Kiva, a crowd-sourcing microlending website, has launched in India. Lenders can give out a loan of as little as $25 to Indian borrowers across sectors.
For the same Kivas has partnered with field partners that will make sure the loans taken via Kiva reach where they are needed the most. The field partners include People’s Forum, a nonprofit organization based in the state of Odisha; Mahashakti Foundation, also based in Odisha, which provides business training and microcredit to community development, fair price pharmacy services, food security, support for farmers, and loans for clean water and sanitation infrastructure; and WSDS, a nonprofit organization based in Manipur which lends money to women over the age of 55.
How Kiva works?
Lenders can offer a loan of as little as $25 via Kiva which has partnered with field partners who administers and disburse each loans. Once lenders make a loan, they get progress updates throughout the life of the loan. As the borrower repays, money gets credited without any interest to lenders account as Kiva credits which can reused to make another loan or can be withdrawn to spend on something else. Like in the case of WSDS, it offers clients credit to purchase solar lamps.
Workaround for RBI’s 3 year regulation
The Reserve Bank of India (RBI) requires loan funds sent to non-government microfinance institutions to remain in the country for at least 3 years. As a work around for this, Kiva’s field partners will hold on to loan funds for the minimum 3-year term before sending repayments back to lenders. That is, once lenders have loaned the amount, even if borrowers have repaid, the lenders’ money will be re-cycled and used to loan another project by the field partners. Which also means that the lenders’ money or credit will be locked down for a period of three years.