Accion in India 2014

Our VisionTo build a financially inclusive world with access to economic opportunity for all.

Our MissionTo give people the financial tools they need to improve their lives.

On the cover: Basket weavers and clients of Accion partner Saija Finance in Patna, Bihar.

Dear Friends,

It is an exciting time for financial inclusion in India.

Just recently, the Reserve Bank of India issued the long anticipated guidelines for “small finance banks” and “payment banks,” in an effort to expand banking services to more people and small businesses across India. In addition, earlier this year Prime Minister Narendra Modi launched an ambitious plan to provide universal access to bank accounts and insurance in India. The target recipients include the nearly two-fifths of the nation’s 1.27 billion people who do not have a bank account, and the idea is to leverage the vastly improved mobile infrastructure to reach many of them.

The country continues to advance financial inclusion on a variety of fronts. The Economist Intelligence Unit’s Global Microscope 2014: The enabling environment for financial inclusion – a publication that assesses the regulatory environment for financial inclusion in 55 countries – ranked India among the top five countries with regulatory and institutional environments that help address the financial needs of the poor.

In India, Accion brings the full breadth of its strategic approach to bear on the problem of financial exclusion. Our work goes beyond traditional microfinance: it includes training industry professionals; teaching clients financial literacy and business skills; working tirelessly to implement strong consumer-protection measures through the Smart Campaign; and supporting bold seed-stage companies that focus on reaching particular segments of the unbanked, including first-time home buyers, private schools for low-income households, and more.

The following pages provide a snapshot of our efforts and successes on all of these fronts. Despite our encouraging progress, more work remains. Thank you for all you do to support our industry’s efforts, and I hope you will continue to join us in building a financially inclusive world.

Sincerely,

Victoria White Regional Head, Asia Accion

Kusum Lata (left) and her mother, clients of Accion partner Shubham Housing Development Finance Company in Faridibad, outside Delhi, where they’re using a loan from Shubham to finance the construction of a new home.

A Letter from Our Regional Head

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Our ApproachAccion’s mission in India, and globally, is to give people the financial tools they need to improve their lives. Our approach is based on three strategic pillars:

• Building the next generation of microfinance institutions (MFIs) by helping MFIs achieve greater scale, sustainability, and efficiency;

• Pushing the frontiers of financial inclusion beyond MFIs by providing impact-investment funding for new technologies and promising start-ups that serve the base of the economic pyramid;

• Building a strong financial inclusion industry with high standards and engagement by redoubling industry commitment to consumer protection, transparency, and social-performance measurement.

Our Initiatives in India

Client Protection and Inclusive Finance

The Smart Campaign for client protection, managed by the Center for Financial Inclusion at Accion, is working with microfinance leaders in India to provide the industry with the tools and resources they need to deliver transparent, respectful, and prudent financial services to all clients. Among the Campaign’s principles is meeting the needs of persons with disabilities.

Client Education

Since 2008, we have been working in India on this key non-financial component of economic development through two major focus areas: financial literacy for low-income families through our MoneyPlan program, and business skills for microentrepreneurs through our award-winning Dialogue on Business program.

Industry Training and Capacity Building

We provide technical and management training to microfinance industry professionals through our Regional Training Center.

Impact Investing

Accion’s Frontier Investments Group and Venture Lab have made investments in promising young Indian start-up companies that serve low-income families with financial products and services, from affordable mortgages to education loans, health insurance, and more.

Building Strong Microfinance Institutions

We are supporting partners Saija Finance Private Limited and Swadhaar FinServe Private Limited with management and technical services, investments, and strategic direction.

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Since Accion launched operations in India in 2005, we have expanded our reach to meet the financial needs of hundreds of thousands of people.

Our Work at a Glance

clients served by the five MFIs certified, to date, by the Smart Campaign for client protection

CLIENT PROTECTION

4.8 MILLION

people taught financial literacy and business skills, to date, by Accion and its partners

CLIENT EDUCATION

175 THOUSAND

microfinance professionals trained since 2008, through

our Regional Training Center

INDUSTRY TRAINING

12.5 THOUSAND

dollars invested in Indian MFIs and other companies serving the poor through financial services, affordable housing, education,

and more

IMPACT INVESTING

12 MILLION

entreprenuers currently served through our microfinance partners Saija Finance and

Swadhaar FinServe as of September 30, 2014

MICROFINANCE INSTITUTIONS

262 THOUSAND

2014 KEY STATISTICS

INDIA HIGHLIGHTS

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Pratiska Mahdik, client of Accion partner Swadhaar FinServe, runs a restaurant with her husband (left) in Chembur, a suburb in eastern Mumbai.

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SWADHAAR FINSERVE PRIVATE LIMITED Swadhaar was established in 2006 with the initial goal of developing financial products for the low-income urban families of Mumbai. In cooperation with Accion, Swadhaar has adapted and tested a number of products to meet the needs of both low-income working women and microentrepreneurs. Since its initial launch, Swadhaar has expanded its reach to cities in Gujarat and Maharashtra, and more recently, to Madhya Pradesh and Rajasthan.

Accion has also played an important role in supporting Swadhaar’s recent transformation to a Banking Correspondent (BC). In a landmark transaction, Swadhaar sold its portfolio to Ratnakar Bank Ltd. (RBL) and launched its own BC to continue to serve this growing client base. With this transformation, Swadhaar’s current and future clients will gain access to a wider range of products available through RBL, while continuing to be served by Swadhaar’s dedicated, client-focused team.

Accion has also helped Swadhaar create and test a mobile wallet system in partnership with telecommunications services company Airtel. With funding support provided by GSMA Mobile for Development Foundation, more than 18,000 mobile wallet customers have signed up for the service in the pilot phase.

As of September 30th, 2014, Swadhaar was serving 190,102 active clients with an active portfolio of INR 202 crores.

SAIJA FINANCE PRIVATE LIMITED Saija was founded by two professionals with careers in banking and human resources in Bihar, a state with a large population of financially excluded households, yet one which has recently made tremendous strides in economic development and double-digit growth. With Accion’s support, Saija is strengthening its credit methodology, delivering client-centered microfinance products and services, and developing alternative delivery channels to improve efficiency. Saija seeks to prove to other social entrepreneurs that profitable and national-scale businesses can be run out of Bihar.

As a strategic investor, Accion has provided management services and technical assistance to Saija to support the scale-up of microfinance operations. In particular, technical specialists have assisted Saija in expanding and improving the company’s operations and attracting additional investors and capital.

Saija has made significant progress during these last two years in attracting funding from various financial institutions. As part of an effort to diversify its funding and improve balance sheet management, it closed its first securitization worth INR 10 crores in the month of September.

As of September 30th, 2014, Saija was serving 72,013 active clients with an active portfolio of INR 80 crores.

In line with our first strategic pillar – building the next generation of top-tier microfinance institutions – we partner with Swadhaar FinServe, headquartered in Mumbai, and Saija Finance, based in Patna, Bihar. We have provided management services, investment, and governance to both institutions, which, as of September 30th, 2014, were collectively delivering microfinance services to 262,115 microentrepreneurs in Maharashtra, Gujarat, Madhya Pradesh, Rajasthan, Bihar, and Jharkhand.

entreprenuers currently served through our microfinance partners Saija Finance and

Swadhaar FinServe as of September 30, 2014

KEY STATISTICS

262 THOUSAND

Building Strong Microfinance Institutions

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A solidarity group member signs paperwork for her loan at Accion partner Saija’s Danapur branch in Bihar.

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ACCION’S VENTURE LAB

To date, Venture Lab has made investments in two start-up Indian companies, Varthana and MeraDoctor.

• Varthana provides specialized loans and other support to affordable private schools, promoting access to and quality of education for India’s poor and emerging middle class.

• MeraDoctor provides a comprehensive health protection product to low-income Indians, combining 24/7 “doctor-on-call” helpline services with health insurance products to protect its customers from poverty-inducing health shocks.

Find out more online: www.accion.org/venturelab

ACCION’S FRONTIER INVESTMENTS GROUP

Frontier Investments Group has made early-stage investments in, and provides governance to, two promising young Indian companies, Vindhya and Shubham.

• Vindhya e-Infomedia Private Limited, located in Bangalore, is the only company of its kind to provide business process outsourcing services to global and local markets by recruiting differently abled employees. Vindhya is a for-profit company that provides clients with data entry and data management, processing, and conversion services.

• Shubham Housing Development Finance Company is an affordable housing lender headquartered in New Delhi that serves low-income, self-employed families in urban and semi-urban areas. Access to credit, delivered in a systematic and professional manner, is a key enabler in increasing people’s ability to purchase or improve the quality of their homes, and Shubham has developed an innovative credit model for customers with informal incomes by leveraging new technologies and practices to obtain impressive operating efficiency. The company currently operates 80 branches in 78 cities in 12 states.

Find out more online: www.accion.org/frontier

Impact Investing

We support economic development in India through our second strategic pillar: pushing the frontiers of financial inclusion beyond microfinance institutions. We are executing that strategy through two impact-investing initiatives: Accion’s Venture Lab, which provides seed funding and technical assistance to promising startups committed to broader financial inclusion but which are often labeled “pre-investable”; and Accion’s Frontier Investments Group, a hands-on equity partner investing in early-stage, post-revenue companies that have moved beyond the seed stage.

dollars invested in Indian MFIs and other companies serving the poor through financial services, affordable housing, education

and more

KEY STATISTICS

12 MILLION

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A class at the Ruby School in Vijayapura, where Accion partner Varthana is financing affordable private schools that serve low-income families.

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FINANCIAL LITERACY

Our financial literacy program, MoneyPlan, is a workshop-based training initiative. It focuses on seven topics: financial planning, cash flow management and budgeting, savings, debt, insurance, banking, and business correspondence. The program is available in audiovisual and print formats, catering to both literate and non-literate audiences, and is available in English, Hindi, Kannada, Tamil, Malayalam, and Marathi.

Find out more about our client education work in India: www.accion.org/client-education/india

DIALOGUE ON BUSINESS

Dialogue on Business (DOB) is a business-training model that uses interactive games and role-playing to help microentrepreneurs solve real-life business challenges. DOB was developed specifically for adult learners and based on the knowledge and experience of participants. Because the workshops are based on the real situations of its participants, rather than textbook cases, they are especially engaging for people with little formal education who may not learn effectively in a traditional classroom setting. Among the various training modules available in our curriculum are courses on business feasibility, entrepreneurial management, leadership, communication and promotion, cash management, savings, investing, and debt. Languages: English, Hindi, Tamil, Marathi, Malayalam, Kannada, and Gujarati.

To date, Accion in India has partnered with a wide range of financial services and skills development organizations throughout India, transferring our unique training techniques and interactive tools and materials through both short and long term engagements. To date, these trainings have taught financial literacy and business skills to more than 175,000 entrepreneurs. Examples of current active engagements include Utkarsh MicroFinance Private Ltd and Ratnakar Bank.

We believe client education is integral to the long-term success and sustainability of the microfinance industry. Since 2008, we have been working in India on this key non-financial component of economic development through two major focus areas: financial literacy for low-income families through our MoneyPlan program, and business skills for microentrepreneurs through our award-winning Dialogue on Business program.

Client Education

people taught financial literacy and business skills, to date, by Accion and its partners

KEY STATISTICS

175 THOUSAND

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Accion partner Mann Deshi Foundation’s clients attend a Dialogue on Business class in a mobile classroom in Mhaswad, Maharashtra.

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TRAINING AND CAPACITY BUILDING

Accion’s Training and Capacity Building team (TCB) provides high-quality training programs and cross-regional learning experiences that connect participants in the classroom and virtually, building core skills and promoting global knowledge sharing. Our offerings leverage Accion’s 50-plus years of industry experience and incorporate practical tools and techniques that encourage application and retention. The result is a rich array of capacity building programs that include best practices, industry trends, and innovations.

In India, the TCB team works closely with Accion’s partners and key industry players to build the technical, managerial, and leadership capacity of MFI staff at all levels. Courses are designed to be relevant to the Indian market, and address priority topics such as risk management, financial analysis, managing portfolios for growth, and leadership skills. Since 2008, TCB has trained over 12,500 microfinance professionals in India.

Accion also seeks to build the internal training capacity of microfinance institutions to increase outreach and achieve scale. To this end, TCB recently rolled out its Certification and Licensing program, in which we worked with Janalakshmi Financial Services (JFS) to certify its trainers to

deliver TCB’s “Leadership Skills for Mid-level Microfinance Managers” signature training program. As a result, three JFS trainers are now able to independently deliver the program to JFS managers.

Recognizing that not all learning happens in the classroom, TCB offers structured, peer-to-peer learning activities for microfinance managers, including exposure visits to model institutions, workshops on industry topics, and webinars led by subject matter experts. In collaboration with the Smart Campaign, TCB launched the first regional webinar series in India on “Smart Practices in Client Complaint Resolution.” The three-part series connected a group of participants from different microfinance institutions across India to exchange with industry experts and peers on developing and implementing effective client grievance redressal systems. In 2014, TCB also led two exposure visits to India – one to Ujjivan Financial Services on the topic of “Maximizing Human Capital,” and the other to Swadhaar FinServe on the topic of “Mobile Banking.” Through these visits, participants had the opportunity to observe practices in action, exchange with key staff members, and learn firsthand from the institution’s experience.

Learn more about our industry training initiatives in India: www.accion.org/training

A key part of our commitment to strengthening the microfinance industry and expanding financial inclusion is training microfinance professionals around the globe. We help them prepare to become managers and leaders in the industry through specialized training programs, workshops, and exposure visits.

microfinance professionals trained since 2008, through

our Regional Training Center

KEY STATISTICS

12.5 THOUSAND

Industry Training

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Airtel Mobile Money training at Accion partner Swadhaar’s Chembur branch, where clients learn to pay loan and utility bills using their cell phones.

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THE SMART CAMPAIGN

In line with Accion’s strategic goal of building a stronger industry with high standards, in 2009 the Center for Financial Inclusion at Accion, whose founding sponsor is Credit

Suisse, launched the Smart Campaign – the industry’s first-ever consumer-protection campaign. The campaign’s goal is to ensure that the microfinance industry remains both financially sound and socially focused.

The Smart Campaign is working with microfinance leaders in India to provide the industry with the tools and resources it needs to deliver transparent, respectful, and prudent financial services to all clients. The campaign includes the assessment and certification of microfinance institutions that comply with its consumer-protection principles.

The campaign has conducted 20 in-depth assessments of MFIs, the result of which has enabled the campaign to establish benchmarks on Client Protection Principles in the country. In partnership with Micro-Credit Ratings International Ltd – the largest ratings agency in India – the campaign has launched its certification process. To date, five MFIs have been certified, including Accion’s investee Swadhaar, and the campaign is providing technical assistance to another five organizations that wish to obtain Smart Campaign certification in the near future.

Learn more about the Smart Campaign online: www.smartcampaign.org

PERSONS WITH DISABILITIES

India is the largest and most dynamic microfinance market in the world, and home to at least 15 million

financially excluded persons with disabilities. Microfinance institutions in India have an extensive reach and have achieved admirable levels of operational efficiency. Yet, there is much work to do for people with disabilities.

In partnership with social enterprise v-shesh and three microfinance institutions – Annapurna, ESAF, and Equitas – Accion has developed a roadmap to disability inclusion and is piloting these activities in India. In the longer term, the project aims to catalyze cultural and operational transformation within the MFIs so that they become more inclusive at all levels.

In 2014, the Mphasis Universal Design Awards recognized Accion’s efforts in improving accessibility for persons with disabilities with an award.

Learn more about our work on financial inclusion for persons with disabilities on the Center for Financial Inclusion’s website: www.centerforfinancialinclusion.org/programs-a-projects/pwd

We support pioneering industry initiatives that keep clients first in the microfinance industry and secure equal and fair access to quality financial products and services for persons with disabilities.

clients served by the five MFIs certified, to date, by the Smart Campaign for client protection

KEY STATISTICS

4.8 MILLION

Client Protection and Inclusive Finance

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Reshma Babu, an employee of Accion partner Vindhya, a back office processing company in Bangalore whose staff is comprised mostly of differently-abled people.

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MARCH 31

2014 2013

EQUITY AND LIABILITIES

SHAREHOLDERS’ FUND Share capital 57,500,000 57,500,000 Accumulateddeficitintheincomeandexpenditureaccount (54,063,410) (48,828,734)

3,436,590 8,671,266NON-CURRENT LIABILITIES Long-termprovisions 2,829,984 2,256,346

2,829,984 2,256,346CURRENT LIABILITIESTradepayables 3,979,467 5,242,717Short-termprovisions 1,073,327 2,054,011

5,052,794 7,296,728

TOTAL INR 11,319,368 INR 18,224,340

ASSETS

NON-CURRENT ASSETS Fixedassets Tangibleassets 237,654 403,499 Intangibleassets - 13,498 Long-termloansandadvances 6,955,068 6,631,205

7,192,722 7,048,202CURRENT ASSETS Inventories 370,464 378,784 Tradereceivables 341,819 7,251,720 Cashandcashequivalents 1,983,665 2,752,609 Short-termloansandadvances 1,143,873 646,775 Othercurrentassets 286,825 146,250 4,126,646 11,176,138TOTAL INR 11,319,368 INR 18,224,340

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

ACCION TECHNICAL ADVISORS INDIA

2014

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YEAR ENDED MARCH 31

2014 2013

INCOME Donationsandgrants 51,889,889 66,112,338 Revenuefromoperations 11,476,503 12,774,393 Otherincome 568,715 - TOTALINCOME 63,935,107 78,886,731EXPENSES Costoftrainingmaterialssold 8,320 16,800 Employeebenefitsexpense 43,872,407 42,309,760 Financecosts - 628,551 Depreciationandamortisationexpense 286,114 390,938 Otherexpenses 23,847,776 24,357,347 TOTALEXPENSES 68,014,617 67,703,396

EXCESS OF (EXPENDITURE) / (4,079,510) 11,183,335 INCOME BEFORE PRIOR PERIOD ITEMS Priorperiod(expenditure)/income (1,155,166) 1,489,804

EXCESSOF(EXPENDITURE)/ (5,234,676) 12,673,139 INCOME FOR THE YEAR

For Walker Chandiok & Co LLP (Formerly Walker, Chandiok & Co) Chartered Accountants

per Sanjay Banthia Partner

Bengaluru

For and on behalf of the Board of Directors:

Abhishek Agrawal Hema Bansal Director Director

CONSOLIDATED STATEMENTS OF ACTIVITIES

ACCION TECHNICAL ADVISORS INDIA

2014

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Women in a solidarity group of Accion partner Saija Finance gather at a disbursement meeting in Danapur, Bihar.

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Selection of Accion PartnersOur work in India this past year has been made possible in part thanks to the support of the following organizations and individuals:

Credit Suisse

Dow Jones & Company

Ford Foundation

GSMA Mobile for Development Foundation

Joe and Luisa Hamilton

International Finance Corporation (IFC)

Dianne and Ron Hoge

MasterCard Foundation

Rumsfeld Foundation

Swiss Capacity Building Fund (SCBF)

Small Industrial Development Bank of India (SIDBI)

Our Board of Directors in IndiaWe thank the members of our Board of Directors for their commitment to our work in India:

CURRENT MEMBERS (as of March 2014)

Mr. Abhishek Agrawal

Ms. Hema Bansal

PREVIOUS MEMBERS (until March 2014)

Mr. Ashok Kumar Nedurumalli

Ms. Sarayu Kamat

Rita Devi (far right), client of Accion partner Saija Finance, makes bamboo shelves and baskets to sell on the streets in Patna, Bihar and help support her husband and four children (two of whom are pictured).

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About Accion in IndiaAccion is legally represented in India by Accion Technical Advisors India (Accion India), an Indian charitable institution, organized under Section 25 of the Companies Act, 1956. Accion India was formed for the purpose of providing counsel and advice to governments, government bodies, microcredit and microfinance institutions, banks and other financial institutions that provide assistance to the poor. Accion India also undertakes, encourages, reviews and invests in research and development activities in order to acquire, create, and/or develop new technologies and products designed to serve the financially excluded.

Investing in individuals. Improving our world.

Accion in India

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