British International Investment

Light Microfinance Private Limited

South AsiaFinancial services

Light Microfinance is a Non-Banking Finance Company registered with the Reserve Bank Of India. Light Microfinance provides microfinance products and services, targeting rural and peri-urban areas, with a specific focus on women. The company operates in Gujarat, Rajasthan, Madhya Pradesh and Haryana.

Our investment

Description of the investment.

We invested $9 million in direct equity in Light Microfinance in 2022 as part of a fundraise with existing investors Nordic Microfinance Initiative, Triple Jump and Incofin.

Our capital will increase access to finance for underserved populations in rural India, primarily women, as well as provide employment opportunities. It will support Light in scaling their microfinance lending in a context where there is limited investor interest in the sector.

Impact information

Applies to investments made from 2019 onwards. The tabs in this section define what we expect to achieve through the investment, assessing the potential impact of the investment against six dimensions of impact. You can find more details on our methodology of assessing impact here.

What?

Impact

Improving access to economic resources as well as microfinance for vulnerable and underserved populations, including and especially women, ultimately contributing to creating economic opportunities and jobs.

How?

Primary Secondary

Our investment will support the expansion of Light’s business into newer geographies (largely peri-urban and rural areas), enabling improved access to finance for underserved populations (primarily women).

Light is also expected to open new branches across various geographies, creating job opportunities for people in those areas. These opportunities will particularly benefit young people as most of the positions will be at the field level and tend to be filled by young people.

Who?

Stakeholder Geography Characteristics
Customers (100 per cent women)

India. At the time of investment, Light operated in four states (Gujarat, Rajasthan, Madhya Pradesh and Haryana) and was planning on expanding to other states.

Underbanked and low-income female borrowers.

Employees

India. At the time of investment, Light operated in four states (Gujarat, Rajasthan, Madhya Pradesh and Haryana) and was planning on expanding to other states.

The loan officers are recruited from local villages within a 35 km radius from the branch.

How much?

Scale Depth/Duration

At the time of investment, Light was serving 309,000 female customers with a potential to serve ~2.9 million female customers and employ an additional 1,700 employees.

The loans are used for income-generating activities, including by grocery shop owners, for tailoring, micro mills etc. Light provides employment opportunities for young people from the local villages.

Contribution/additionality

Contribution/additionality
  • Financial additionality: The microfinance sector in India has been through a challenging time during the COVID pandemic period. The sector is on the recovery path and has started observing some interest from commercial and mission driven investors.
  • Value additionality: Includes improving gender participation and effective implementation of an environmental and social risk management system.

Impact score

Impact score (at point of investment)

The Impact Score is a tool to help us manage our performance against our strategic impact objectives. It is designed to incentivise investments that support our productive, sustainable, and inclusive objectives. You can find out more here.

The Impact Score is published for investments made from 2022 onwards. The Impact Scores are calculated at the point of investment. We publish the Impact Scores of new investments annually, once the information has been externally assured by an independent third party.

5

Environmental and social information

  • Environmental and social summary

    A high-level description of the environmental and social aspects of the investment. This may include a summary of key environmental and social risks identified during environmental and social due diligence (ESDD); key elements of an environmental and social action plan (ESAP); or ways in which we plan to support the investee improve environmental and social standards, such as through their environmental and social management system (ESMS); as well as any other priority areas agreed with the investee.

  • Environmental and social risk

    A risk category rating, which indicates the level of environmental and social risk associated with an investment. For an explanation of the categorisations used, see here. We consistently provide an environmental and social risk category for all investments screened from 2023 onwards.

Environmental and social summary

We agreed on an ESAP focused on developing and implementing a proportionate ESMS.

Environmental and social risk

Medium-Low

Reporting and Complaints Mechanism

The Reporting and Complaints Mechanism allows anyone outside BII to report alleged breaches of the business integrity or environmental and social provisions of BII’s Policy on Responsible Investing. This includes breaches made by BII, a BII investee, or a portfolio company of a fund in which BII has invested. The Reporting and Complaints Mechanism Rules are available here. Reports and complaints can be submitted by email to [email protected] or by mail. See more details on our Reporting and Complaints Mechanism here.

For any other general enquiries contact us at [email protected]

  • Key facts

    Last updated

    When the last quarterly update of the website database occurred.

    :
    June 2024
    Project number

    An identifier number shared by investments in the same project.

    :
    D5325
    Status

    The current status of the investment (green flag for active and red flag for exited).

    :
    Active
    Region

    The geographical region where the country is located. We currently invest in Africa, South Asia, South East Asia and the Caribbean. In 2023, BII’s investment mandate was extended allowing it to invest in regional funds linked to Ukraine, with the majority of activity expected to begin post-war. Investments outside these regions were made prior to 2012 under previous investment mandates.

    :
    South Asia
    Country

    The countries where the investment delivers impact. Where impact is delivered in multiple countries, this is indicated.

    :
    India
    Sector

    We prioritise those sectors that facilitate development and need our capital the most. Our priority sectors contribute towards many of the Sustainable Development Goals. They range from investing in the power infrastructure that will provide people with better access to electricity, to investing in financial institutions that direct capital to the individuals and businesses that need it the most.

    :
    Financial services

    We provide capital in the following ways: directly – through direct equity, direct debt, guarantees and other non-intermediated financial instruments; and indirectly – principally through investment funds.

    For direct investments and fund investments, this is the date BII committed capital to the investments. This is typically the date on which legal agreements are signed by all parties.

    For the portfolio companies of our fund investments, this is the date (either the month or the quarter) on which the fund committed capital to the portfolio company.

    For direct equity investments, this is the date at which British International Investment exited the investment.

    For debt investments, this is the date at which the final debt repayment was made.

    For funds, this is the date at which the fund was terminated.

    For underlying fund investments, this is the date at which the fund manager exited the investment.

    The total amount committed, per financial instrument, per investment, on the date BII becomes subject to a binding legal obligation to provide funding or assume a contingent liability. This information is provided in US dollars.

    For direct investments, this is the amount that BII has committed to the business or project. For fund investments, this is the amount BII has committed to the fund.

    The currency in which the investment was made.

    Investment type :
    Equity
    Start date :
    August 2022
    Amount :
    $9.3m
    Currency of investment :
    INR
    Domicile

    The company or investment fund’s place of incorporation.

    :
    India
    2X Gender Finance

    Indicates whether the investment is ‘2X qualified’ using the 2X Challenge criteria. You can find out more here. It only applies to investments made from 2018 onwards, when the 2X Challenge was first launched.

    :
    Fully qualified

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