Technical assistance for exploring and serving education finance market in India

Opportunity International EduFinance is working to address the global education crisis by increasing access to quality education and improving the quality of education. Opportunity’s EduFinance Technical Assistance Facility (ETAF) supports socially focused financial institutions around the world in pursuing the goal of access to education for all. ETAF provides support to develop, launch and grow sustainable education lending portfolios. Arth Finance, an MFI based in Rajasthan, reached out to ETAF for support in developing its education lending portfolio. Arth has been empowering women and their households in India for more than 14 years through microfinance and lending. It currently functions in the states of Rajasthan, Haryana, Himachal Pradesh, Punjab, Uttarakhand, and Madhya Pradesh.

Opportunity International onboarded Samavit as an expert agency to provide technical assistance to Arth Finance in developing its education focused lending portfolio. The major objectives for this technical assistance were to understand the demand and aspiration for school fee loan amongst parents in the select Arth’s operational states; develop a loan product based on market research findings, prepare standard operating procedures (SOPs) for the school fee loan, prepare a risk management note, provide training to Arth Finance’s staff on the loan product and processes, support Arth Finance in pilot testing the school fee loan, and provide monitoring support to Opportunity EduFinance for a fixed period.

Samavit conducted mixed-methods research to understand the demand and aspirations of parents for their children’s education in Rajasthan. Data was collected through household surveys, focus group discussions, and key informant interviews, and rapid desk-based research. The selection of program beneficiaries for household surveys was done using probabilistic sampling technique (simple random sampling) to ensure objectivity in findings, and the sample size was calculated using high measures of uncertainty (95% confidence level, 5% margin of error). The results of the market research informed the product development process. Samavit developed key features of the school fee loan (ticket size, repayment frequency, repayment channels, interest rates, etc.). Following that, Samavit’s team reviewed Arth Finance’s operations manual and prepared SOPs customized for school fee loan. The SOP was disseminated using process maps that included “as-is” and “should-be” processes. This was accompanied by preparation of a risk mitigation framework. Once the product and process note were finalized, Samavit conducted a training workshop for Arth’s staff to build their capacities for handling the school fee loan. Lastly, Samavit supported Arth’s team in piloting the loan product.

Samavit prepared a market research report, product & process note, risk mitigation plan, and a capacity building module. Samavit delivered training to Arth’s staff and monitored the progress of the pilot.