Smita Ram and Ramakrishna N.K of Rang De, are the finalist of The Social Entrepreneur of the Year India 2018 Award for their work in building bridges between India’s credit-starved communities and ordinary citizens who contribute to meet the education, health and enterprise needs of resource-poor populations.
India CSR Network interacted with Rang De. Edited excerpts:
Your organization presents a unique story on solving credit problems, can you detail the work undertaken and flagship projects across the country?
Rang De was founded with the simple thought that the cost of micro credit needs to be lowered if it needs to help people fight poverty. Towards that end, we partner with organizations across India and offer micro credit to borrowers at very low interest rates. Over the past ten years, we have disbursed close to Rs 70 crores for ultra – poor families in the form of affordable and customized loans (2 – 10% interest rate per annum). This has helped more than 65,000 families meet the expenses related to healthcare, education and running small businesses.
We have worked in 18 states in India and have an active presence in 11 of these states. Our projects are tailored to address the issues in various geographies. For instance, in Warangal, Telangana, we have been working to help farm widows get out a vicious debt trap by providing them loans to pay off their late husband’s loans and take up livelihood activities. In the Kotra region of Rajasthan, we have partnered with the SELCO Foundation to finance affordable, decentralized, renewable energy installations that are bringing electricity and light to remote villages. In Jharkhand, we are working to help communities take up agriculture – related livelihood generation activities by providing them credit.
Besides individual borrowers, we also support handloom weavers’ cooperatives and farmer producer organizations in a big way by providing them with working capital. This is just a snap shot of our work across India.
One of the most important projects we have launched is Swabhimaan, an initiative to bring adaptive financial literacy and financial inclusion to rural communities in India. The Swabhimaan program, launched in March 2017, is currently running across five centres in the rural areas of Karnataka, Madhya Pradesh and Chhattisgarh.
How do you think the microfinance space is evolving in India?
When Rang De was set up in 2008, it was the first organization to take up Peer-to-Peer lending in India, and many others have since followed suit. When we started micro credit operations, we were clear about taking up honest, transparent and ethical lending practices. We don’t believe in lending to make a profit, or making money off the backs of the poor. We ensure that we don’t burden people with credit, and only provide loans to borrowers in need.
Sadly, this is not something that other MFIs in India are following:
There is a huge section of the population in India that continues to remain unbanked and does not get access to credit from formal financial institutions. There is a great competition among the MFIs to reach out to this ‘untapped market’. This ruthless, profit-based model that MFIs follow is leading to some very unsavoury outcomes: increasing indebtedness, exploitation of borrowers, coercion in loan recovery.
With some big companies entering the picture, the market is becoming more profit-oriented and the situation is only going to get worse.
What value proposition does SEOY, hosted by Jubilant Bhartia Foundation & Schwab Foundation create for you?
Rang De is at a crucial phase right now. After a decade of running a not-for-profit, we are in the process of setting up a Non-Banking Financial Company. This is an incredible opportunity to take our experience over the past ten years and truly increase the scope of our operations.
The SEOY is a great platform for us reach out to like-minded people and organizations in the development space and learn from them. It is also one of the most prestigious awards in the world. Just being nominated is a great source of pride for us, a vindication of our work and constant strive for innovation.
How are you using microfinance to empower women in India and what are your plans to scale up your operations?
At Rang De, over 90% of our borrowers are women. In our operations, we focus on communities without access to financial services. We especially focus on women who come from difficult backgrounds, and help them earn a livelihood.
Over many years of working in a region, we have seen close to 70% increase in incomes and a greater increase in savings of a household. But beyond economic terms, the social impact of our work has been amazing: we hear stories of single mothers working hard to educate their children, women setting up businesses of their own and becoming the primary bread winners in their families, other women working and supplementing the family income. This economic and the consequent social empowerment, is heartening to see.
In the near future, we have plans to drastically increase the number of people that we reach with microcredit services. And our aim is not just to provide loans. We are also making a definite shift towards financial literacy and financial inclusion.
Ultimately, our mission is to combat poverty and bridge the huge divide of financial inclusion in India. We want to ensure that people in rural communities are equipped with the requisite knowledge and skills to be able to access basic financial services on their own.