Usha Devi, a resident of a small village in Jharkhand, doesn’t know what Supriya Nadig looks like. What she also doesn’t know is that Nadig helped her fulfill her dream of buying benches for her one-room school in Chas, Bokaro.
Nadig (38), a software engineer from Bangalore, came across Usha Devi’s story on a website called United Prosperity( www.unitedprosperity.org ) in January. The website, started by US-resident Bhalchander Vishwanath, partnered with a Micro Finance Institute that works with rural people in Jharkhand called Ajiwika and HDFC bank in May 2009.
The website features the stories of all the persons who have approached the MFI for a loan. Internet users can then raise a guarantee for the people listed by lending a small amount of money. Once a guarantee of 55 per cent of the loan amount is raised, the bank releases the loan to the MFI, which then promptly delivers the money to the rural entrepreneur.
Financing a dream
When Devi started the school with her husband in 1995, there were only 10 students. Today, the number has grown to 50. But the fees, not more than Rs 50 a month, barely cover the basics — books, which are re-used year after year, and a meagre salary to the five teachers Devi has employed. They have never had enough money to buy benches. “We hate to see them sit on the floor. We want them to sit on proper seats,” said Satendra Narayan Sharma (47), Devi’s husband.
Last November, the couple approached a Ajiwika for a loan of Rs 8,000 to buy 25 benches — each can seat four children easily. Two months later, the money was in their hands thanks to Nadig and a few other netizens, who stood as online guarantors.
Moved by their dream, Nadig pledged $21 (Rs 1,000) towards the couple. “By helping her, I’m helping more than one family, I’m helping the whole locality,” said Nadig. The money is returned through the website itself. Borrowers repay their loan over 18 months, so every month lenders like Nadig receive a bit of their money back. In the past six months, Nadig has raised a guarantee of Rs 19,000 for over 68 entrepreneurs listed on the website.
“This website lets me see what my money has helped achieve through an online progress report. I can even keep a track of the borrowers’ repayments,” she said.
A website that gives returns
For Himanshu S. (29), a Bangalore-based engineer, repayments hardly matter despite the fact that he invests in a website called Rang De ( www.rangde.org ) that assures a 2 per cent interest. This website, started by Smita and Ram NK in 2008, doesn’t raise a guarantee for a bank. Instead, the money invested by a lender goes directly to the borrower through the MFI. Rang De has tied up with 18 MFIs in 10 states. For the past one and a half years, Himanshu has invested 10 per cent of his monthly income and made 161 investments, totalling Rs 42,800. Himanshu doesn’t withdraw the money once it’s returned — whatever comes, goes off to another rural entrepreneur through an automated option on the site.
One of the first persons he invested in was Kusum Shivnarayan Khare (40), a vegetable seller from Pusad, a small village in the Yavatmal district of Maharashtra.
A little sum goes a long way
With the Rs 5,000 loan that she received from Rang De’s local MFI partner, Samagra Gram Vikas Sanstha, Khare could buy more vegetables at wholesale prices, thereby increasing her sales. She even bought a handcart, which has helped her expand her business. “I am making enough now to pay back my loan and I also have enough left over to save and send my son to school,” she said.
“I invest small sums for several rural entrepreneurs, so that if they’re not able to return the money I won’t have lost much,” said Himanshu. Both websites allow several users to invest small sums of money for one particular entrepreneur or group of entrepreneurs. This way, people can invest as little as $1 or Rs 100.
Chennai-resident Sekhar Basavaraju (40) ‘adopts’ the borrower by paying her entire loan. Basavaraju paid the entire sum for all the 22 entrepreneurs listed from Andhra Pradesh the first time he logged into Rang De last year. “Within three days, I had loaned Rs 97,000,” he said. “This was the most time-effective way of helping out,” said the IT professional. With close to Rs 1,02,700 invested till date, Basavaraju has helped daily wage labourers escape exorbitant rates of interest of moneylenders and helped agarbatti-makers set up cottage industries.
Vishwanath of United Prosperity believes the Internet connects the borrowers with a whole bunch of net-savvy lenders who are experienced in online fund transfers and are, at the same time, socially conscious. “An online social investor is a powerful change maker, because she makes systemic change possible in a sustained manner,” he said.