SIDBI Partners KarmaLife To Offer Micro Loans To Gig Workers

Small Industries Development Bank of India (SIDBI) has joined hands with OnionLife Private Ltd to tap its technology platform KarmaLife for a pilot to provide small enterprise loans to gig workers and aid their financial inclusion to formal institutional credit.

KarmaLife will enable gig workers to access microloans through a mobile app. This will pave the way for gig workers to manage liquidity needs of their enterprise activities.

S Ramann, CMD, SIDBI said, “…the partnership with OnionLife will help us understand and assist the new and emerging enterprise class of gig workers. The pilot will also help in developing an institutional mechanism for assessment of credit risk of this segment.”

Rohit Rathi, cofounder and CEO KarmaLife, said, “We are excited to be associated with SIDBI to empower gig workers with the financial resources they need to thrive in the gig economy. Our mission is finding effective solutions to help gig workers efficiently manage liquidity for their enterprises.”

With the gig economy expanding in India, there is a critical need to offer affordable and accessible financial support to non-salaried gig workers who rely on platform aggregators for their livelihoods, as per the brand.

Founded in 2020 by Rathi, Naveen Budda and Badal Malick, KarmaLife operates in a B2B2C model and has partnered with 50+ organisations, including Flipkart, Elasticrun, Uber, Porter and Delhivery, to offer the employees an option to access their pay-out before the payday.

KarmaLife claims to have offered its service to 2.7 Lakh gig and blue-collared workers so far. It offers subscription-based credit products, such as earned wage access and line of credit. KarmaLife has developed a proprietary real-time credit scoring system, KarmaScore.

Besides, the startup’s flagship product, earned wage access (EWA), gives gig and blue-collar workers access to a portion of their earned but unpaid salary any time before their payday. 

As of 2023, the startup claimed to serve over 100K blue-collar workers through its platform.

Established in 1990, under an Act of the Indian Parliament, SIDBI serves as the primary financial institution for the promotion, financing, and development of the micro, small, and medium enterprise (MSMEs) sector. Additionally, it coordinates the functions of institutions engaged in similar activities.

Last month SIDBI secured $24.5 Mn from Green Climate Fund (GCF) for its maiden anchored sustainability and climate focussed fund Avaana Sustainability Fund (ASF).

Meanwhile, in February, SIDBI has inked a pact with Bihar Startup Fund Trust to manage the INR 50 Cr Bihar Startup Scale-up Financing Fund (BSSFF) with an aim to transform the state into a startup hub.