Tata, Nilekani, Kelkar to start microfinance firm

MUMBAI: At a time when the RBI has been promoting setting up of banks in rural areas to serve those who don’t have a bank account, Tata Trusts chairman Ratan Tata, former Infosys CEO Nandan Nilekani and National Institute of Public Finance and Policy chairman Vijay Kelkar have come together set up a financial services firm, which will provide affordable credit to the poor.

HT Image

Named Avanti Finance, the company will focus on “delivering affordable and timely credit to under-served and un-served segments in India,” said a statement from Tata Trusts.

Avanti will apply to the RBI for registration and is expected to start operations before the end of the financial year, it added.

“The returns will be invested back in charity. Avanti will be a platform to impact the poor through credit at individual and community levels, and create a lasting improvement in their livelihoods and standard of living, ushering prosperity,” Ratan Tata said.

The focus on the unbanked also seeks to highlight that although the segment has the lowest default rates, they are charged very high interest rates. “The target customer segment has displayed very low delinquency rates…Avanti’s primary objective is to make a difference in this sphere, thereby enhancing the prosperity in these communities,” the company said in a statement.

Both Tata and Nilekani will invest from their respective philanthropic capital, and any gains will be reinvested in philanthrophy. “My participation in Avanti is more driven by social motivation rather than anything else — with a view to serve the underserved and unserved, and make Tat a Trust sand other like-minded partners’ philanthropy more effective,” Nilekani said.

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