In the wake of the Coronavirus pandemic and subsequent economic crisis, the phrases ‘Aatmanirbhar Bharat’ (which translates to Self-reliant India) and ‘Vocal For Local’ have been trending over the past few months. Coined by the current government, these initiatives aim to encourage the citizens to promote the products and services made by Indians for Indians.
However, more than a decade ago, when the concept of empowering local communities was considered as little more than charity, an entrepreneur-couple – Smita Ram and Ramakrishna NK - launched an online platform to urge relatively well-off individuals to invest in their fellow citizens. Using their savings, the duo launched Rang De on 26 January, 2008, as a peer-to-peer lending platform through which one can lend to the small-scale entrepreneurs at low interest rates. In 2015, they received funding support from Tata Trust.
Following the Demonetisation of currency notes in 2016 and the move towards digital financial inclusion, Rang De also went for a revamp. Between 2017 and 2019, Rang De transitioned into the NBFC model for P2P. Since the company could no longer have access to grants, the new platform sought to bring changes that would enable RangDe to meet operational costs along with the guidelines from the Reserve Bank of India (RBI). The platform had to raise equity investments for the new entity too. In January 2018, many social investors on the platform volunteered to become equity investors. By 2019, Rang De fully transitioned into a non-banking financial company (NFBC).
A social investor at Rang De can make an investment by choosing to invest in curated communities. All investees go through a diligent screening process to assess their credit score. The team works with partner organisations who have been carefully selected based on their previous work in their target regions. The borrowers pay interests ranging between 4.5 percent and 10 percent flat per annum for their collateral-free loans.
“In the unregulated space, we had dispersed about Rs.80 crores from 15,000 lenders, who are called social investors. Over 66,000 individuals actually received support from us as loans,” said Smita in a recent interaction with MAKERS India.
“Since the new platform went live in September 2019, we have disbursed about Rs.8 crores. We have had more than 4000 social investors and 6000 investees since then. Over 90% of our investees are women,” Smita added.
But Rang De is not your run-of-the-mill NBFC startup aimed only at profit generation. Their goal is to bring about a behavioural change in lending and borrowing – or responsible lending, as Smita calls it.
Also, in response to the economic crisis due to the COVID-19 pandemic, Rang De has provided interest-free loans to farmers, over 85% of them women. According to Smita, the focus is on helping them rebuild their livelihoods. Recently, Rang De also conducted a drive - named ‘Jai Jawan Jai Artisan’ – to help provide a livelihood for the rural artisans whose daily lives have been badly affected by the ongoing Coronavirus pandemic. The initiative aimed to send 1,00,000 rakhis to the soldiers guarding the country, made by women artisans of rural India.
Looking back, Smita feels that she is living her dream. “Very few people have this opportunity. I just feel very blessed and fortunate that I was able to do this at the right time. Rang De didn't remain an idea. What if we had just written about it on a white paper about Rang De and didn't have the courage to go about doing it? But we took that plunge,” she says with a smile.
In the true spirit of self-reliance, she adds, “What I hope to see is a day when Rang De would not need me anymore, and when there are enough leaders within the organization to take the mission forward. Rang De is a very young organization, and it needs to be led by young people. That's the next big thing that we want to achieve.”