Kajal Ilmi, founder, MD and CEO, AVIOM
Image: Madhu Kapparath
Babita Sisodia from Dewas, Madhya Pradesh, and Baljinder Kaur from Ganganagar, Rajasthan, had one thing in common. The women were invisible in their homes. Their work—managing households or taking care of their kids—went largely unnoticed and was taken for granted. They were dependent on their husbands for financial needs, and would hardly get money to spend on themselves. All that changed three years ago when they came across AVIOM, a housing finance company started by Kajal Ilmi.
AVIOM (Adhering to Vision of Inclusion of Masses) provides housing loans to women in rural and semi-urban areas, catering to both salaried and self-employed categories. It provides loans ranging from ₹5,000 to ₹500,000 for home extensions, sanitation facilities and renovations. Founded in 2017 by Kajal Ilmi, who is also CEO, the company is “run by women, for women, and lends to women”.
With over 120 branches across 14 states, AVIOM has a team of over 55,000 women, whom they refer to as ‘Shaktis’. They source loans for the company. So far, the company has lent to over 50,000 women.
AVIOM, which claims to be the only financial lending company specifically lending for the construction of toilets, has a ticket size of ₹270,000. The loan tenure is up to 10 years, and the interest rates are approximately 21 to 27 percent.
The reasons for this interest rate range compared to other NBFCs and housing finance companies (HFC) are multi-fold, Ilmi explains. Since AVIOM’s target segment is informal, a surrogate assessment of income is required for which employees visit each customer’s home, leading to higher expenses. The assessment is to understand their income stability and repayment capabilities, since proper documentation is unavailable.
As per Ilmi, big HFCs and public sector banks (which offer housing loans at 11 to 20 percent) do not extend loans to this group and instead lend to AVIOM for reaching this particular segment. AVIOM’s only direct competitors are local money lenders, who, she says, charge 5 to 6 percent interest per month, which comes to a compounded annual rate of more than 60 percent.
Fauzia Nazneen, general manager—credit, Svatantra Micro Housing Finance Corporation (MHFC), explains that for lower ticket-size loans that companies like AVIOM offer, it is “obvious” that they charge a higher rate, because “they are offering loans to customers mainly from rural areas, for whom there is no way to accurately assess incomes owing to their nature of employment”. “Therefore, the risk associated here is much higher.”
Also read: Swagatika Das' bold and daring attitude is taking Nat Habit to new heights
Most HFCs which are based out of Tier I cities do not completely go into remote rural areas. They maintain a portfolio of mixed regions consisting of urban, semi-urban and rural customers. Svatantra MHFC is one such company that offers a rate between 13 and 18 percent for home purchase, construction, renovation/improvement and loan against property in the rural segment.
“Microfinance institutions have their stronghold in rural areas because they understand those customers and their needs better as compared to semi-urban and urban customers who have better access and multiple choices for meeting their financial needs,” says Nazneen.
The repayment structure at AVIOM is based on flexible loan instalment plans. The default rate or gross non-performing asset ratio is 0.5 percent, says Ilmi. “This group is happy to receive the funds, there is no wilful default. For only about 30 cases out of about 50,000 customers does the the repayment come in late, but it still comes. There are no write-offs,” she claims.
One tranche of all their home loans is specifically for sanitation. For example, for a ₹3 lakh loan, a certain amount compulsorily needs to be used for building sanitation facilities in houses. “Sanitation affects the quality of life for women tremendously, more so than men,” says Ilmi, who wants to focus on sanitation facilities in local schools because “girls tend to drop out of schools due to lack of toilets”.
Ilmi started AVIOM after stints with companies like PVR, DLF and Reliance Industries. In her mid-40s, with more than two decades of corporate experience, she decided to become an entrepreneur. She was sure her company would focus on Tier II and III regions, and that she will work with women. “I believe women are the torchbearers of positive change,” says Ilmi, 53. “Involving women in purchase decisions became the basis of AVIOM, where women are the centre of the underwriting and the core plug around which the entire loan is created.”
As per Ilmi, AVIOM is adding 4,000 to 5,000 women Shakti volunteers every month. The Shakti movement trains women—stay-at-home mothers or anganwadi workers or self-help group leaders—in financial literacy and enrols them as sourcing agents. Their job is to provide files on potential loan seekers; for every file they submit, they get ₹500. They can progress to become managers for “Shakti branches”, with their earning potential, according to Ilmi, increasing up to ₹40,000-50,000 per month.
Sisodia, 30, and Kaur, 29, are both branch managers in their respective villages. While Sisodia started with a small tailoring business for additional income, Kaur used to work as an intermediary with certain banks who would use the resources and information she would provide but didn’t pay her and her fellow workers. Both have now gathered a group of 3,000-4,000 women under their leadership.
“The biggest change I have experienced after joining AVIOM is that I am known in my city,” says Kaur. She is glad that she has become a catalyst for women getting jobs as Shakti volunteers, which she says helps them become self-dependent.Also read: Saumya Mittal's Fitbudd enables fitness coaches scale their businesses through this SaaS platform
Ilmi found that though the loans were meant for women, they were taken in the name of the man of the family. To deviate from this, AVIOM encourages women to be named as co-owners of the properties for which they provide loans. If a woman’s name is part of the property, they become eligible for a bigger loan amount. “I think having a house under her name gives a certain comfort to a woman, especially in small tier cities where we hear about women facing domestic violence and threats to be thrown out of the house,” Ilmi says.
AVIOM started off bootstrapped with a seed capital of ₹14 crore that Ilmi invested. Since then, it has raised three rounds of funding and is currently in process to raise another $30 million in a Series D round. It has also raised close to ₹1,200 crore in debt from 70 lenders, including SBI, HDFC Bank, TATA Capital, and IndusInd Bank, among others. Equity partners include Sabre Partners, C4D Partners, and Gojo & Company Inc. AVIOM also became one of the few early-stage financial services companies to be associated with the US International Development Finance Corporation. The company is profitable and generated a revenue of ₹106 crore in the first couple of quarters of FY23.
“AVIOM is a market leader in a niche segment. We see massive opportunities for scale and it is addressing an important need for borrowers. The management has been able to develop a good track record and sustainable business model in quick time. The expansion into new geographies and the smaller ticket-size of the loans have allowed AVOIM to build a well-diversified and granular portfolio, giving us comfort as an impact-focussed lender,” says Dhruv Malhotra, senior investment officer at BlueOrchard Finance Limited which started a lending relationship with AVIOM in May 2021.
According to Press Information Bureau report, in February 2022, about 10.9 crore individual household latrines have been constructed under the Swachh Bharat Mission.
AVIOM aims to fund more than a lakh toilets by 2023-end, and by the next couple of years, it aims to increase the number of Shakti partners to over three lakh. “In 2026, we plan to get listed and become the largest company in terms of rural employment forwomen,” says Ilmi.
(This story appears in the 24 March, 2023 issue of Forbes India. To visit our Archives, click here.)