Tata, Nilekani to set up microfin

Economically better off customers make the majority in the defaults but the deprived segments has displayed very low delinquency

The urge to give affordable loans to the underserved and unserved segments of India has brought the big three — Ratan Tata, Vijay Kelkar and Nandan Nilekani together to establish a technology enabled financial inclusion vehicle, Avanti Finance.

Avanti will leverage on the social sector presence of Tata Trusts and other like minded partners and the rapidly evolving JAM (Jan Dhan Yogna-AadharMobile), UPI and payments bank ecosystem.

It would use this ecosystem and will innovate on product design in consonance with the indigenous needs, to deliver seamlessly for the end consumer.

Earlier, the customers who were meant to have access to affordable credit were deprived of this credit due to institutional inequalities and information asymmetries.

Unlike the economically better off customers who account for the majority of defaults to lenders, the deprived segments over the last few years has displayed very low delinquency rates, but were still charged the highest rate of interest.

Avanti’s primary objective, according to the promoters is to make a difference in this sphere thereby enhancing the prosperity in these communities.

Mr Tata said, “Avanti will be a platform to impact the poor through credit at individual and community levels to create a lasting improvement in their livelihood and standard of living, ushering prosperity. I am thankful to Dr Kelkar and Nandan for agreeing to be part of this purpose driven initiative”.

Both Mr Tata and Mr Nilekani are putting in their investments from their respective philanthropic capital, and any gains will be reinvested in philanthropic causes.