On the increasing role of impact reporting for microfinance institutions – Interview with Mr. Sovan Satyaprakash, Head of Strategy at Aye Finance

02/07/2019 Blog

Aye Finance, a NBFC, lending to micro and small enterprises in India, is an investee in the BlueOrchard managed Microfinance Initiative for Asia (MIFA) Debt-Fund. MIFA has a dedicated Technical Assistance Facility (TAF) to support local financial institutions, offering capacity building in the form of advisory services, training, product and systems development. BlueOrchard is the Technical Assistance (TA) manager. Aye Finance’s recently published Social Performance Management Report was produced with the financial and advisory support of the MIFA TAF. BlueOrchard’s Blended Finance and Impact Management team interviewed Sovan Satyaprakash, Aye Finance’s Head of Strategy, to learn more about the cooperation between Aye Finance, MIFA TAF and BlueOrchard.

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In concrete terms, how did the MIFA TA support benefit Aye Finance?

Sovan: With the MIFA TA support Aye Finance (Aye) was able to conduct an extensive impact assessment survey of over 1600 customers in 34 cities across 8 states. With the support from consultants assigned by BlueOrchard, Aye was able to get hands on experience on the SPI4 tool and undertake the Social Performance Management (SPM) audit. This helped Aye benchmark against global peers on USSPM.

What are for you the key advantages of cooperating with BlueOrchard?

Sovan: BlueOrchard is a leading global impact investment manager. Having worked in the impact space for almost two decades they bring their expertise and resources to help institutions like Aye achieve their mission to create a transformative impact on the underserved micro enterprises across India.

Will the outcome of the TA support help in strategic decisions of Aye Finance? How?

Sovan: Based on the recommendations of the SPI4 report, Aye has prepared an organization wide action plan to further strengthen its processes to make them more aligned towards its social goals. Also as part of the impact assessment survey, Aye was able to identify key interventions that it will pursue through its not for profit entity FAME (Foundation for Advancement of Micro Enterprises).

What was your motivation to invest on impact reporting?

Sovan: Aye was setup with the goal of bringing a transformation in the underserved micro enterprise lending space. Since its inception 5 years ago, Aye has provided financial and non- financial services to more than 125,000 grassroots businesses. This project was an effort to measure not only the alignment of the organization towards its social goals but also measure the impact of Aye’s services on its clients so that we continue to deliver customer centric services.

What opportunities do you see ahead for Aye Finance in monitoring and reporting impact?

Sovan: Aye intends to conduct midline and end line surveys to measure the impact on its customers’ lives and businesses as a progression of this project. We have also identified key impact metrics that will be captured and tracked at a regular frequency on a larger pool of customers, in line with our social strategy around SPM.

Why has it become more and more important for MFIs to report on their impact?

Sovan: Reporting on impact helps in evaluating and validating an institution’s intent, actions and outcomes. MFIs are double bottom line organizations catering to a vulnerable, new to credit clientele which makes them important players in the ecosystem. Reporting on impact ensures accountability and responsibility towards the community they serve.

Thank you, Sovan, for answering our questions.