Peer to Peer microcredit

An Indian business website is doing a special series on Social Entrepreneurship, which is starting business with the goal of human benefit instead of only a goal for profit. The latest installment of the Pluggd.In series has a profile of a peer to peer microcredit website. The site Rang De gives individuals the opportunity to make the microcredit loans to low income people.

From Pluggd.In is this interview with Rang De founder, Ram NK.

Rang De is a social business with a strong focus on becoming a sustainable and scalable business that provides access to capital. Rang De is able to provide microcredit at low cost as we source social investments from individual investors. The unique proposition we offer to the social investor is that they have the ability to select an individual borrower to whom the money goes to – based on business activity and geography. Social Investor also has the ability to monitor the progress made by the borrower through a unique wellness score. Rang De engages with a network of grassroot organizations to help in screening borrowers, disbursing the loan and collecting repayments.

While the social investor gets a tangible social return and a nominal financial return of 2% flat p.a. or 3.5% APY, the field partners get 5% flat p.a. to cover their operational costs. Rang De charges 1% flat p.a. to cover its transaction costs. Rang De ensures that the borrower pays no more than 8.5% flat p.a. as interest towards the loan. There are no hidden charges or processing fees.
Startup Journey
# What made you start Rang De? And how did you go about it?

The journey started in December 2006 when I was giving a serious thought to coming back to India after a short stint in the UK. Having started as a senior consultant in Vignette and going on to become the Principal Consultant in the company, I decided that it was time to quit my corporate career and return to India and do something that is socially relevant. The desire to do something socially relevant was always there but did not have the financial means or the know how to take the plunge. After a successful career and a small amount of savings, I thought the time is now or never.Then the question of what could bring about a sustainable impact in India began to occupy my thoughts. That’s how we decided on doing something in the microcredit space. Prior to that the other causes that I really wanted to work on were – child labour, domestic help and social media.

Somehow, microcredit seemed to be the most promising as it had the potential to alleviate poverty on a large scale. Also because the root cause of almost every social problem in India emanates from poverty. Our initial research brought out a startling fact: 90% of the total estimated demand for microcredit of Rs. 200,000 cr was still unmet and that 80% of India’s population still does not have access to any form of credit.

Rang De was started with a seed funding of 6000 GBP from the founders and unconditional support from our technology(sen-sei.in) and creative(niyati.com) partners. We subsequently received funding from CSO Partners – a strategic partner of ICICI Foundation.

Did you always wanted to be a social entrepreneur?

Yes. Right from my college days, I was involved in getting people together to do something for a social cause. During my second year of engineering I organized a fund raising event where we celebrated the birthdays of 40 children from an orphanage run by Missionaries of Charity. They were simple acts of charity and volunteering. This continued during my professional life as well. I volunteered for NGOs during weekends and holidays.