Arpita is the MD & CEO of Dia Vikas Capital. Dia Vikas Capital was established in early 2008 as a social investor to fill the gap of social investment and thereby support the growth of the Indian microfinance sector and encourage the development of start-up operations in underserved areas. Dia currently partners with socially focused microfinance & related institutions that serve millions of poor through provision of credit, savings, insurance, remittance and pension products to support livelihoods creation and create impact.

Prior to Dia Vikas, Arpita was the MD of a ESG focussed consulting firm that provided high quality professional services for the economic enhancement of the lives of low-income families. Arpita has 20+ years of management and risk consulting experience with the ‘Big Four’ professional services firms. Throughout her career she has held global and national leadership roles, collaborating with peers from 30-plus countries in emerging and developed markets. She is passionate about helping improve the ESG (Environmental, Social and Governance) performance of organisations and is an advocate for cost effective and efficient solutions leveraging technology, to create sustainable impact at scale.

Arpita serves on the Global Supervisory Board of an international social investor. She is also an independent director on the board of India’s only multi-segment FinTech operating at scale with a banking license. Arpita holds a post-graduate program in Management qualification from the Indian Institute of Management, Ahmedabad, India as well as a bachelor's degree in Electronics & Communication engineering from DCE India

1 As a leading impact capital provider that focuses on Poverty Alleviation, could you help us understand your approach in tackling poverty?

Dia Vikas Capital (Dia) is a subsidiary of Opportunity International Australia which has a strong legacy and track record of delivering microfinance solutions to millions of clients for almost 50 years. Dia Vikas Capital, since its inception in 2008, has worked with the mission to reduce poverty through provision of financial services to the underserved poor. We are focused on enabling inclusive and sustainable growth – ensuring that families experiencing poverty can create opportunities and transform their futures.

We have been doing this do by providing catalytic capital to Microfinance Institutions (MFIs) that provide access to credit and other financial services to this segment. While selecting partners, we ensure that the focus is not only on financial return but equally on social returns. A potential Partner should demonstrate their commitment to tackle the multi-dimensional aspects of poverty faced by the client and not be limited to simply providing access to credit to their clients. Lack of access to quality health and education services, poor livelihood opportunities are other aspects of poverty that need urgent and effective addressal. Dia also works with partner closely to develop financial products for WASH, Education etc. which improves the quality of life of our target clients and help them break the vicious poverty cycle. Dia also ensures that the partner predominantly serve the poor clients and have operations in areas where poor people have lesser access to financial services.

Dia encourages partners to provide credit plus services to clients. One example is Cashpor Micro Credit, which launched “Community Health Facilitators” (CHFs) programme in 2014 with Dia’s support and has so far trained >3,500 SHG members as CHFs who have provided basic health education to more than 2 million people in the last eight years, helping them live healthier, more productive lives. Cashpor is also providing Telemedicine services for its clients where medical treatment is provided at a nominal cost by qualified doctors.

2 What factors does Dia Vikas Capital take into consideration to assess its partnerships with Microfinance Institutions and Small Finance Banks?

Dia is an impact investor which focuses more on social return by providing catalytic & patient capital. Dia focusses on the following factors for assessment of its existing partners

• Strong governance framework: Dia places a strong emphasis on the quality of governance at the partner level. We believe that the success of any institution is dependent on effective governance practices.
• Operational Performance & Risk Management: Dia believes that only a financially sustainable institution can provide services to clients on a long-term basis. Focus is on adopting efficient processes, suitable risk mitigation measures and leveraging digital technologies to achieve efficiencies, lower cost services to clients and creating impact, at scale.
• Impact Measurement & Reporting: Dia expects its partner to embed its processes with impact metrices so that it is able to track and report progress and demonstrate sustained impact and longer-term positive outcomes on the lives of clients. Dia works closely with partners to develop the impact measurement framework whilst ensuring the principle of “do no harm”.

3 Could you share Dia Vikas Capital’s investment strategy in India for the calendar year 2023? Also, can you share an example of a successful investment made by Dia Vikas Capital in India, and what made the company stand out?

In 2023, Dia is looking for mission aligned financial inclusion partners that are addressing the changing and maturing needs of the poor households through innovative and tech/digital leveraged business models and have the capability to address the muti-dimensional aspects of poverty and create sustainable impact and help build pathways out of poverty for their clients.

Dia has so far partnered with Microfinance Institutions and Small Finance Banks in the financial inclusion (FI) sector. Going forward, Dia also plans to partner with institutions focused on financial needs of microenterprises that help in livelihoods creation and their knock-on impact on additional employment opportunities. Financing of affordable housing, WASH and Edufinance are also sub-sectors of interest for Dia.

An illustration of a successful investment by Dia is the ESAF Small Finance Bank. Dia first invested in ESAF in early 2009 when it was a small NBFC. After infusion of equity by Dia, ESAF grew rapidly and transformed into a Small Finance Bank (SFB) in 2017. It now offers diversified loan and savings products to its 3 million+ clientele across the country and is expected to go for public listing in the coming months. ESAF recently launched two new products – a digitised loan product for street vendors and a ‘Farmers Interest Group’. These groups see 25 farmers take out loans for agricultural purposes. The loan is for small and marginal farmers – cultivating land up to 2.5 acres – and requires no collateral.

4 Can you help us understand how you measure and track the impact of your support, and how this sets you apart from other Capital Providers in the industry?

For Dia, sustainable social impact is the most critical part of our investment. Dia’s social performance management programme ensures that we understand the need of our clients which equips us to design products and services that enables the clients to transform their future most effectively. Social Performance Management (SPM) is the framework we use for demonstrating and sharing our successes and failures.

Dia encourages its partners use tools like Poverty Probability Index (PPI) to collect data on outreach to poor and collect data on other social indicators depending on their social goals. With the PPI, partners can identify the clients who are most likely to be poor, integrating objective poverty data into their assessments and strategic decision-making.

Dia also expects its partners to ensure that “client protection principles” are followed while delivering their services. Dia has made it mandatory for partners to obtain client protection certification from agencies certified by CERISE+SPTF within a reasonable time frame post its investment to ensure that microfinance offered by its partners is based on responsible, sustainable lending practices, data privacy and respect of human rights.

Dia also encourages its partners to take part in external client survey such as 60 Decibels to get actionable, benchmarked social impact data, gathered from clients. The same is used for identifying evolving client needs and other service improvement opportunities.

5 What are your views on the impact investing market in India? How does it compare with other emerging markets?

The impact investing market in India has grown significantly in recent years with IIC itself reporting nearly 6 bn $ equity investments in impact enterprises in India in 2022. Big ticket deals (more than $10 million) have more than doubled in the past five years. Nowhere is there a greater need for the resolution of environmental and social challenges than in emerging markets – hosting 86% of the world population and nine of the top ten cities most vulnerable to climate change.

Among the emerging markets, India is the biggest investment destination with good investor interest due to the unmet needs of more than half billion of its population. More recently, impact investments in India are now expanding beyond financial inclusion into emerging sectors such as agriculture, technology for good, healthcare, education and livelihoods.

India is an opportunity-rich environment and its attractiveness for impact investing worldwide is due to multiple factors such as rising smartphone use, increasing penetration of internet, maturing of digital payment systems and an increasing tribe of young entrepreneurs launching start-ups and providing innovative financial services to clients using the digital means. These start- ups have the capacity to bring more and more people under the financial inclusion umbrella by providing innovative products and achieving scale. Several policy initiatives by the Indian government such as the Social Stock exchange, Atal Innovation Mission, are further facilitating a growth-stage impact investing landscape in India.