Bonani Roychoudhury, Managing Director of Nabsamruddhi Finance, is leading the mission to nurture of green and sustainable finance through groundbreaking initiatives and partnerships:
Ravi Lalwani: Briefly describe Nabsamruddhi Finance in terms of business size, number of employees, and its mandate.
Bonani Roychoudhury: Nabsamruddhi is a non-banking financial company (NBFC) subsidiary of NABARD that predominantly caters to the non-agriculture sector with a focus on environmental, social, and governance (ESG) factors. The company has an asset under management (AUM) of approximately Rs15 billion, which is managed through a branchless model. Nabsamruddhi has a team of 30 dedicated and passionate employees, of which 52% are women.
In the fiscal year 2021-22, the company revisited its strategy and identified green and wellness finance, fabrics, and handicrafts value chain as focus areas to give it a more distinct character. These focus segments are aligned with NABARD’s mandate as well as national and global priorities. Over the last 2 years, more than 45% of the company’s disbursements have been channelized towards these segments, and currently, around 40% of the AUM comprises of these activities.
Nabsamruddhi also supports these segments through capacity building, policy advocacy, and thought leadership. Collectively, these efforts cater to 9 out of the 17 sustainable development goals (SDGs).
What is the funding for each of the products you offer? Which products have grown the fastest in the last 12 months? Which products will be in focus in the next 12 months?
Nabsamruddhi provides funding to MSMEs and producer organizations through wholesale loans, direct term loans, or working capital term loans under project finance. The company also funds through subscription to securitized assets (through certificates). Loans accounted for 80% of the total disbursement of Rs10 billion, while PTCs comprised 20%.
Segment-wise, 30% of the funding was towards green and wellness. 60% of this was disbursed for WASH (Water, Sanitation, and Hygiene). Renewables & energy-efficient systems and electric vehicles were the other two major sub-segments. MSME and microfinance accounted for 24% and 21%, respectively.
The World Health Organization and UN studies have flagged that unsafe water and poor sanitation cause an estimated 1.6 million deaths per year worldwide, with water-related diseases responsible for 80% of diseases and deaths in developing countries. Inadequate WASH resulted in a loss equivalent to 6.4% of India’s GDP, according to a World Bank study.
To address this issue, Nabsamruddhi has escalated its WASH funding initiatives through stakeholder connects, influence, education, and concessional loans. Cumulatively, ~Rs4 billion of WASH loans have been disbursed through 30 partners so far. Nabsamruddhi is positioned as an ecosystem builder in WASH funding, being the largest wholesale debt provider for SDG6 among homegrown NBFCs, the largest wholesale debt funder for last mile WASH, and the only homegrown wholesale debt provider covering all sectors.
Nabsamruddhi has received recognition for its efforts, having been awarded the Sa-Dhan Water-org WASH award in 2022 and 2023 in the Capital Providers category. The company has received special concessional refinance from its parent NABARD, which is passed on to clients along with further concessions from Nabsamruddhi. Technical support from Water.org has helped to scale up the WASH portfolio substantially.
While green finance remains the company’s focus, WASH funding will continue as its flagship product as Nabsamruddhi realises that the health of the planet and its people are interlinked. Nabsamruddhi’s efforts in funding climate-smart WASH will be in sync with the global goals set by COP27 and COP28 to ensure clean sanitation for 3.6 billion people by 2030 and reduce methane emissions by 30% from 2020 levels by 2030, respectively.
What is typically the profile of NBFCs that you lend to in terms of geography, size, rating, age, profitability, customer segments, etc?
Nabsamruddhi provides financing to various sectors by lending to NBFCs, non-profits, trusts, and societies across the country. Our lending portfolio ranges from small-sized entities (Rs200 million AUM) to large-sized NBFCs (Rs100 billion AUM) having pan India operations. We have recently relaxed our norms to cater to unrated NBFCs with AUM up to Rs1 billion, which covers the entire risk rating spectrum below AAA-, as these entities can be supported by our parent company, NABARD. Our focus is on reaching the unreached segments to ensure sustainable livelihoods and rural prosperity through customer segments in semi-urban areas. SMEs catering to rural and semi-urban segments also fit into our narrative. We consider entities having 3 years of profitability, however, we make deviations for the impact-focused NBFCs. 90% of our 2 lakh end borrowers are women.
What are the new developments at Nabsamruddhi?
Nabsamruddhi will soon venture into co-lending, particularly for financing its focus segments. This move will help the company gather valuable insights into these segments. It has floated an RFP for the required software. The company has also started direct project financing handicrafts and bio-composite, and are currently assessing 3 projects for MSMEs in climate-ready WASH and biofuels.
Who are your main partners?
For technical evaluation, Nabsamruddhi is leveraging its close relationships with Water.org, Sa-Dhan, FINISH, WASH Innovation Hub, Toilet Board Coalition, Climate Policy Initiative, and collaborating with ISB, USDFC, GIZ, ACCESS Development Services, IFAD, and other stakeholders to enhance its blended finance offering. At the ground level, the financial interventions of NSFL have enabled 2 lakh ultimate beneficiaries to contribute to a reduction in total CO2 emissions, an increase in annual household income, savings, improved health and hygiene, reduced health-related expenses, gender equity and empowerment.
Briefly describe the technology team at Nabsamruddhi and the main softwares that have been developed inhouse.
Our tech team comprises a Chief Information Officer (CIO), a Chief Technology Officer (CTO), and an Assistant Vice President (AVP) for data analytics. We have developed modules for credit assessment, risk management, and Early Warning System (EWS) in-house using Python and MS Excel for PTC assessment. While CBS is being managed by software provided by NABARD, Nabsamruddhi is in the process of adopting a SaaS-based co-lending solution and platform, which will help reach more customers and scale up operations.
