Amartha - Inclusive Capital Fund SPV

Debt : March 2025

BIO has granted a USD 15 M loan to Amartha, an Indonesian microfinance fintech fund.

Amount

$ 15,000,000.00

Type of investment

Debt

Development impacts

Local economic growth
Private sector consolidation/innovation
Financial inclusion
Food security & rural development

Beneficiary locations

Asia: Indonesia

Investment field

Financial Institutions

Activity

KK.64.191 Microfinance institution

Organisation

Amartha - Inclusive Capital Fund SPV

Website

https://amartha.com/en/

Domicile

Singapore

Amartha was founded as a microfinance institution (MFI) in 2010 to provide
productive loans and other financial services to unbanked and underserved women
in rural communities. The MFI became a fintech peer-to-peer platform in 2015. A P2P
platform is a decentralised network where two or more individuals interact directly
with each other without the need for an intermediary. Crowdlending and
crowdfunding platforms are the most common examples. Over the years, Amartha
has developed its technology to automate operations including borrower
applications, data gathering and credit scoring. It also became one of the fastest
growing microfinance providers in the country. As of March 2024, Amartha connected
11 institutional and 142,000 active retail lenders with 1.5 million female borrowers
located in 92,000 villages with an average loan of USD 375.

Amartha has an innovative business model that combines a traditional microfinance model on the loan origination (asset)side and leveraging its peer-to-peer (P2P) license on the liability side to mobilise banks and investors to participate in financing micro/small businesses operating at the bottom of the pyramid. IFC has led a debt funding round of up to USD 206M. The facility is structured through a special purpose vehicle (SPV) as local regulation does not permit P2P platforms to take loans on balance sheet. The facility will be composed of a USD 25M A loan by IFC.

Development impacts

Local economic growth
Funding a fast growing microfinance lending platform that provides basic financial services - mostly productive loans - and literacy trainings to underserved microentrepreneurs - mostly women in rural areas. Furthermore, Amartha mobilises local savings through the possibility for individuals to fund multiple loans through the P2P platform.
Private sector consolidation/innovation
Amartha promotes a unique hybrid business model that relies on the Grameen lending model (group lending) and leverages its P2P license to achieve scale and reach the underserved segments of the population, by using financial technology not only for linking lenders with borrowers but also for risk assessments and specific outreach and last-mile connect to rural areas, including through the dedicated Amartha app that encompasses multiple financial services (e-wallet, payment points, self service loan application etc).
Financial inclusion
Amartha increasing access to microcredit services - including payment services - and financial education to low income (target individuals with less than 4,10 USD/day) microentrepreneurs who are all women in rural areas.
Food security & rural development
Amartha expands access to basic financial services in rural and remote areas, with a unique and almost exclusive outreach to rural borrowers that also includes smallholder farmers in agriculture; smallholder farms, and small-scale agri value chain enterprises.

E&S Impact

The following key areas of E&S improvement were agreed upon:

Perform an external assessment on Client protection, implement the remedial steps proposed in the report and obtain the Silver Client Protection Certification
Train staff on client protection and on the ESMS
Develop and implement a basic E&S Management System
Develop a strategy to manage deforestation risk
Adopt the EDFI exclusion list
Formalise the possibility for women to be eligible as guarantor
Human Resources improvements regarding staff accommodation, fire safety, whistle blowing policy, road safety, accident register and social dialogue.

Situation at the time of investment

Amartha has an E&S policy in place, that stipulates their commitment to sustainability and specific standards like the Client Protection Principles and the IFC PS. The institution is currently developing a basic E&S Management System, and uses an exclusion list based on the IFC exclusion list.

Amartha has officially committed to the Client Protection Pathway and has done a self-assessment on the Universal Standards for Social and Environmental Performance Management. They have drafted an internal action plan with improvement measures, and aim to achieve Client Protection Certification.

An Impact & Sustainability Team is in place, managed by the Chief Risk and Sustainability Officer. An ESG Committee, consisting of senior executives of Amartha, has the role of defining ESG priorities, approving budget, overseeing implementation and reporting to the Company’s Board.

Risk Category: Low risk C