sector adopted these practices. “These were two very critical products…that gave confidence to the regulators and to the government agencies,” says Singh. “Things became much better for the microfinance industry as a whole.”
With this support, Utkarsh trained and hired staff, opened new bank branches, and better tailored its financial products to meet the needs of women, who make up 97 percent of Utkarsh’s borrowers.

Strengthening Communities

The markets of Varanasi, on the banks of the Ganges River, are a sensory overload: a feverish din of auto-rikshaw drivers and livestock herders, amid crowds of vendors selling everything from hand-knotted carpets to jasmine garlands. The aroma of pakoras, legumes, and ground spices wafts from family-run food stalls.

Microfinance institutions are important for an economy like India’s, where more than 80 percent of people work in the informal sector. Local banks aren’t typically an option for these entrepreneurs because the fees are too high. In some cases, people lack the documents required to open an account, such as identification cards and proof of income.  Or they cannot read and write well enough to fill out the paperwork.

Utkarsh’s core mandate is to strengthen communities and empower women, says CEO Govind Singh.

Singh has these people in mind when he speaks of Utkarsh’s core mandate to strengthen communities and empower women like Irawati, who is part of a lending group of 30 women. This group acts as a guarantor for the repayment of each individual’s loan in lieu of physical assets like cars or homes.

Every two weeks, the group convenes for an early morning meeting with an Utkarsh credit officer to exchange business ideas and make payments on their loans. Millions of women to whom Utkarsh lends money participate in this process of group lending and collective liability.

Many of the borrowers establish bonds with the members of their lending groups. “I now have a support network that I never used to have outside of the family,” says Pramila Devi, while frying green chilies in her shop in the neighboring village of Bahutera. “There’s a feeling of sisterhood. I know that if I’m having trouble, someone will support me.”

Not only has Pramila Devi been able to open a small tea store, nearly doubling her family’s monthly income, but the center meetings have also given her a sense of pride because her lending group calls her pradhan, the Hindi word for leader.

Utkarsh supports its borrowers in other ways as well. Employing only women at some of its micro-banking branches, including at Harhua, helps ensure it is a welcoming space for new clients.

“They feel comfortable talking about their challenges,” says Sabhya Yadav, manager of Utkarsh’s Harhua branch.  She was the first woman from her hometown, Billia, to leave the village for formal employment elsewhere. “They would hesitate, or maybe not even enter, if men were involved.”

Expanding the Definition of Financial Inclusion

Utkarsh’s success is partly due to its ability to combine lending with other initiatives, such as education and health care. Utkarsh’s charitable foundation, which receives 2 percent of the company’s profits, offers a range of services to help women maximize the impact of their loans—from financial-literacy classes to skills and vocational training.

“The definition of financial inclusion is changing,” says Umanath Mishra, the head of Utkarsh Welfare Foundation, while walking through Puranapul Village to oversee a class on savings. “If you have a savings account, but don’t understand the technology or concept, you are still excluded. We teach them when to borrow, how to borrow, and the terms of borrowing.”

The foundation, which serves 450,000 women, also helps connect women to nearby marketplaces so they can increase their income—a step that paves the way for greater social mobility.  It’s why lending to the poorest people in India—190 million of whom do not have a bank account—will remain a priority for Utkarsh.

Malti Devi, an Utkarsh client, speaks to neighbors and members of her lending group in the village of Belwa.

To have an even greater impact, in 2017 the company transitioned from a microfinance institution to a small finance bank.  It now delivers critical funding to small- and medium-sized companies, known as India’s “missing middle.”  These are an important source of jobs and economic growth. Eight million of these companies lack access to the financing they need to grow—but $230 billion would be required to fill this gap.

Utkarsh’s transition allows the company to accept deposits from its microfinance clients, a move that encourages customers to save.  It can also issue loans at lower interest rates.  Since Utkarsh began operating in this sector, its more than 50 general-banking branches have provided first-time credit to 15,000 companies, with loans ranging from $500 to $6,000.

While Utkarsh continues to expand, “microfinance will remain our focus,” says Singh, looking over the fields and rice paddies that surround the Harhua branch. “This is what we know best. These are the people who need it most.”

Join the conversation: #Invest4Tomorrow

Originally posted on IFC’s website


Yasmin Bin-Humam, Juan Carlos Izaguirre, Emilio Hernandez (CGAP)
12 Nov 2018

By Yasmin Bin-Humam, Juan Carlos Izaguirre, Emilio Hernandez (CGAP)

Digital financial services (DFS) have played a major role in increasing people’s access to financial accounts globally, but access to these services has been uneven for men and women. According to Findex, between 2014 and 2017 women’s mobile money account ownership rates jumped from 8 to 15 percent in low-income countries. Yet men’s ownership grew even more, from 12 to 21 percent. To highlight some of the starkest inequalities: In Burkina Faso, where 33 percent of adults currently have a mobile money account, the gender gap is 18 percentage points. And in Bangladesh, where 21 percent of adults own a mobile money account, the gender gap is 22 percentage points.

A farmer uses her mobile phone in rural India.

Policy is an important lever for addressing these growing inequalities, and there are some specific policy areas that can help ensure women benefit from financial inclusion . In May 2018, CGAP published a report that describes four basic regulatory enablers of DFS that have guided our in-country policy work across Africa and Asia over the past 10 years. Below are some of the important ways these enablers can improve women’s access to and use of DFS when implemented through a gender lens. Unless policies consider gender, we risk leaving behind the most vulnerable in society, particularly women, limiting our ability to achieve the SDGs.

Enabler 1: Nonbank e-money issuance
The first enabler — diversifying DFS ecosystems by allowing nonbanks to issue e-money — has already brought many women aboard. About 80 percent of women in developing countries own a mobile phone. Nonbanks like FinTechs and mobile network operators with large female customer bases often market DFS to women and others who are underserved or excluded by banks. Expanding e-money issuance to more of these nonbanks will make it possible for many more women to own financial accounts. In Côte d’Ivoire, which has allowed nonbanks to issue e-money since 2006, women are now more likely to own a mobile money account than a bank account.

Enabler 2: Use of agents
The second enabler aims to expand outreach of all DFS providers by responsibly allowing them to use a wide range of third-party agents — for example, retail shops — to facilitate customers’ access to and use of DFS. This enabler can create employment opportunities for women to serve as agents and bring greater financial inclusion. Zoona’s Girl Effect pipeline, for example, has set up an award-winning training program to help more female high school graduates become Zoona tellers, kiosk owners and community leaders.

Women agents of a microfinance institution in India show the devices they use for collections.
Photo: Sudipto Das, 2013 CGAP Photo Contest

Women agents can also benefit financial services providers (FSPs), as they have strong potential to boost providers’ performance. An IFC study across nine African countries showed that women agents were significantly more successful than male agents, with both higher volume and value of transactions. Increasing the number of women agents could attract more female clients due to social norms and safety concerns that women may have about interacting with male agents. In Bangladesh, IFC surveys found that although 52 percent of women customers preferred female agents, 97 percent were using male agents due to female agent scarcity. Women who visited female agents reported a higher median number of transactions than those who visited male agents.

To expand the number of women in agent networks, development practitioners should focus on building the business case for women agents, starting by understanding key capital and training constraints faced by the types of businesses women are likely to own in many developing countries, such as hair salons and food stalls. Governments should develop regulation that balances safety and inclusion when determining who is eligible to become an agent.

Enabler 3: Risk-based customer due diligence
The third enabler is proportionate risk-based customer due diligence (CDD). People with low incomes, especially women, often lack access to an official identification document. Traditional CDD requirements that do not consider these constraints deeply affect whether women are able to access formal financial services. In Togo, where 62 percent of women and 47 percent of men lack an account, 30 percent of financially excluded people cite lack of identification as one of the reasons they do not have an account, according to the 2017 Findex. Regulation that allows for simplified CDD in lower-risk scenarios and recognizes the types of identification documents that women typically have should help to bring more women into the financial system.

Enabler 4: Consumer protection
A strong provider commitment to customer protection is important for a healthy, inclusive market in which women trust financial services providers. Women often feel sidelined and discriminated against by formal financial institutions, and they have lower rates of digital and financial literacy. MNO Tigo Ghana found that women usually require 5 to 10 interactions before they feel confident enough to use its mobile money service and initiate transactions, whereas men require just 3 to 5. Moving away from lengthy forms toward more behaviorally informed disclosure practices is one way to help women access and more effectively use DFS. In Kenya, improved mobile disclosure for digital credit reduced delinquency rates.

Data protection is also becoming a key factor shaping DFS access and use, especially by women. CGAP’s research in India has revealed many instances in which women rely on male family members and more educated people for advice on how to protect their personal data, such as photos and social media messages. Moving forward, it will be important to obtain more insights on effective data privacy and protection approaches that contribute to responsible financial inclusion of women.

A gender lens must be applied across the entire range of regulatory enablers for DFS.  Simply focusing on one enabler will be insufficient. Policy makers are already convinced of the case for financially including women. The challenge now is working together to achieve it.

Originally published on CGAP’s website.


Fabian Reitzug
05 Nov 2018

By Fabian Reitzug, International Finance Corporation (IFC)-Mastercard Foundation Partnership for Financial Inclusion. Responsible Finance Forum Blog October 2018.

Ms. Muyenga owns two grocery stalls and a catering business in a Zambian Copper belt town. She earns too little to open a bank account, but discovered that with digital financial services, she could save money on her phone. This enabled her to invest and successfully grow her fritter business.[1]

The success story of Ms. Muyenga is one among many – digital financial services (DFS) have benefitted millions of women all over the African continent and enabled them to start and grow their businesses. Beyond the anecdotal, quantitative research from Kenya clearly demonstrates the benefits of mobile money for female-headed households, enabling women to escape poverty and move from agriculture into commerce (Jack and Suri, 2016).

Promoting the financial inclusion of women is part of responsible finance and should be embedded into business functions such as customer acquisition, product design, and delivery channels of financial service providers (FSPs). But how concretely can FSPs expand access to women and close the gender gap in DFS?

This post argues that gender-lensed data analytics can contribute to women’s inclusion by informing the delivery and design of services that are responsive to women’s needs and concerns. An IFC data analytics project in Congo (DRC) showcases how this can be achieved.

Using customer transaction data to understand gendered usage patterns

The gender gap in DFS has two facets: uptake and usage. In a recent post in this blog series, Richard Chamboko succinctly summarized the challenges women face in DFS adoption. These include lower socio-economic status and education, access to mobile phones (where there is a 15% gap in Sub-Saharan Africa), lower digital and financial literacy, and lack of awareness of DFS. Evidently, closing the gender gap requires doing away with the account ownership gap: In the eight African countries with highest share of mobile money accounts, the gender gap in combined financial institutions and mobile money accounts still ranges between 5 and 15 percentage points (World Bank Global Findex, 2017).

But a gender gap exists not only in access to banking services. Even if women adopt DFS, they tend to use them less than men. Analyzing customer transaction data can help to understand how and why usage patterns for female users differ from men, and what FSPs can do about it.

Applying gender-lensed data analytics in DRC

Gender-lensed data analytics requires the availability of relevant data. A 2016 survey by the Alliance for Financial (AFI) inclusion shows that 79% of AFI members collect some form of gender-disaggregated data. FSPs can avail themselves of such existing information to implement gender-lensed data analytics. By showcasing a project in DRC, this post provides a glimpse into the practice-relevant insights such analysis can generate.

For the IFC project presented here, data from 1.3 million customer transactions of a bank-led DFS service in DRC were used to better understand women’s interaction with DFS. Available information included customer and agent demographics, transaction characteristics, and location data.

Insights from the data

The data analytics results shed light onto the gendered usage patterns of DFS in DRC. 

  1. Gender gap among DFS clients: The analysis quantifies the usage gap among the banks’ clients. Females represent 36% of DFS clients, but just 25% of all transactions and their median transaction value is 40 USD – 10 USD below the median value for men. Thus, women use DFS less frequently and make lower-value transactions.
  2. Preference for female agents: Women have a predisposition for transacting with agents of their gender. Women agents have 6 percentage points more female customers than male agents (Figure 1). The preference for female agents is particularly pronounced for high value transactions: If a transaction is over 200 USD, women are 13 percentage points more likely to visit a female agent. The difference shrinks to a mere 2 percentage points for transactions below 10 USD. A possible explanation is trust – females seem to place higher confidence in women agents and transact with them more – especially when it matters, i.e. when amounts are large.
  3. Few female agents: While women have a clear preference for female agents, women agents are relatively scarce. Their share within the bank’s network varies between market areas (see Figure 2), but on average, only 25% of agents are women. The likely consequence: women have to travel further to transact with an agent of their gender – and travel is costly in terms of money and opportunity costs. Hence, the lack of female agents may represent a barrier for women’s usage of DFS.

The practical implications for FSPs

The gender-lensed insights from DRC can be put into service for advancing women’s financial inclusion. Results suggest that agent networks where women have the opportunity to transact with a female agent in proximity can facilitate usage of DFS. The straight-forward operational implication is that FSPs should strive for sufficient female representation among their agents. Recruiting more women for agent positions may require careful reconsideration of existing hiring requirements. Because women are less likely to meet conditions such as minimum capital requirements, having a bank account and a registered business, they are often not on equal footing with men when it comes to registering as an agent.

The data analytics insights also suggest that trust is a factor that impacts women’s usage of DFS. This finding squares with ethnographic research by the IFC-Mastercard Foundation Partnership, showing how trust affects usage, perceptions, and attitudes towards DFS. As a result, educating women about financial services and ensuring that their needs are met, represent promising avenues to foster women’s trust and usage of DFS.


IFC’s work in DRC provides a concrete example of how data analytics provides insight into gendered usage patterns, generating knowledge to support FSPs in making decisions that narrow the gender gap in DFS. Improving women’s usage should complement equally important strides to reduce barriers to DFS adoption. Gender-lensed data analytics highlights the central role of women agents and trust for service use. The project provides a use case for how FSPs can leverage data to advance responsible finance and financial inclusion. This will enable Africa to have more empowered women like Ms. Muyenga in the future.

[1] Ms. Muyenga’s story is part of an ethnographic study on DFS perceptions conducted by the IFC-Mastercard Foundation Partnership. The study is available here.

Note: More case-studies and guidance on how data analytics can be used to advance DFS adoption and use is available in the Data Analytics and Digital Financial Services Handbook (June, 2017 ( For detailed insights on gender and DFS, stay tuned to the forthcoming report from the IFC-Mastercard Foundation Partnership for Financial Inclusion: Women and digital financial services in Sub-Saharan Africa.