Triodos Fair Share Fund and Triodos Microfinance Fund jointly contribute USD 11.4 million to Janalakshmi Financial Services, one of the three largest microfinance institutions in India. This loan will help Janalakshmi to expand further into the market of small- and medium-sized enterprises (SME).

Further expansion into SME

Janalakshmi Financial Services Private Limited (JFS) is one of the three largest microfinance institutions in India, focusing primarily on the urban poor. JFS started in 2008 and it has grown to assets around USD 440 million and 154 branches across 84 cities in India, reaching nearly 1.5 million clients.

Funds under management of Triodos Investment Management – Triodos Fair Share Fund and Triodos Microfinance Fund – closed on a USD 32.5 million joint loan with FMO to JFS. Both Triodos funds have jointly contributed USD 11.4 million to the facility. Fifty percent of the loan will go towards expanding loans to small and medium-sized enterprises (SMEs), a highly under-serviced sector in India.

Karel Nierop, Senior Investment Officer, “This joint transaction with FMO provides the opportunity to let a renowned leader in the Indian MFI space expand its SME portfolio and leverage on its capital and technology base, truly creating impact in financial inclusion.”

Untapped market

JFS has seen rapid growth due to the large unmet demand in India and aims to keep expanding its outreach through its emerging focus on SMEs and its differentiated approach to inclusive finance. It also has plans to become a fully functioning bank within the next couple of years.

While JFS primarily lends through group loans, financing SMEs remains a largely untapped market in India. Many SMEs have become too large to receive traditional group loans and still cannot conveniently access credit of mainstream financial institutions; a gap JFS intends to focus on increasingly. A growing opportunity also exists with its innovation in technology. By using technology as the foundation of its services via cloud computing, PDAs, smart cards, and biometric devices, JFS has also become a leader in technology and innovation for financial inclusion in India.