Harshavardhan Jegadeesan's

Social Impact of Microcredit - RangDe's Field Visit to Vandavasi

Written by Harsh Jegadeesan on 8:58 PM

I have been a micro lender with Kiva and more recently with RangDe. I've always believed that grassroutes entrepreneurship coupled with access to affordable capital is the key to poverty alleviation and a better standard of living for millions of Indians, especially in the rural hinterland.

RangDe is India's largest peer-to-peer lending platform and has doled out micro loans close to INR 8 million in a short span of 2 years. As I wanted to do something more than just micro lending, I joined them as a volunteer. Last Saturday, I had the opportunity to see how micro credit really works. I along with 7 RangDe volunteers from the Bangalore Chapter went on a field visit to villages around Vandavasi to meet borrowers and the field partner agency - ASSCOD. The goal of the field visit was two-fold. Firstly, we wanted to see for ourselves the impact that the loans were making to the community. Secondly, we wanted to conduct a social audit on the field partner and the effectiveness of the loan disbursement and the repayment processes.

Elzhumalai, the local ASSCOD coordinator joined us in Vandavasi. Sivagami was the first borrower we met. Sivagami and her husband set up a small eatery and when they had begun to do well, her husband passed away. After the initial shock, Sivagami was forced to take charge and be the sole bread winner for her family. Her eatery serves snacks for breakfast and simple meals for lunch. She is assisted by her 2 daughters before they go to school. Her son who is studying in an ITI is planning to join her in the eatery business after his studies. Sivagami took a small loan of INR 10,000/- from RangDe to buy utensils and a gas stove to expand her business. She quickly repaid the loan with 8.5% interest in 12 months. She acknowledged the huge impact the micro loan had made on her life and was really thankful to RangDe for providing her access to affordable capital. We left her eatery wishing her and her son best of luck!

Our next borrower was Fathima and her daughter Muneera. They are part of the Muthamizh self-help group (SHG), a group of 20 muslim women who engage in tailoring and hand embroidery. Muneera(18) really impressed us with her enterprise and confidence. She has formally undergone training in hand embroidery and is the local garment designer in Vandavasi. She trains other women in tailoring and employs them in her business. Fathima borrowed INR 15,000/- to buy a sewing machine and is repaying very regularly. The mother and daughter duo now want to buy a embroidery machine to grow their business. A lot of these women have to overcome social conventions and community customs to take part in the SHG. We were all overwhelmed by the spirit, enterprise and the positive attitude that these rural women exhibited.

Next in our list of borrowers was Fyrose Banu. Fyrose has 2 children. Fyrose is in the mat finishing business. Vandavasi is famous for its mats and a lot of people in and around Vandavasi are involved in this business. Fyrose's husband buys unfinished mats in wholesale; Fyrose stitches up the mats and they sell the finished mats to nearby villages. Fyrose took a loan to buy a mat making machine. She has repaid the load and is looking for a loan to buy a motorized vehicle to transport her mats to far off villages and towns.We took the opportunity to visit a mechanized mat making unit and see how mats were being made. I also bought a few mats from Fyrose, for which she reluctantly took money.

The last borrower in our list was Boopalan. Boopalan’s life presents a classic example of what can be achieved by sheer will power and hard work. Over the last 14 years Boopalan has grown from being a mere daily wage earner to a micro entrepreneur employing 3 persons in his own establishment. The secret of his success is dedication, sincerity and an iron resolution to excel. Initially Boopalan was employed as an operator in Southern Polymers where he learnt the tricks of making plastic goods. Soon Boopalan launched his own establishment to make a variety of goods like jewel boxes, plastic dolls, gift items, devotional gifts etc. Boopalan took a loan of INR 125,000/- to buy an automatic moulding machine to make plastic boxes. He is confident of expanding his business and employing more locals. He told us that he was deeply indebted to RangDe for providing him a loan and changing his life beyond his imagination.

As we were meeting borrowers, I couldn't help but think how small amounts of money we lend was make a tangible and real difference to people. I could really appreciate the power of micro lending and its profound social impact in a community. Earlier each of these borrowers had to borrow money at exorbitant interest rates from local money lenders. Banks did not lend unsecured loans. Now with access to micro credit through peer-to-peer lending platforms like RangDe, coupled with hard work, enterprise and self-belief, a mini revolution has started in our rural hinterland.

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