Chapter 6 - Section 6.5Innovative financing of MLIs
Since its inception, microfinance movement has been seen as a financial market closely linked to the poor local communities working towards helping the poor and unbanked popu- lace at the bottom of the pyramid while gener- ating social empowerment. For microfinance to continue delivering positive outcomes for the poor, the financial sustainability of the in- stitutions involved is essential. In view of this the relationship between diverse financing options and financial sustainability of MLIs is unavoidable. For MLIs to continue to be an investible destination for the bankers and in- vestors it needs to have strong financial and product diversification. In today’s times having a diverse base of financing structures be it through blended financing, end use financing or smart subsidies is paramount to spur finan- cial sustainability and counter inefficiency and dependency. Especially relevant in the context of growing impact of climate change and fre- quent instances of climate extremes that are more likely to endanger clients’ health and their asset base and ultimately affect both di- rectly and indirectly the financial performance of MLIs. Therefore, innovative financing solu- tions around livelihood, health, insurance, clean energy, affordable housing, agriculture etc. need to be explored to augment financial sustainability and multiply outreach of MLIs.
Beyond Microcredit - Evolving Role of Micro Lending Institutions (MLIs)
6.5 Innovative financing of MLIs
Since its inception, microfinance movement has been seen as a financial market closely linked to the poor local communities working towards helping the poor and unbanked popu- lace at the bottom of the pyramid while gener- ating social empowerment. For microfinance to continue delivering positive outcomes for the poor, the financial sustainability of the in- stitutions involved is essential. In view of this the relationship between diverse financing options and financial sustainability of MLIs is unavoidable. For MLIs to continue to be an investible destination for the bankers and in- vestors it needs to have strong financial and product diversification. In today’s times having a diverse base of financing structures be it through blended financing, end use financing or smart subsidies is paramount to spur finan- cial sustainability and counter inefficiency and dependency. Especially relevant in the context of growing impact of climate change and fre- quent instances of climate extremes that are more likely to endanger clients’ health and their asset base and ultimately affect both di- rectly and indirectly the financial performance of MLIs. Therefore, innovative financing solu- tions around livelihood, health, insurance, clean energy, affordable housing, agriculture etc. need to be explored to augment financial sustainability and multiply outreach of MLIs.
Box 6.1: Annapurna way of serving the Community Beyond Credit
As a socially responsible financial institution, Annapurna actively extends its support beyond lending by engaging with communities through its credit plus activities and Corporate Social Responsibility efforts. These initiatives are designed to address pressing social needs in areas such as accessible financial awareness. healthcare, livelihood support, women and child welfare, and gender inclusion.
- Digital Literacy Training (FDLT) program: Annapurna Finance’s Financial & Digital Literacy Training (FDLT) program, launched in 2015, empowers clients with essential financial skills and promotes the adoption of digital and financial services. In FY 2025, it reached 31,782 participants across six states, covering its three core areas: financial literacy, banking facilities & digital literacy and awareness of government welfare schemes. FDLT directly supports SDG 1 (No Poverty), SDG 5 (Gender Equality), SDG 8 (Decent Work & Economic Growth), and SDG 10 (Reduced Inequalities) with impact assessments showing marked improvements in financial awareness and digital readiness among beneficiaries post-training.
- During FY 2024–25, the organisation allocated ₹2,68,52,575 towards seven CSR projects supporting over 3.4 lakh individuals across various projects. Along with broad outreach, the initia- tives also contributed meaningfully to nine of the United Nations Sustainable Development Goals, highlighting An- napurna’s commitment to driving inclu- sive and sustainable change.
- Mobile Medical Unit (MMU): A key health intervention by Annapurna, the Mobile Medical Unit (MMU), was launched to support SDG 3 (Good Health and Well- Being) by delivering essential medical services to underserved communities. Since its inception, the MMU has reached over 34,000 individuals, with a strong emphasis on inclusivity—two- thirds of this year’s beneficiaries were women, 67% of whom were over the age of 40. In FY 2024–25 alone, the MMU provided healthcare access to more than 4,600 people across rural Khordha, Odisha, through 56 health camps and over 1,500 diagnostic tests. The initiative helped beneficiaries save an average of ₹2,000 per month—a 160% increase from the previous year—driven by the introduction of diagnostic services, a wider range of medicines, free consultations and reduced travel costs. With an investment of ₹1,170 per person, the program created ₹1.6 in value for every ₹1 spent and consistently maintained over 80% satisfaction across all service quality indicators. Encouraged by its impact, Annapurna plans to scale the MMU model with greater outreach and specialised healthcare.
- Artisan cluster initiative: Another flagship project, Atulya Karigari, Annapurna’s artisan cluster initiative, aims to ensure livelihood security while preserving traditional handloom and handicraft practices. In FY 2024–25, the program introduced 315 new products, 80 innovative designs and provided training in eco-friendly packaging, digital marketing and design development. A Tusser Silk cluster was also established in Gopalpur, expanding the initiative’s reach. Artisans saw a significant boost in income, with average monthly sales increasing by ₹80,583 and profit margins rising by 125%. For every ₹1 invested, ₹80 in sales was generated. Over 90% of artisans accessed new markets, embraced new designs and reported financial independence. Onboarding to ONDC further enabled digital inclusion, while feedback highlighted a strong demand for sustained orders, better visibility, and ongoing design support.
- Scholarship Program: Annapurna also launched the ‘Excel the Excellence’ (E²) Scholarship Program in partnership with People’s Forum, offering competitive exam coaching and career guidance to 59 underprivileged students from 13 districts of Odisha—70% from low- income families and 41% girls—with special consideration given to children of community workers and those from socially disadvantaged groups (34%). Each student received around 125 hours of focused coaching for competitive exams such as NEET, JEE, NDA, and CA, resulting in an average academic improvement of 16%. By bridging the gap in career opportunities, E² aims to create education-to-employment pathways that promote long-term financial stability and upward mobility for underserved youth.
- Healthcare Initiative: In the area of public sanitation, Annapurna installed four solar-powered Bio-toilet units at high-footfall locations in Puri, including Puri Sea Beach, Shree Setu and public parking zones. These eco- friendly facilities are expected to serve over 3 lakh visitors annually, while also contributing to waste management by generating approximately 4.4 metric tonnes of organic manure and reducing wet waste by 16.4 metric tonnes— supporting a circular sanitation system and easing the burden on municipal services. Additionally, in collaboration with People’s Forum, Annapurna undertook the regular cleaning and hygiene maintenance of the Tarini Temple. A dedicated team of 11 personnel has been deployed to ensure the temple premises remain clean, safe and welcoming for thousands of daily visitors.
- Promotion of Gender Equality: Promoting gender equality remained a priority through collaboration with OSAFII, where 14 sensitization workshops were conducted across seven districts of Odisha, training over 700 participants, 94% of whom were women, including members of self- help groups.
- Clean Energy: Annapurna continues to contribute towards clean energy efforts through its sustainable financial offerings and environment- conscious CSR initiatives. This year the organization installed 90 solar streetlights in high-traffic public areas in Bhubaneswar and Puri, including parks, temples, beaches, police stations, flyovers, and UPHCs. An additional 40 lights were installed in key locations in Indore, Madhya Pradesh. Collectively, these installations are estimated to reduce carbon emissions by over 46 tonnes annually—32.32 tonnes in Odisha and 14.37 tonnes in Madhya Pradesh—reinforcing Annapurna’s commitment to sustainable urban infrastructure and proactive climate action.
These initiatives not only addressed critical gaps in healthcare, education, environment and livelihoods but also reflected Annapurna’s long-term commitment to inclusive, sustainable community development while advancing key SDGs such as No Poverty (SDG 1), Good Health and Well-being (SDG 3), Quality Education (SDG 4), Gender Equality (SDG 5), Clean Water and Sanitation (SDG 6), Affordable and Clean Energy (SDG 7), Reduced Inequalities (SDG 10), Sustainable Cities and Communities (SDG 11) and Climate Action (SDG 13).