Sarvodaya Nano Finance Limited was registered as a Non Banking Financial Company (NBFC) in 1996 with a mission of promoting a large number of sustainable livelihoods for the rural poor, especially women and rural artisans, through the provision of financial services and technical assistance in an integrated manner.

Association for Sarva Seva Farms (ASSEFA) is a Non Governmental Organisation (NGO) founded on Gandhian principles. It has been initiating various developmental interventions focused on rural Tamil Nadu and several North Indian states covering different sectors.

The Women’s Development Project of ASSEFA started in the late 1980s with the formation of women’s Self -Help Groups (SHGs) in different locations of Tamil Nadu. This initiative gathered momentum and by the year 2000, there were close to 3,000 SHGs with about 50,000 members. The Mid Term Assessment of the Women’s Development Project carried out in March 2000 revealed that though there was a good system of thrift, savings and internal credit, 40% of the SHG members had not accessed any external credit.

It was found that in actual practice it is very difficult for the poor to access loans without security. So it was felt that the only sustainable long-term solution was to have in place a financial institution, which is not only oriented to the needs of the poor, but is also fully owned by the rural communities. Sarvodaya Nano Finance Limited (SNFL) took the role of such a financial institution.

Based on this strategy, the SHGs were assisted and helped to federate at the regional level into Mutual Benefit Trusts, called the Sarvodaya Mutual Benefit Trusts (SMBTs). These trusts are permitted by their bye-laws to raise external resources for meeting the credit needs of the SHGs and also to invest in shares of other corporate entities.

The SHGs have given their concurrence in the form of a resolution to the proposal to utilise the community resources to invest in the shares of corporate entities. These trusts have now bought all the shares of Sarvodaya Nano Finance Limited, a Non Banking Financial Company (NBFC) registered with the Reserve Bank of India. So, in effect, this is a NBFC owned by the Self-Help Groups.