Streamlining Individual Microlending

Swadhaar FinServe publishes in-depth analysis of multiple years of individual microloan data in order to accelerate industry progress for new individual lending products

This is part of the Unitus Labs’ India Microfinance Innovations initiative

As a leading innovator in the individual microlending space, Swadhaar set out to analyze their customer data to reduce the time needed to deliver individual loans, and to implement superior risk mitigation strategies based on a thorough analysis of their clients’ histories.

Upon analyzing their data, Swadhaar found that it was possible to tailor products by various business types, and to further segment these into six distinct groups. The team forecasted profitability margins of these groups based on scale and location, and standardized household and business expenses based on number of household members. An analysis of these businesses demonstrated that net business income continued to grow for repeat clients across cycles, an indicator that individual loans are indeed beneficial for micro-entrepreneurs. However, there was insufficient data to come up with a credit scoring model for new clients, though a scoring model for repeat clients was possible.

Swadhaar has shared detailed data (by business groups), which for the first time goes into as granular of detail as monthly sales, profitability margins, cash flows, inventory rotation cycles, household expenses, and assets owned, allowing organizations to bypass the years it takes to collect and analyze such data.

NOTE: This is published in the spirit of open source. You may use and modify this content with the condition that you provide credit and intellectual property rights acknowledgement to Swadhaar FinServe, and provide a link back to this page.

Download Streamlining Individual Microlending Project Report (PDF – 3MB)

Download Background Note on Individual Lending (PDF – 3MB)

Download Analysis of Streamlining Individual Lending Evaluations (PDF – 2MB)

About Swadhaar

Swadhaar FinServe Pvt. Ltd. is a non-banking finance company, headquartered in Mumbai, and engaged in urban microfinance. Swadhaar was one of the first Indian MFIs to introduce non-collateralized individual loans for men and women in urban areas, having launched its individual loan product for micro-entrepreneurs in 2006. Swadhaar conducts detailed evaluations of client business and repayment capacity for non-collateralized loans, and does not require clients to have previously belonged to a joint liability group.