Spandan is a Sankrit word and it means Response. As Spandana was born in response to a problem, the Organisation was named as Spandana. Spandana is a public limited company registered with Reserve Bank of India (RBI) as an NBFC MFI. Started in 1998, within five years, by 2003, it grew to the largest Micro finance Institution in India and 6th largest across globe. In its peak, Spandana had 1,856 Branches with presence in 10 states and work force of over 13,500 employees.
Spandana was founded by Mrs. Padmaja Reddy in 1998 as a Society which was later transformed into an NBFC and subsequently as NBFC MFI. Mrs. Reddy, the Promoter and Managing Director of Spandana prior to founding Spandana used to work with an NGO in Andhra Pradesh. This NGO used to help poor people to build their houses, provide safe drinking water, sanitation, health education etc. The NGO used to raise grants from different funding agencies and implement these activities.
While working with this organisation, she happened to meet a rag picker and in her interactions with her, she came to know that the rag picker earns about Rs.60 per day, of which she was paying Rs.10 per day towards rent for the cart and Rs.30 towards interest on the loan and she is left with meagre income of Rs.20 per day. She explained her misery that the husband is not supportive and the whole family had to live out of this small income. When asked about, since how long she is doing this business, the rag picker said that she started it when she was 12 years old and was doing it for the past 14 years. She paid over Rs.40,000 rent for a cart that would have costed Rs.1,500- had she bought the same. She also said that she was borrowing Rs.270 everyday and paying back Rs.300 on the same day to the money lender and she was obligated to sell the scrap to him at a price dictated by him which is lower than the market price.