The fund helps Avanti extend loans to low-income borrowers in urban and peri-urban areas in MP, Gujarat, and Tamil Nadu for up to 30 months.
The company targets to begin full-scale operations in the first half of 2019, with a goal to serve 100 million households in the next five years, the company said in a statement.
The Tata Group Chairman Emeritus along with technocrat Nandan Nilekani and former Finance Secretary Vijay Kelkar have announced setting up of Avanti Finance which will be mainly engaged in micro financing activities.
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Tata and Nilekani are bringing in their investments from their respective philanthropic capital, and any gains will be reinvested in philanthropic causes, Tata Trusts said in a statement.