Ratan Tata, Vijay Kelkar and Nandan Nilekani in microfinance alliance

Ratan TataTata Group chairman emeritus Ratan Tata, former finance secretary Vijay Kelkar and Infosys co-founder Nandan Nilekani have joined hands to set up a micro finance company, Avanti Finance, to provide credit in India.

Avanti will commence operations before the end of the financial year.

Tata is currently the chairman of Tata Trusts, the principal shareholder of Tata Sons, the parent company of the Tata Group, while Kelkar is the chairman of the National Institute of Public Finance and Policy (NIPFP), and India Development Foundation, New Delhi.

Nandan Nilekani is a co-founder and former CEO of Infosys and former chairman of the Unique Identification Authority of India, which has given over a billion Indians the unique identity called Aadhaar.

Tata said, ''Avanti will be a platform to impact the poor through credit at individual and community levels to create a lasting improvement in their livelihoods and standard of living, ushering prosperity.''

The technology-enabled financial inclusion vehicle aims to leverage on the social sector presence of Tata Trusts and others similar entities.

Avanti would use this ecosystem and will innovate on product design in consonance with the indigenous needs, to deliver seamlessly for the end consumer.

Tata has been actively engaged in several initiatives of the Tata Trusts since his retirement. His endeavours in the last few years have been focused on creating a sustainable model for interventions which have lasting impact on communities, especially the under-privileged and the deprived.

The promoters strongly believe that the institutional inequalities and information asymmetries are depriving the target customer segment of access to affordable credit. The target customer segment over the last few years has displayed very low delinquency rates compared to any other customer segment, but still is charged the highest rate of interest.

Avanti's primary objective is to make a difference in this sphere thereby enhancing the prosperity in these communities.

Both Tata and Nilekani are bringing their investments from their respective philanthropic capital, and any gains will be reinvested in philanthropic causes. Avanti will apply for registration with the Reserve Bank of India in the coming days.

The founding directors of Avanti are Ratan Tata, Vijay Kelkar, Nandan Nilekani and R Venkataramanan. A senior leadership team with experience in technology, microfinance, enterprise risk management, credit operations and customer service, leadership and strategy consulting, structured finance and investment banking is in place.

''Access to credit at an affordable cost is still a challenge. I am honoured to be part of Ratan's initiative that leverages on the Tata trusts' rich legacy and aims to make a significant shift in achieving financial inclusion to the common man,'' Kelkar added.

''My participation in Avanti is more driven by social motivation rather than anything else – with a view to serve the underserved and unserved and make the Tata Trusts and other likeminded partners philanthropy more effective. Technology is an important differentiator and allows us to make a difference in many ways than one,'' said Nilekani.

The investments by the trio were not disclosed.