Small social investments spreading big smiles across India with Rang De
Arunabai Bansode is a 52 year old fruit vendor from Mundhawa, Maharashtra. She buys fresh fruits from the wholesale vendors and supplies them to people’s doorsteps. She has been doing this for the last one year and has gained some loyal customers. Now she wants to expand her business by buying more fruits and sorting her transportation mechanism better. For this she needs INR 8000.
She does not have this amount to invest in her business at a go. If you have the amount to spare for a year or so and get back the capital plus a little interest after a certain time, would you like to lend to her? Many of us would love to make this social investment to bring a smile to Arunabai’s face and a scale up to her business.
Rang De, a crowd funded social investment platform, makes it possible for the needy in the remote areas and lenders interested in supporting them to connect. Rang De was started by Smita Ramakrishna and Ramakrishna NK in 2008 with the belief that peer-to-peer lending model could be leveraged to lower the cost of microcredit and to help alleviate poverty in India.
We recently caught up with Smita to hear her colorful story of Rang De and know her 5 year journey of being a social entrepreneur. After completing her B.A in economics and Masters in Social Work, Smita worked with many non-profit organizations in various capacities. She had very idealistic perceptions about the approach and functioning of nonprofit organizations lending a hand to solve the pressing problems of society. Working in the social sector came very naturally to her but she had never thought that she will ever be an entrepreneur.While working in the non-profit sector, some incidents and experiences made her realize why civil societies have stopped being charitable. “Accountability and transparency are the most needed in the civil societies but when it comes to conduct and action, nobody does it because it’s everybody’s business,” says Smita.
Seeing that even non-profits can be murky, Smita wanted to set an example of the power and impact of a not for profit organization backed by a sustainable and scalable social business model.
Rang De allows a microcredit of as low as INR 100 which was a conscious decision to increase the inclusion of social investors and works in 14 states of India. The idea is to let lenders experiment with small amounts first to clear their doubts if any about the credibility of Rang De’s model and impact of its approach to tackle poverty. A social investor can choose a borrower online and lend the money, Rang De has field partners providing the last mile connection and delivery of the loans to borrowers and these loans are paid according to a specified repayment schedule. To sustain and scale the impact created and in lieu of the long term vision, Rang De takes a nominal cut of 1% on all the loans repaid by the borrowers.
Crowd funding is still nascent in India but Rang De has made it work well. The biggest challenge in the crowd funding model in India is the ‘trust deficit’ according to Smita which exists because we are culturally taught not to trust. Many scandals and exposed frauds have made people even more skeptical. To address the apprehensions which keep people from trusting non-profit organizations and crowd funding campaigns, Rang De has kept all the information, data and communication about every detail very open and clear right from the beginning.
“We were experimenting with crowd funding for social impact model when we began and we were very much ready to fail. In hindsight, this readiness to fail has been our greatest strength. When we were starting, people used to say that I and Ram have lost our minds. The best part has been that we have come this far; we never imagined it,” says Smita.
Smita shares that in these 5 years every day had some challenge or the other but there is nothing as exciting for her as being a social entrepreneur. Smita gives a huge credit to her co-founder Ram for where Rang De stands today. “Rang De would not have reached this far without Ram. We bring different skill sets to the table and it helps in progressing towards our goal,” says Smita.
She believes that following one’s passion with a little bit of planning and calculated risk taking can lead social entrepreneurs to achieve great heights.
Website: Rang De