Microcredit refers to small size loans that are collateral free and are lent to low income households to meet their working capital needs. Typically, the loan size varies from Rs. 5000 to Rs. 15000.These loans are usually utilised for income generation activities. The borrower then repays the loans according to a preset repayment plan.

How can Microcredit make a difference?

Microcredit provides the much needed financial stability that is needed by many low income households in Indian villages, semi urban and urban areas. It gives them the opportunity to access finance at reasonable rates of interest and provides a healthy and sustainable alternative to the local money lender.

For instance: Lakshmi in Doddahalli requires a loan of Rs 5000 in order to buy a second hand refrigerator. Lakshmi runs a small vegetable shop and will use the refrigerator to store her left over vegetables and sell them the next day. This is the beginning of financial independence for Lakshmi.

Like Lakshmi, there are tens of thousands of people across India who want to make a beginning towards financial independence. And microcredit provides the means to achieve this independence.

How does traditional microfinance work?

Traditionally microfinance institutions borrow capital from the banks at a fixed rate of interest of 5.5 to 8.3% (or 10 % - 12 % diminishing rate of interest) and the MFI then adds the cost of servicing the loan before disbursing the loan to the borrower. Thus the interest paid by the borrower of microcredit ranges from 13.5 % - 20 % fixed rate of interest (or 24 % - 36 % diminishing rate of interest) depending on the cost incurred by the MFI for servicing the loan.

How is Rang De different from traditional microfinance?

Rang De is an innovative attempt to bring down the cost of microcredit by enabling individuals to lend small sums of money via RangDe.Org. Rang De hopes to reach out and include people to whom even ‘traditional microcredit’ is unaffordable. Rang De will make affordable microcredit a reality. Rang De loans are given at 8.5% flat p.a.(16% APR) flat per annum

Who are the borrowers of microcredit?

Borrowers of microcredit are typically people of very low income households who require working capital and credit. The investment you make as a social investor is usually towards the working capital of an individual whose occupation is farming, livestock rearing, dress making or small businesses. Rang De hopes to provide you with opportunities to make investments towards educational and medical needs of borrowers in the near future. You can find borrowers whom you wish to help based on the search criteria by selecting ‘Invest’. Alternatively invest smartly by selecting ‘Quick Invest’.

What is the repayment rate?

The repayment rate in the microfinance industry has been higher than 92% and sometimes as high as 97 or even 100 % even though there is no collateral. There are several reasons for this. Borrowers of microcredit are always women and loans are usually given to women in groups of 10 or 15. This creates a social collateral and if there is a default from one borrower, the peers in the group pitch in. There is also peer pressure that is created within the group so that defaulters are always under pressure by peers to repay.

Why should individuals lend?

We believe that everyone should have access to credit in order to rise above their existing economic condition. And that is the only way to fight against poverty. While some banks and microfinance institutions are working towards financial inclusion by lending to the rural sector, we thought as individuals we can do our bit towards inclusion. Simply because as an individual, we have a responsibility.

Rang De hopes to bring microcredit and microlending to the forefront by enabling individuals to become Social Investors and fulfil their Individual Social Responsibility (ISR). A Social Investor lends to make a positive social difference and also earns a nominal interest on the money lent.

Is my investment and return assured?

The repayment rates in the microfinance industry are as high as 97% to 100 % and this is a known fact. The key reason for these unusually high repayment rates is as follows: Loans are always given to individuals who are members of a group - Self Help Group (SHG) or a Joint Liability Group (JLG). In both these groups, the onus of repayment is on the group in case an individual is not able to repay. This is also known as social collateral.

At Rang De, we follow the same principle and ensure that all Rang De borrowers are members of either an SHG or a JLG to ensure timely repayments and zero defaults.

What is the Invest by date?

For every loan borrower who applies for a loan, there is a waiting period of 30 days during which the loan amount needs to be raised. The invest by date indicates the cut off date by which social investments need to make investments to the borrower.

Why does the borrower pay 8.5% flat p.a.(16% APR) when the Social investor only gets a return of 3.5%?

The investments that you make are received by Rang De’s field partners who are responsible for identifying borrowers, disbursing loans and collecting repayments. The Field partner incurs expenses for all this and the 5% the borrower pays is just enough to manage these costs. Thus the borrower pays a cumulative interest of 8.5% flat p.a.(16% APR) on the loan.

How Rang De works?

Step1. Social Investors like you search and choose borrowers to make a social investment. You can invest as little as Rs.100.
Step 2. Rang De’s field partners receive and disburse loans to their borrowers.
Step 3. Borrower repays loan according to a repayment schedule.
Step 4. You receive your money at the end of the tenure and earn an interest of 3.5 % on the principal you have invested.

What’s in it for Rang De?

Rang De is an initiative to make low cost microcredit a reality. By enabling individuals to become online Social Investors, Rang De will bring microcredit and online lending to the forefront . Rang De is a non profit entity with the sole object of connecting individuals who need money to social investors like you. Rang De will create a sustainable alternative to charity by promoting online lending as a way of life.Rang De charges a nominal fee of 1% on all transactions. This is to help Rang De become sustainable and cover costs such as the payment gateway fees and server charges. .5% is kept aside as a contingency fund to partially cover cases of default caused due to genuine reasons.

What is my return on my social investment?

You will earn an interest of 3.5% A.P.Y on your investment. Your interest is calculated from the day the loan is disbursed to the borrower. This typically will be around a month’s time from the date of investment.

What is an MFI?

An MFI is a Microfinance Institution. Most MFIs are non governmental organisations registered as trusts or societies.

I am an NRI. Can i make a social investment on Rang De?

Yes, you can make a social investment from your NRO and NRE bank accounts and make online transfers in Indian Rupees.

Can I pay by credit card?

Yes, we do accept payments via credit or debit cards and cheques.

If a borrower is partly funded before the "Invest by Date." Will the borrower get the partial amount that was raised or nothing at all?

Rang De appreciates the fact that borrowers need to make plans based on the loan they have applied for and it is important for them to get the money as promised. Rang De ensures this through a unique blend of technology and processes. In any case Rang De ensures that if a borrower has been unable to get the loan by the Invest by Date, Rang De pitches in from its corpus.

Will the social investor get a receipt for the payment?

On the day the loan is disbursed, the social investor will receive an e-mail with the details of the disbursement. This typically happens within 5 days after the Invest by Date.

What will be the mode of repayment to the social investors?

When the loan matures the social investor will receive an e-mail informing that the loan has been repaid. The social investor will have two options: either to reinvest the money or opt to have it back. In case of the latter the social investor provides the bank details and Rang De will make an online transfer.

As a social investor, how will I give the money?

As a social investor you have two options of lending money
Option 1: Search and choose borrowers. Commit to make a social investment in multiples of Rs.100. Choose the bank which allows you online access. Make an online transfer.
Option 2: Use the quick invest option and make a payment following the steps on the website.
Use the quick invest option and let Rang De invest on your behalf.

As a social investor, is my investment and return secured?

Any social investment made via Rang De is for an unsecured loan for a low income household. Therefore your investment and return are not assured.

In what time will I get the money back?

You will get back your investment at the end of the loan tenure typically 1 year or 2 years with a return of 3.5% APR provided there is no default.

Can I forego the interest rate?

We do appreciate the concern that social investors have for the people we are facilitating loan. Many have expressed that they would like to forego their return. As of now, there is an option of donating the interest to Rang De however this is not passed on to the borrower. There is a reason for this. All our borrowers are part of a group - either a self help group or a joint liability group. And members within this group interact closely. In such a scenario, it becomes very important to maintain a common interest rate across all members. Two different interest rates for two people in the same group will cause conflicts.

Are all loans given to women in groups?

Rang De believes that everyone - irrespective of gender should have access to microcredit. Rang De will facilitate microcredit for men and women as long as they are members of either a self help group or a joint liability group. Rang De does not facilitate individual loans.

What is a Joint Liability Group (JLG) ?

A Joint Liability Group (JLG) is an informal group of 4 to 5 individuals coming together for the purposes of availing micro credit either singly or through the group mechanism against mutual guarantee.

What is a Self Help Group (SHG) ?

Self Help Groups (SHGs) are usually informal groups whose members create a common fund by contributing their small savings on a regular basis.Request for loans are considered by the group in their periodic meetings and competing claims on limited resources are settled by consensus.The amounts loaned are small, frequent and for short duration.Defaults are rare mainly due to group pressure and intimate knowledge of end use of credit.

Can I pay by cheque?

Yes, on popular demand, we have recently started to accept cheques as well. Cheques can be paid into our ICICI, HSBC, HDFC Bank details of which are on the payment page. Please do not forget to enter the details of the cheque. This is very important for us to track the status.

What is a flat interest rate?

A flat interest rate refers to the interest rate a borrower has to pay on a loan if they pay it at the end of the repayment period. Rang De charges its borrowers a flat interest rate of 8.5% flat p.a.(16% APR) i.e. for a loan of Rs. 1000 taken over a year, the amount the borrower has to pay is Rs. 1085 (Rs. 1000 for the loan and Rs. 85 as interest) divided equally over each repayment period (monthly, weekly, quarterly).

What is APR?

APR (Annual Percentage Rate) refers to the interest rate on a loan that is calculated on an annual basis. A borrower will effectively pay interest on a loan that is equivalent to the APR i.e for a loan of Rs. 1000 taken over a year the interest to be paid is Rs. 85 in the case of flat interest. However as the borrower makes each repayment, the loan amount is reducing, which means that the interest amount should reduce too. This reduction is not included in a flat interest rate. Hence the flat rate is recalculated to give an APR. Rang De's borrowers pay an interest of 16% APR (8.5% flat p.a.(16% APR) ) which is 11% less than the APRs of other MFIs world-over.

What is APY?

APY (Annual Percentage Yield) refers to the annual rate of interest received by the social investor taking into account the effect of compounding. For example if a social investor has made an investment of Rs. 1000, they will get an interest of Rs. 20 after their repayments. However after each payment they will get the divided interest on Rs. 1000 loan and not the remaining loan amount. Hence the flat rate is recalculated to give an APY. Rang De gives its social investor an APY of 3.5% (2% flat).

Where are Rang De's borrowers currently located?

Rang De's partners are located in Tamil Nadu, Andhra Pradesh, Maharastra and other states. Rang De looks to expand it operations through field partners to reach out to borrowers across India. The current field partner listing by location and the number of borrower each field partner has disbursed loans through social investments by clickinghere.

How much does the borrower pay as interest for working capital loans?

The borrower pays an interest rate of 8.5% flat p.a.(16% APR)
The break up of the 8.5% flat p.a.(16% APR) interest is as follows:

5% is for the field partner
2%(3.5% APY) is the financial return for the social investor
1% is for Rang De to cover its operational costs.
0.5% goes to a contingency fund that is maintained by Rang De to repay social investors in case a borrower dies or defaults on a loan.

How much does the borrower pay as interest for educational loans?

Borrowers pay an interest rate of 5% flat p.a.(9% APR)

4% is for the field partner
1% is for Rang De to cover its operational costs.
Social investors do not get any interest on educational loans, but they get a phenomenal social return.

What is the interest rate paid by the borrower?

Borrowers who get a loan via Rang De pay an interest rate of 8.5% flat p.a.(16% APR) . Out of the 8.5% flat p.a.(16% APR) , 5% goes to the field partner for their operations and 3% to you as a Rang De Social Investor.

What is Rang De Credit?

Rang De Credit refers to the money that has been repaid by borrowers to your Rang De account. You can use your Rang De Credit to make a reinvestment, buy Rang De gift voucher(s) or withdraw it.

How do I withdraw Rang De Credit?

Step 1: Log into your Rang De account by clicking “Login” at the top of the page.
Step 2: Go to your Dashboard by clicking “My Rang De”
Step 3: Click “Withdraw” in the dashboard header to the right side of your available Rang De Credit.
Step 4: Enter the amount of Rang De Credit that you want to withdraw and click submit after entering your account details and mode of withdrawal.

Can I make online Transfers?

Yes, you can make an online transfer from your bank account into any of Rang De's accounts listed on the payment page.