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Photo credit: missbossy.

Indonesian peer-to-peer lending firm Amartha said today it’s raised a series A investment led by Mandiri Capital Indonesia (MCI), the VC fund of Indonesia’s largest bank by assets, Bank Mandiri. Lynx Asia Partners and Amartha’s existing investor Beenext and Midplaza Holding also participated.

MCI CEO Eddi Danusaputro said the investment was “in the range of common series A investments, which is between US$2 million and US$5 million,” declining to reveal the exact amount.

Indonesia is seeing a boom in fintech companies as banks and the government begin to recognize its potential for bringing financial services to wider parts of the population.

Amartha, started in 2010, is one of the companies working on improving access to small loans.

Amarta is a group lending institution, similar to Bangladesh’s Grameen Bank. Its concept was to work together with big banks to disburse loans to members of lending groups in rural areas.

In 2016, Amartha changed its business model to P2P lending, allowing individuals, not only banks, to become investors on the site.

“We will use the money for developing our technology, so we can provide a product that is easier and more comfortable to use,” Amartha CEO Andi Taufan Garuda Putra told Tech in Asia.

See: 7 crowdlending sites in Indonesia

Everyone pays back

Lending groups managed by Amartha consist of around 15 to 20 people. They can apply for loans from US$225 to US$750 in size. Amartha gets its revenue from taking a cut from both lenders and borrowers once the loan and interest is paid back.

Until now, Amartha has disbursed US$5.1 million in loans to 30,000 microentrepreneurs in Indonesia, mainly in West Java. The average interest rate on loans was at 19.8 percent in 2016. Amartha claims to have a maintained a track record of zero percent non-performing loans for the past seven years.

With this investment, Amartha hopes to extend its loan offer to more people around the island of Java.

In 2014, still roughly 60 percent of Indonesia’s adult population didn’t own a bank account. The hope is that easy, unbureaucratic access to small loans can help prevent individuals and families from getting stuck in cycles of poverty.

This article first appeared in Indonesian, written by Aditya Hadi Pratama.

This post Indonesian mircro-lender Amartha scores funding from major bank appeared first on Tech in Asia.

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