Annapurna Finance has entered into a partnership with British International Investment (BII), the UK’s development finance institution and impact investor, and FinReach Solutions, a guarantee facilitation partner dedicated to enhance credit availability to viable Micro and Small Enterprises (MSEs). The alliance aims to empower India’s MSEs, which form the backbone of the country’s economy.
With this partnership, it is for the first time that a Development Finance Institution (DFI) has extended a credit guarantee to an NBFC-MFI in India. The agreement entails BII providing a first-of-its-kind credit guarantee to Annapurna Finance, with FinReach Solutions playing a pivotal role as the key enabler. The credit guarantee is expected to increase Annapurna Finance’s loan book by Rs 100 crore, thereby enhancing its capacity to provide financial services to over 4,000 under-served MSEs, particularly in regions where traditional financial services are limited, such as Eastern India.
Speaking in this regard, Gobinda Chandra Pattanaik, Managing Director (MD), Annapurna Finance, stated, “This partnership with British International Investment and FinReach Solutions represents a major milestone not only for Annapurna Finance, but also for the broader financial inclusion landscape in India. The introduction of BII’s credit guarantee enables us to expand our reach to under-served MSEs, empowering those with the credit they need to scale their operations and achieve sustainable growth. These businesses, often located in regions with limited access to traditional financial services, are the backbone of our economy. Providing these enterprises with the means to grow will contribute to create a more dynamic and resilient economy, enhance local livelihoods and support sustainable development in their communities.”
The credit guarantee scheme is a financial arrangement under which BII partially guarantees the repayment of retail loans extended by Annapurna Finance to MSEs. This arrangement notably reduces the lending risk for Annapurna Finance, enabling the company to extend credit more confidently to businesses that might otherwise face challenges in accessing finance. As a result, this initiative will not only promote financial inclusion by improving access to credit, but also support job creation, entrepreneurship and poverty reduction by empowering small businesses to grow and contribute meaningfully to the economy.
Gaurav Malhotra, Director and Head — Financial Services Equity, British International Investment, said, “The credit guarantee under our MSME Finance Guarantee programme, developed in close collaboration with FinReach Solutions, is an effort designed to address the systemic challenges faced by MSEs in accessing finance. This initiative is not solely about mitigating risk for Annapurna Finance, but also about creating a more inclusive financial ecosystem where under-served businesses can thrive. We are proud to partner with Annapurna Finance in this endeavour as it aligns with BII’s mission to promote sustainable and inclusive economic development. Facilitating greater access to credit allows these businesses to unlock new growth opportunities, contribute to the economy, and improve the livelihoods of countless families.
The agreement exemplifies the profound impact that collaborative partnerships can have on social and economic development.
Suvalaxmi Chakraborty, Managing Director, FinReach Solutions, also mentioned, “At FinReach Solutions, access to credit is seen as a fundamental enabler of economic empowerment, especially for MSEs that drive local economies. Our role in this partnership with Annapurna Finance and BII is to facilitate a credit guarantee programme that not only addresses the immediate financial needs of these businesses, but also contributes to build a more inclusive financial system in India. The innovative structure of this credit guarantee is a game-changer as it reduces the perceived risks associated with lending to smaller enterprises, allowing those to access the capital they need to grow and scale. We are confident that this programme will set a new standard in the credit guarantee market, paving the way for future initiatives that will further empower under-served businesses across the country.”
