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Interview: Smita Ram – Rang De

In our lives whenever there is a financial emergency we have the privilege of access to a whole gamut of banking and financial services. We could walk into a bank

Interview: Smita Ram – Rang De

Rang De

In our lives whenever there is a financial emergency we have the privilege of access to a whole gamut of banking and financial services. We could walk into a bank avail a loan , use our credit cards. But there is a vast majority in our country who don’t even have access to a bank account.

That is where ‘Microcredit’ comes into play. Microcredit refers to providing small loans to low income households – mostly to start a micro-enterprise like livestock rearing, tailoring, grocery store etc. These income generating activities enable poor households to become self-reliant and get out of the vicious circle of poverty.

Rang De is not just any peer to peer micro lending platform. Their field partners are non-profit organizations who believe in the organization’s mission to reach out to the truly undeserved. Their terms and conditions are quite explicitly stated on the portal which includes 1) Every borrower on Rang De is aware that his/her photograph is displayed on the portal 2) All Rang De borrowers pay 8.5%flat p.a. on business loans and 5% flat p.a. on education loans.

One can simply register on to become a social investor. Choose borrowers to make a social investment of as little as Rs. 100. At the end of the repayment schedule, the investor receives a 2% interest on the investment.

Here’s an interview with Smita Ram, Co-Founder & COO , Rang De:

What was the whole idea behind starting Rang De?

The idea behind starting Rang De was to create a sustainable initiative that will address a problem at its roots. Prior to starting Rang De, we were dabbling with several ideas relating to child labor, domestic help, media etc.

But soon we realized that most of these problems had poverty as its root cause and unless we address poverty, the rest will continue to exist. While we were researching these problems, Mr. Mohammed Yunus won the Nobel Prize in December 2006. That’s how we were introduced to the concept of micro-credit. Something that intrigued us was the interest rates that the borrower paid and how little people like us knew about the concept.

Thus Rang De was born as an initiative that facilitates small loans (micro-credit) for Indians that do not have access to credit. You can lend from Rs. 100 onwards on to entrepreneurs identified by our partners across India. Join us to make poverty history in India!

What kind of hurdles you had to face during setting up the organization?

There were plenty of challenges right from registering the entity, to attracting talent to getting funds. We continue to face similar and other challenges but that is what makes working for Rang De enjoyable.

Rang De has a fabulous repayment rate, how do you guys achieve that?

We follow a model that is similar to the one propagated by Mr. Mohammed Yunus. We lend money usually to individuals in groups.The group could be a self help group or a joint liability group. In both cases, the group members vet each other and the group leader signs as a guarantor. The group also agrees to pitching in with the repayments if one of them fails to repay. This is the main reason for the repayment rate. Apart from this, we have a criteria for the selection of the borrowers which our field partners follow.

What has been the response of the social investors?

Our social investor base is growing slowly but steadily. We have a little more than 1000 social investors and in some sense, we are a close-knit community. Those who invested their money first have also now begun to invest their time to make Rang De more efficient.

In how many states does the organization have its presence?

We currently have a presence in 10 states – Karnataka, Andhra Pradesh, Tamil Nadu, Orissa, Kerala, Rajasthan, Uttar Pradesh,Maharashtra, Madhya Pradesh,West Bengal.

Although the impact is quite evident, could you tell us some anecdotes of the social impact of Rang De, on individuals and the community in general?

Women entrepreneurs we are reaching out to in Orissa are getting access to loans for the first time. Their loan size is as small as Rs.1000. They are able to borrow money for the first time because it is affordable.

Any plans of making it a for-profit organization?

No. We do not plan to make it a for-profit organization.

How do you plan to take it forward? Where do you see it 5 years down the line?

We would like to be able to reach out to people across all states in India and go deeper into the territories where we have started to work. We would also like to provide a wide range of social investing options to the investors and make social investing a norm.

The Better India team wishes Rang De all the best of their mission to create a macro impact through micro credit.

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