An Indian lending firm is partnering with the US Agency for International Development (USAID), in a multi-million-dollar partnership to encourage innovation in India’s healthcare sector – especially by women.
The deal, struck between USAID and Dewan Housing Finance Corporation, Ltd. (DHFL), was announced yesterday. The agreement in question is a loan portfolio guarantee (LPG). This is a type of risk-sharing partnership, wherein a lender (in this case, DHFL) makes loans to organisations in a single sector, backed by a USAID credit guarantee.
Under the DHFL-USAID agreement, DHFL will issue a portfolio of loans worth a total of ten million USD to healthcare enterprises across the country. Small and medium-sized enterprises in tier II and tier III cities will be targeted.
The end goal of such an agreement is to make financial capital more accessible in the long term, to enterprises and start-ups that may initially find it difficult to get funding. “Experience shows that when USAID guarantees expire,” the Agency says, “banks continue lending to the same borrowers that they previously perceived as unqualified.
The design of a partial credit guarantee ensures that banks perform their own due diligence to understand new sectors and are therefore more likely to continue lending on their own.”
The DHFL-USAID initiative will prioritise female entrepreneurs, in a bid to “boost women’s empowerment by prioritizing them for lending, helping women access loans and expand and improve the viability of their businesses”, according to U.S. Consul General in Mumbai Edgard Kagan.
The partnership is good news for Indian innovators in digital healthcare as it has the potential to open up channels for investment that may before have been closed to them – especially for those who may previously have been ostracised from the field.
More broadly, the agreement and its potential long-term effects is good news for the many Indians who face difficulty in availing healthcare due to shortfalls in the country’s public health system. For them, some measure of relief can be provided by companies innovating in digital healthcare.
This is particularly true of those living in rural areas, where doctor shortages are concentrated. Past health innovations in the past have ranged an online “crystal ball” to help patients determine their risk of developing heart disease and a glove powered by artificial intelligence (AI) capable of warning a patient in advance if they are at risk of experiencing a seizure.
Outside of digital health, entrepreneurs have proved successful in the past of answering even the most basic needs of India’s citizens. In one notable example, Tamil Nadu entrepreneur Arunachalam Muruganantham invented a low-cost machine to make cheap menstrual pads. His efforts were documented earlier this year in the Bollywood film Pad Man.
Even as the country’s public health system often seems to be at a standstill, healthcare is a field in which Indians are constantly innovating. This is not going unnoticed, eliciting the interest of parties ranging from the World Bank to Bill Gates. With the DHFL-USAID partnership yet another investment, it is cause for optimism that innovation in India’s healthcare sector is on the rise.