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How Rs.100 From Your Pocket Can Go Out, Change A Life Forever, And Come Back To You With Interest

Here's how the interesting micro-finance model of Rang De focuses on first-time borrowers and enables "social investors" to contribute amounts as low as Rs.100, while enjoying an unmatched repayment rate and leaving a huge positive impact on the communities they serve.

How Rs.100 From Your Pocket Can Go Out, Change A Life Forever, And Come Back To You With Interest

Here’s how the interesting micro-finance model of Rang De focuses on first-time borrowers and enables “social investors” to contribute amounts as low as Rs.100, enjoying an unmatched repayment rate while leaving a huge positive impact on the communities they serve.

Mamtal’s family was living in abject poverty. With no financial assistance and support of any kind, she thought her life would follow the same path as the millions of others in circumstances such as hers. But then she took a small loan through Rang De, identified her strength and her life changed forever. She started making potato wafers and, within six months, her business grew from selling 5 kgs wafers to 30 kgs in a day.

She now runs a successful small business of snacks and her husband, who is an auto driver, helps her in this too. Her kids go to a better school and she has found a new respect, not just in her family, but in the community at large.

Mamtal is just one of the thousands of people Rang De has leveraged through their interesting micro-credit model so far.

Started in 2008, the online platform is bridging the gap between social investors and people who need small amounts of money to improve their lives.

A Rang De borrower in West Bengal engaged in fish rearing.
A Rang De borrower in West Bengal engaged in fish rearing.

When we need financial assistance, we can go to a bank and apply for a loan any time. But when it comes to lower income groups, a large number of people don’t even have a bank account. Also, getting a small amount as a loan becomes a huge challenge. This is where micro-credit comes into the picture.

“We were introduced to micro-financing in 2006. At that time, inspired by Muhammad Yunus’ model, micro-financing was already at its peak in India. However, at the same time we learnt that many people were committing suicide because of their inability to repay these micro loans,” says Smita Ram, co-founder, Rang De.

Gradually Ram developed a better understanding of the model and realized that the reason behind such drastic actions taken by people was the high interest rates – they were hovering at 45 to 50 percent then!

A Rang De borrower in Maharashtrawho took an education loan to fund her children's studies
A Rang De borrower in Maharashtrawho took an education loan to fund her children’s studies

That is when Ram came up with a low-interest rate model which would help the poor without giving them an excessive burden of interest.

“We wanted to break the old traditional approach and launch a fresh platform. We went for a rally and received a tremendous response, with a lot of organizations coming forward to partner with us. This gave us confidence to take it forward,” recalls Smita.

Having started as a small initiative, Rang De has now grown to a huge platform that has provided about 35,000 loans to over 30,000 families so far with help from 7,200 people who act as “social investors”. These people are not institutional investors or high net worth individuals but regular civil society people like you and me who wish to use their disposable income, however small, in making a difference. All in all, about Rs. 28.26 crores of loan amount has been disbursed so far.

The unique model of Rang De is what makes it different from other similar platforms. They follow a bottom-up approach, where they keep the need of the community as the priority and provide loans accordingly.

There is no minimum loan amount criteria and they have given loans for requirements as low as Rs. 2,500.

A SHG meeting of Rang De borrowers
A SHG meeting of Rang De borrowers

“We believe there is no point in setting a minimum limit on the loan. If a person needs just Rs. 2,000 why should we force him or her to take more? That will only increase their burden,” asks Smita.

The process of granting loan starts with identifying the beneficiaries. Priority is given to first time borrowers, who constitute nearly 50 percent of Rang De’s portfolio. The interest rates on these loans too are low as compared to the mainstream micro-finance institutions. They started with providing loans at 8 percent flat rate where 5 percent would go to the field partners, 2 percent to social investors, 1 percent to Rang De, of which they kept .5 percent for contingencies. The flat rate has now gone up to 10 percent, which is still less than that charged by other institutions. Apart from these general purpose loans, Rang De also provides education loans at around 5 percent interest rate.

Thanks to their low interest rate and community-based peer-to-peer lending model where they partner with local organizations, Rang De’s repayment rate stands at an impressive 99.78 percent!

The focus is given to first time borrowers.
The priority is given to first time borrowers.

“One thing we note before facilitating the loan is the purpose and indebtedness of the borrower. Also, first time borrowers are given preference as we want to reach out to more people and lift them out of poverty,” says Ram.

The impact of Rang De’s loans is quite evident. Communities which were never considered credit-worthy have not only availed the loans but have also repaid them on time and have used the amounts for improving their present and securing their future.

Focusing on communities like handloom workers, tribals and other low income groups, Rang De has managed to make entrepreneurs out of them. Saraswati Devi from Jharkhand availed a small loan to set up a mobile repair shop. She then expanded her business to other products and even won an award for her entrepreneurial skills.

A Rang De borrower in Pusad, Maharashtra engaged in goat rearing
A Rang De borrower in Pusad, Maharashtra, engaged in goat rearing

“There is a lack of role models in this area. If stories like these are told, then a lot more people will come forward to contribute. Also, more people from these communities will feel comfortable in availing the services,” says Smita.

When Rang De initially started its operations, building trust was the difficult part. Also, finding the right partners who were willing to engage on a regular basis took some time. In seven years of existence, they had solved these issues to a large extent and it was now time to take their operations to the next level.

It was just then that they came across the Marico Innovation Foundation’s Social Innovation Acceleration Program (MIF-SIAP) and decided to apply for it.

Inaugurating the papad making machine unit in Bahadarpur, Maharashtra
Inaugurating the papad making unit in Bahadarpur, Maharashtra

A couple of interactions with the MIF team helped them come up with a plan to scale up the number of loans given, the social investors they reached out to and the loan amount disbursed every month by ten times in the next three years! This would involve innovative ways of raising capital, investment in technology and strategic partnerships, among others.

“The due diligence process of MIF was a revelation in itself. It was interesting that they only wished to partner with organizations which were poised at a stage where MIF’s contribution could go a long way in helping them scale. In a way, they see their success in our success, and go all out to help us achieve our goals,” says Chaitanya Nadkarny, President, Rang De.

An insightful conversation with Marico Chairman, Harsh Mariwala, made them think deeply on why they wished grow to the numbers they had in mind, and helped them understand the far reaching consequences of each loan they disbursed, which translated into more savings and easier lives for the beneficiaries. They also understood that scaling up would help them become financially stable and efficient in the long run.

In the near future, Rang De hopes to reach out to over 3,00,000 families and disburse loans to the tune of Rs. 90 to 100 crores every year.

Many women have started their small businesses using Rang De loans.
Many women have started their small businesses using Rang De loans.

As Rang De’s model helps you to loan an amount as low as Rs.100, anyone can be part of the initiative.

Not only do you get your money back with interest but you also get the satisfaction of having helped someone improve their lives without you losing anything in the bargain! It is a win-win situation for both the parties.

To learn more about the organization, please email them at – or check out their website.

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