Powering Micro Businesses

The Jan Dhan-Aadhar-Mobile (JAM) trinity is often credited with boosting the pace of financial inclusion in India. It has led to the opening of nearly one billion bank accounts in India. However, even with these initiatives, access to credit continues to be limited for micro-enterprises and businesses. As founder & CEO, Shweta Aprameya-led ARTH aims to provide inclusive and equitable financial services to micro-enterprises of India. “Our vision is to become the first specialised category micro MSME bank in the country. By 2023 we will touch 1 million micro-enterprises across the segment and geographies,” says Aprameya.

The MSME space faces a $380 billion credit gap, which, according to Aprameya, limits the income and scope of growth for these enterprises. ARTH targets new-to-credit (NTC) nano- and micro-entrepreneurs who borrow from informal sources to get credit facilities. It strives to include these enterprises under a formal borrowing ecosystem to scale their businesses. 

ARTH has also developed a social welfare programme focusing on self-employed women with a database of 250-plus government welfare schemes. This programme has benefited more than 1,500 underserved households. It has disbursed more than 5 lakh loans to date to over 3.5 lakh nano and micro-entrepreneurs across India.

Interest as Income

ARTH earns revenues from interest income from the loans and a one-time processing fee for managing the end-to-end process for the customers. The company makes money from the interest spread earned between the interest charged and the cost of funds through debt and equity.

Aprameya identifies penetrating Tier-3 cities as a big challenge. Moreover, there is also a lack of structured data regarding payment, lending and insurance. “As a firm, we had to design products that are easy to understand by our target group and also have flexibility in terms of documentation and processes,” says Aprameya.

The core competency for ARTH remains access to credit availability for micro-businesses, but it does have expansion plans. It plans to tap the financial planning, insurance and account management tools market to support its customers in powering and improving micro-business outcomes.