Our Journey
in the Evolution of Financial Inclusion in India
Financial Inclusion Sector
Lok Capital

Early Challenges

Microfinance in India primarily operated through not for profit and self-help groups. These models face sustainability challenges.


Lok Foundation Created


Gaining Traction

Private limited & for profit models increase scalability of microfinance.

Official Launch of Operations

Goal to catalyse delivery of financial services to the under-served low-income households in India.


Official Launch of Operations

Goal to catalyse delivery of financial services to the under-served low-income households in India.


Banking Correspondent Regulations

RBI acts progressively in creating capital light institutions for last mile bank delivery but only designated for NGOs.

First Close Achieved: Lok Fund I LLC

Lok brings Accion’s Latin American business model (banking correspondent) expertise to India.


Achieving Scale

The for profit microfinance sector has an outreach of 6.6 million customers, diversified across urban and rural focused models including in low income states such as MP, Orissa, Jharkhand, and Rajasthan.

Investments in Janalakshmi & Spandana

From 2007-2009 Lok Fund I makes early investments in some of the largest MFIs of today including Janalakshmi, Ujjivan, Satin and Spandana.


Lagging Regulation

The Non-Bank Finance Company-Micro Finance Institution model is proven viable, yet commercial microfinance is excluded from a draft microfinance bill proposed by the government.

Final Close Achieved: Lok Fund I LLC

Funding committed from FMO, CDC, IFC, KFW, Accion, Desjardins and, responsAbility.


Self-Regulatory Organization Formed

The Microfinance Institutions Network comes together to establish framework for fair practices & client protections.

Sector Awareness & Collaboration

Lok works with industry stakeholders to caution against overheating in microfinance industry. Fund I begins partial exits of early investments.


Andhra Pradesh Crisis

Unilateral action by the state government results in large write offs as customers stop repayments.

Direct Engagement Value-Add

Lok’s value-add such as initiating rural diversification in Satin, implementing technology at Asirvad, lowering operational costs at Ujjivan, and hiring key management across portfolio companies enables growth and sustainability.

First close of Lok Fund II LLC (Sarva Capital) Achieved.


Government Response to Crisis

RBI committee under Malegam recommends regulatory framework for the microfinance sector.

Targeted Crisis Response & Final Close of Fund II LLC (Sarva Capital)

Lok conducts third party market study with 70 customers across 8 districts in Andhra Pradesh.


Regulatory Approvals

RBI guidelines come into effect with microfinance institutions being accorded a specific category of non-banking finance companies (NBFCs).

Partnering for Innovation

Lok plays a pioneering role in backing financial institutions working on innovations in the areas of products and delivery. Lok also closes investments in Vistaar and IFMR Rural Channels.


Strong Industry Recovery

The recognition of MFIN as a common platform for microfinance institutions, 35% sector growth rate, and RBI proposals for small finance banking licenses point to sector health.

Actively Diversifying Investments

Lok diversifies financial inclusion focus through two investments in housing finance, co-investment with CDC in Utkarsh a pure play MFI & diversified financial services players such as Equitas & MAS. Lok also works closely with companies to prepare RBI applications for banking licenses.


RBI Grants Banking Licenses

RBI grants provisional licenses to ten small finance banks and eleven payment banks.

Small Finance Banking (SFB) Licenses Granted

All five Lok portfolio companies (Ujjivan, Utkarsh, Suryoday, Equitas & Janalakshmi) applying for SFB licenses are among first ten to recipients. Lok leverages expertise of other models of FI to help companies diversify assets and build deposit books.


Microfinance Accepted Pan-India

By March 2016, the microfinance sector in India reached 32.5 million clients with an aggregate loan portfolio of Rs 52k cr (excluding the numbers for Bandhan). The sector had a pan-India reach and covered most of the districts designated by the RBI as unbanked or underbanked.

Demonstrated Success through Full Fund Cycle

IPOs in Ujjivan & Equitas reflect market acceptance. Return of capital to Fund I investors at market rates reflect fund model viability in financial inclusion. First close of Fund III achieved.


Looking Forward: India Stack & Fintech

Presence-less, paperless, and cashless open source architecture will bring new generation innovations in financial inclusion and other critical sectors (health, agriculture, etc.)

Strategic Focus in Lok Fund III: Growth Catalyst Partners

Lok’s mandate for Fund III correlates with next growth phase in financial inclusion: expansion to new lending sectors, new products and leveraging technology for process/cost improvement (fintech).

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