Hardika Shah

Ashoka Fellow
India,
Fellow Since 2014
Kinara Capital

Citation

This profile was prepared when Hardika Shah was elected to the Ashoka Fellowship in 2014.
The New Idea
The debt gap for micro and small enterprises in India is about $198 billion, growing at 11% per year. Falling in between large businesses and individuals, these enterprises are neither serviced by traditional banks nor by microfinance institutions due to the perceived risk and lack of collaterals.

Hardika is addressing this ‘missing middle’ market through an approach that lowers the risks of lending to this market. Chief among her strategies is extending the principles of self-help group (SHG) finance to small enterprises. She recognized the upstream and downstream supply chain partners for small enterprises can be leveraged the same way peer-groups are for SHGs: to provide security and increase transparency. Drawing from this insight, she has built new financing model that provides debt capital loans in the range of Rs. 1 lakh to Rs. 10 lakh ($2000- $20,000) to small business that hedges risk by financing a supply chain. She works with network partners (buyers, trade organizations, franchisors, etc.) across supply chains to source and fund micro and small businesses in manufacturing, artisan products and agri-retail. In addition, she has also influencing upstream supply chain partners to value their partners and support the growth of their smaller business partners by setting up ‘guarantee funds’ or financing the asset purchase. By plugging into supply chains, she is building systemic trust with the borrowers to manage risk and create a low cost / high leverage model that grows with its partners.

Alongside scaling her work to create more sustainable businesses and jobs, Hardika sees that a partnership with traditional banks will leverage and bring together the finance available with traditional banks and her strength to quickly diligence and service customers. Towards this, Hardika is working to build strategic partnerships with banks that will leverage her model to reach more small businesses.
The Problem
The Strategy
The Person

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