Empowering Dreams. One Loan At A Time – Milaap

Poverty is never by choice and in most cases it is the lack of opportunity that leads to poverty more than anything else. When resources are so scarce that you can barely make it through a day, there is little scope of saving. In such cases, an illness or emergency means disaster. Not to mention, the ones below the poverty line are the most prone to illnesses because of lack of access to sanitation and potable water. To escape this vicious cycle of poverty, some resort to loans and try to fulfil their needs and make a living.

The miseries don’t end here, because they also lack access to mainstream financial services and lenders charge exorbitant rates to lend money. This traps them in an endless cycle of poverty. This is when microfinance comes in play, providing financial services in areas where mainstream banking and related services are not accessible, maintaining closer relationship with the beneficiaries of such loans. The number of microfinance institutions is estimated to be more than 10,000.  These serve more than 150 million people worldwide and it is already a $70 billion industry!

Milaap is one such microlending platform that crowdfunds loans for rural India by providing loans at rates as low as 5–12% which is considerably lower than even other organized microfinance firms which hover around 26–31 %. The global average interest rate for microfinance loans is 37% and it goes as high as 70% in some places. Milaap partners with NGOs and microfinance institutions who select borrowers and create loans for them based on their repayment capacity. The people out in the fields have a good understanding of the background of the borrowers and know their repayment capacities better.milaap-how-it-works

The loans go towards areas like vocational training, entrepreneurship, sanitation, energy and drinking water. The minimum lending amount is 1000 INR or $25 and repayment period ranges from 12 months to 36 months. A donor needs to register on the site, pick a cause and transfer the amount to Milaap. Borrowers receive the money through local partners of Milaap. The returns are received in the form of credits that can be used to fund another loan or be transferred back to your bank account.

We spoke to Alister D’Monte who is the Manager of Campaigns and Community Engagement at Milaap about the work being done at Milaap.

Milaap is quite similar to the US-based Kiva.org, right?

Yes, Milaap is focused on the Indian market and it enables Indians and Non-Resident Indians to provide loans in India. Milaap was founded in 2010 by three guys – Anoj Vishwanath, Sourabh Sharma and Mayukh Choudhury and was incubated at NUS Enterprise, NUS’s incubator. They had even met and consulted Mr. Premal Shah, one of the founders of Kiva.org

What do you think is needed to adapt it to the Indian market? What are your usual challenges?

We’re looking to change the way people give – mainly because people are skeptical. Because of lack of transparency, people don’t give very easily. We send out regular updates to donors on the progress of their beneficiaries. Our anonymous impact partners match these donations with equal or more amounts and the effect of the donors’ action is multiplied several times.

What do you have in store next?

We’re working in 18 states right now and we want to reach all the states in India. Also, we’ve started Milaap Open which is a crowdfunding platform for any cause. People have raised funds for various social and personal causes. It is a regular crowdfunding platform, different from our core work.

okintrnt-milaap-campaignWe love what Milaap is doing. Since supporting entrepreneurship is at the heart of OK, Intrnt, we have chosen a campaign that will provide financial support to women in rural india and help them set up their own micro-enterprises. We encourage you to contribute to our fundraising campaign for Milaap. Remember, a small loan will help empower someone. (Note: every contribution made in the month of March will be matched by 2X the amount by a partner of Milaap ; the money is returned to the donor when the loan period ends)

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As part of our efforts to connect people, we asked Alister if he would like to speak to some of our readers directly and he happily agreed! Write to us and we will contact you within a week and tell you how you can reach him!

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Category: Game Changers