Experiments with microfinance
Milaap.org is another microfinance website which connects lenders and borrowers. However, unlike Rangde.org where a lender can lend in multiples of Rs 100, the minimum amount is higher at Rs 1000 . The loans taken by the lenders at Rangde.org are usually less than Rs 10,000, but the loans taken by the borrowers at Milaap.org are significantly higher at Rs 40,000 – Rs 50,000 each.
Many of the borrowers for microfinance loans need the funds for buying stock for their grocery stores. Most of the small store owners have limited funds , so they can stock only a few fast moving items. They can use the loan to purchase and stock some additional products, which could help increase sales.
Repayment rates for loans from these borrowers have been high.
A significant number of the microfinance loans are made to borrowers for whom tailoring is a major income source .
These loans are then used to
1. Buy a sewing machine
2. Repair sewing machine
3. Purchase consummables / inputs like thread and needles
4. Buy fabric , if the borrower sells readymade garments. Most borrowers specialize in ladies garments.
A few of the borrowers for microfinance loans are involved in the repair of electrical and electronic appliances.
The loans they have availed will be used to
1. Buy tools and equipment, which will make the repair work easier
2. Purchase consummables / inputs
No defaults in loans so far
Goat rearing is one of the most popular income generating activities in low income families. Most of the borrowers already have a few goats and will use the loan to purchase a few more kids.
Repayment rate is high for this activity.
Some of the states where microfinance companies are active are:
Most microfinance companies have field partners who manage the actual disbursal of the loan and collection of the repayments from the borrowers.
Since the loan amounts are small (usually between Rs 3000 – Rs 10000), the expenses involved in being in touch with the borrowers on a regular basis can be significant and add to the overheads.
2 websites for online lending / microfinance in India are