Rang De: Share the colors of joy
How did the concept of Rang De emerge?
Smita: Rang De.Org was born as an initiative to make low cost microcredit a reality. The urge to make a difference in India resulted in a thought process to work on socially relevant business models. Even though we identified a few areas of intervention and put together plans, we could not foresee the impact of these interventions at a large scale. We realized poverty was at the root cause of all these initiatives. That’s when we started reading about microcredit. That led us to reading about microcredit. Something that alarmed us was the interest rates that borrowers were paying, in spite of the fact that the repayment rates were as high as 98%. That’s when we decided to do something that would lower the cost of microfinancing. We researched the peer to peer lending models around the world. Clearly there was a big gap in India to intervene in the space.
How Rang De is different from other microfinance organizations that are existing in India today?
Smita: Rang De.org is a non profit organization and enables individuals like ourselves to become social investors by lending as little as Rs.500. As my source of capital is retail and social investors do not expect huge returns, we are able to lower the cost and reach out to people to whom even microcredit was not affordable.
When rural people are used to getting loans from Non Banking Financial Companies (NBFCs), how do you make them aware of the microfinance?
Smita: We are establishing a network of grassroots organizations that we call Field Partners. These field partners help them to bring in the awareness and also help us to do proper due-diligence. The investments that you make are received by Rang De’s field partners who are responsible for identifying borrowers, disbursing loans and collecting repayments. The Field partner incurs expenses for all this and the 5% the borrower pays is just enough to manage these costs. Thus the borrower pays a cumulative interest of 8.5% on the loan. The remaining 3.5% interest is given back to the social investor.
Who are the borrowers of microcredit?
Smita: Borrowers of microcredit are typically people of very low income households who require working capital and credit. The investment you make as a social investor is usually towards the working capital of an individual whose occupation is farming, livestock rearing, dress making or small businesses. Rang De hopes to provide you with opportunities to make investments towards educational and medical needs of borrowers in the near future. You can find borrowers whom you wish to help based on the search criteria by selecting ‘Invest’. Alternatively invest smartly by selecting ‘Smart Invest’.
What are the ground level challenges you see currently in making microfinance as a success, similar to what Dr.Yunus has done in Bangladesh?
Smita: It is already happening in a big way in India. However, awareness about microcredit and how powerful is still not widely known here. Rang De allows everyone to participate thus encouraging people to learn more about microfinance.
Tell us more about your team and funding model?
Smita: Currently we are 8 people now, who are working on various capacities like building alliances and finance. We are funded by CSO (Civil Society Organizations) Partners initiative, who is primarily working towards building a vibrant society.
For more details on Rang De log onto their official website: http://www.rangde.org