NGO Consultant

NGO Consultant
Odisha NGO Consultancy Services

Monday, December 1, 2014

MicroGraam inks partnership with crowd funding platform for social good www.Kiva.org

BENGALURU: Peer-to-peer microlending platformMicroGraam has inked a strategic partnership with crowdfunding platform for social good Kiva.org enabling people globally to fund low-income microfinance borrowers in MicroGraam's network of NGO partners in India.Alongside, the partnership expands Kiva's ability to crowd fund microloans in India.

"We want to tap into capital from abroad. Also, as Indian market matures we would also like to get funds for borrowers from outside. This partnership will give us faster scale as well," said Rangan Varadan, CEO and cofounder of MicroGraam on reasons for partnering with Kiva.

Kiva has agreed to raise up to $2 million (Rs 12 crore) as the first tranche over the next two years, under this partnership that comes under the purview of external commercial borrowing (ECB) as per guidelines set by the Reserve Bank of India (RBI). "India is the largest micro-finance market in the world and also has largest number of poor people.For an organisation whose mission is to eliminate poverty it was always a priority country for Kiva to work with. MicroGraam has an interesting model and is a lot like us in that they raise funding using the internet. This partnership allows us to reach more borrowers rather than brining on more field partners," said Saheba Sahni, Portfolio Manager for South Asia & the Middle East at Kiva.

"Also they charge a lower interest rate as compared to other MFIs in India and this allows us to reach even poorer borrowers," she added. Kiva launched in India in August 2012 and has five field partners including MicroGraam.

So far, both entities have raised $250,000 from pilot that started in March this year. MicroGraam now expects over 15,000 borrowers in India and will be crowd-funded by Kiva lenders over the course of this year, a fifteen-fold increase in Kiva's reach in India from last year.

Varadan and Sekhar Sarukkai founded MicroGraam in 2010 that works on a micro-VC model providing low-cost credit to rural entrepreneurs from socially minded investors. MicroGraam has partnered with 31 non-governmental organisations (NGOs) in rural areas of Karnataka, Tamil Nadu, West Bengal, Jharkhand, and Assam to find borrowers. To date MicroGraam alone has disbursed loans worth Rs 9.27 crores across 5,709 borrowers. Visitors to Kiva site can browse through the profiles and stories of those they want to support with a loan of $25 (Rs 1500) or more. Loan products offered -and in development -are for microenterprises, livelihoods, healthcare, education, clean drinking water, clean energy , and organic farming. The minimum loan term from Kiva to MicroGraam is for three years as per RBI guidelines. Even if loan term to a borrower is for one year, MicroGraam will collect it back from borrower and is allowed to relend it before it pays it back to Kiva.

Since its inception in 2005, Kiva and their growing global community of 1.2 million lenders have crowd-funded close to $800 million (Rs 4,962 crore) in loans to over 1.4 million people. Kiva operates in 83 countries through a network of 286 field partners.