JOIN USHigh-tech loans to the rescue of rural women
Surekha Kadapa-Bose is all praise for an online micro-finance platform that has helped several rural women turn round their lives
Last September, Priya Singh, a civil servant with the Indian Revenue Service, was chatting with her Singapore-based friend on Facebook. With Singh’s upcoming birthday, the conversation invariably turned to how she was planning to celebrate. Singh was looking to do something different that year and so her friend told her about Milaap, an online platform that enables ‘regular’ people to lend money to the working poor in select Indian states so that they can access basics like education, clean water, energy and sanitation.
Singh instantly logged on to their website (www.milaap.org). She not only understood their work and the loan management and repayment plan but also saw the kind of women, children and unemployed youth she would be reaching out to if she decided to lend money. Then, as she turned a year older, Singh marked the occasion by extending a loan, which she was sure would help someone, somewhere lead a better life.
Says Singh, “I had never imagined that becoming a lender would be such a joyful experience. It was the best birthday gift I could give myself. While I had been donating money and materials off-and-on, helping people who are helping themselves by giving them a loan has been satisfying.”
Of course, it is precisely to tap this vast resource pool of socially conscious individuals keen to give back to society that Anoj Vishwanathan, Mayukh Choudhury and Sourabh Sharma got together and set up Milaap in 2010. While Vishwanathan was well versed with micro-financing, having worked with SKS Microfinance, Choudhury had an understanding of the rural poor, as he was engaged in rural electrification programmes in Uttar Pradesh and Sharma, a Computer Science graduate, brought his considerable business development and IT marketing skills to the group.
When Vishwanathan was attached with SKS Microfinance he got to see first-hand the kind of difference something as fundamental as solar lighting could make to impoverished households in Odisha. Unfortunately, the solar lanterns were out of their reach as there were no affordable loans available for such products. At the same time, he also observed that there were numerous well-to-do individuals in big cities across India, looking for avenues to make a difference. “There was a need to connect them to those in need and that’s what we do,” says Vishwanathan.
Expanding on the Milaap philosophy, Sharma adds, “We believe that everyone, irrespective of gender, should have access to credit that can contribute to an improved standard of living. Therefore, we make it our business to provide small loans to a borrower screened by our partner organisations.”
Within a span of nearly two years, over 4,000 lives have been transformed and close to 130 unemployed youths have managed to secure white/blue collar jobs, with the over US $215,000 raised in loan amounts till date.
With the Milaap loans, several families across Maharashtra, West Bengal, Tamil Nadu and Karnataka — where the organisation has been working with its field partners, including local NGOs and civil society organisations — have gained access to potable water, have built toilets at home, are now the proud owners of solar lanterns, and have been able to enrol their young children into vocational courses.
This has not only enabled girls and women in rural and peri-urban areas to devote lesser time to the back-breaking activity of water collection, it has also created a safer environment for them — they are no longer forced to defecate in the open, especially at night. In addition, several youngsters have gained employable skills. Easy availability of working capital has also translated into a 20 to 30 per cent rise in income for artisans and craftsmen, while the work of struggling entrepreneurs has taken off.
Sridevi is one such entrepreneur. With a loan of Rs two lakh secured through Milaap, this creative woman set up her own handicraft unit, Prateik Creations, in Chamrajpet, Bangalore. A Science graduate, she and her husband had been facing tough times after they lost everything due to some family problems. Almost on the streets with their small daughter, the duo approached Milaap for a loan. Says Sridevi, “Now I employ 13 women and men, some of them physically-challenged, for a monthly salary ranging from Rs 3,500 to Rs 5,000. We make eco-friendly corporate gift items, jewellery and stuffed toys. Of the Rs two lakh loan, I have paid back Rs 1.2 lakh.” Sridevi is also planning to expand her operations to Kolar, a city 72 kilometres from Bangalore, where she wants to create employment opportunities for the economically backward.
Today, Milaap can boast of backing many successful women like Sridevi, but initially, they had their share of start-up problems, especially when it came to handling government regulations regarding money transfers from overseas. Says Shubhashree
Sangameswaran, Communications Manager at Milaap, “Getting the regulatory authorities to enable us to accept loans from foreign lenders is probably the biggest hurdle we’ve faced so far. It took a year and multiple phone calls, email conversations and trips to Mumbai before things were finally worked out. We managed to get the approval in August 2011 and this makes us the first and currently the only organisation in the world that supports foreign micro-lending into India. Of course, our other big challenge has been reaching out to those who can give loans. While most people are used to traditional forms of charity, this is still a relatively new concept.”
Here’s how Milaap’s credit system works. Lenders can go to the website and register themselves. The next step is to choose a cause; the organisation focuses on six critical issues — education, energy, water, health and sanitation, enterprise and sustainable farming. Payment options include online through PayPal and offline through cheques or electronic fund transfers. A short cycle of 12-24 months (until full repayment) with monthly installments, and the loan is repaid. There’s also the option of re-cycling the credit so that the same amount can benefit multiple borrowers.
Priya Singh, who lent money last year, says, “So far, loan repayments have been as per schedule, which is very encouraging. I also feel happy that Milaap encourages women borrowers. Moreover, their focus on solar power is timely.”
According to Sangameswaran, “Till now, we’ve been fortunate to have had a repayment rate of 100 per cent. We take measures to mitigate the risks involved. Despite this, in the off-chance that there are defaults, our field partners offer a 20 per cent first-loss guarantee.”
Apart from water, sanitation and electricity projects, Milaap’s support to entrepreneurs focusing on creating awareness on higher tertiary education as well as the promotion of vocational training and skill development needed in the hospitality, retail, BPO, security and healthcare sectors, has worked wonders. Several youngsters have secured jobs after their training, conducted with the help of partner agencies. Take Heena, a young girl from Hubli in Karnataka, who couldn’t pursue her college education for lack of funds. Enter Milaap and she could do a vocational training that has enabled her to secure a job with a popular coffee shop chain. Now, she manages to support her mother, sister and is hoping that after repaying her loan she would be able to save enough to fund her college education.
If Heena and Sreedevi can afford to live the life of their dreams, it’s because someone, somewhere decided to log on to Milaap and make a contribution. These high-tech loans are certainly turning out to be timely stepping stones.