As Yashodha walks barefoot down the narrow trails of her fields, she carefully inspects the moisture in the soil and her delicate mulberry plants. She irrigates the land and prunes any dying leaves to keep the plants disease-free for the hundreds of silkworms she rears. The tiny worms feed on fresh mulberry leaves and spin cocoons, which are later sold in the market to produce lustrous silk. Her husband, Channegowda, and sons, Arun and Kiran, help her till the land, irrigate the fields, and apply manure to encourage the growth of the plants that feed their silkworms.
Yashodha, a smallholder farmer in Konnapura, a small village in Karnataka, India, used to rear dairy cattle to support her family. She would feed, milk, and clean her cows, and sell the milk to earn a living for her family. To supplement household income, she and her husband worked as wage laborers on farms, earning 200–300 Indian rupees [$2.3–3.5] a day. “It was tough to run the family in that condition,” shared Yashodha. “Often, we didn’t have enough money to buy food.”
In the rural parts of India, agriculture is the lifeline for most families. However, economic challenges, unpredictable weather conditions, and systemic barriers can put them at risk of losing their livelihood and falling into chronic poverty. Access to responsible credit can play a pivotal role in making resources available to vulnerable segments — like smallholder farmers and rural microbusiness owners — and shifting families from the path of subsistence living to economic growth.
When Yashodha decided to start her small sericulture (silkworm cultivation) business to support her household income instead of working as a daily laborer, she needed capital to invest in her enterprise. The lack of access to affordable and responsible credit is a challenge that rural communities face across India. Banks and other formal financial institutions are often hesitant to lend to small-scale farmers and entrepreneurs, considering them high-risk borrowers due to their unstable incomes and lack of collateral. This leads to high dependence on informal sources of credit, such as local moneylenders.
“The local lenders charge a very high rate of interest. If we had taken a loan from them, we would be paying much more,” Yashodha explained. Yashodha applied for an enterprise loan with Accion’s partner Dvara KGFS. Through its tech-touch balance approach — a blend of traditional branch networks and digital banking solutions, Dvara KGFS provides rural populations with credit, savings, and insurance products. It currently operates 420 branches across 10 states of India, reaching over 650,000 customers.
With support from Mastercard Center for Inclusive Growth, Accion provided advisory support to Dvara KGFS to improve lending to micro, small and medium enterprises, which often lack collateral, credit history, and adequate business records. Accion supported Dvara’s efforts to leverage technology to enhance operational efficiency and optimize customer experience. This partnership led to the implementation of a digital omnichannel strategy, making Dvara’s financial products more accessible and convenient for rural customers — helping them invest in their small businesses.
Silkworm farms are prone to disease, which can infest the entire clew of worms, and lead to hefty losses. With access to necessary capital, Yashodha invested in building infrastructure for her sericulture unit. She built wooden racks covered with trays and nets where she lays fresh mulberry leaves every day to feed the worms. “It’s important to keep the soil moist at all times to cultivate leaves,” Yashoda explained. Extreme heat and erratic rainfall can lead to poor harvest, causing a shortage of feed for her silkworms. “We didn’t have money to purchase pipes. To get the water to the fields, we bought big pipes,” she explained. With this irrigation system, she can now pump water and divert it to her fields to ensure a healthy harvest.
“We chose to take a loan from Dvara because the terms were fair, and we could make monthly payments. That made all the difference for us,” Yashodha said. In contrast to the rigid, high-interest loans offered by local lenders, Dvara’s microloans were structured to accommodate the family’s monthly income cycle, aligning repayment with the rhythm of their business operations.
“Farmers and small-scale agricultural businesses face challenges, such as lack of market access to buy and sell their produce, high costs of inputs and equipment, and inadequate access to formal financial services. Accion Emerge’s investment in Dvara KGFS underscores its commitment to making credit accessible to agri-businesses and micro-entrepreneurs driving wealth creation in rural areas,” shared Kiran Sharma, Senior Investment Analyst, Accion Emerge.
The family has also embraced new technologies to manage their finances, such as using digital payment platforms like PhonePe to repay their loans and manage other transactions. This shift to digital payments not only saves time but also reduces the need for frequent trips to the bank, a convenience that is particularly valuable in rural areas where financial institutions are often located far from home.
“Digital payments are much easier,” says Yashodha’s son Arun, who handles the family’s digital transactions. Embracing technology has made it possible for the family to continue growing their business by overcoming barriers to accessing financial services and reducing the risks that come with unpredictable incomes. “We are the owners of the business, and we are the decision-makers,” Yashodha says with pride. With income from both silk farming and cattle farming, Yashodha is building a stable and dignified life for her family and a legacy for future generations.
