Kiva: Now Micro Financing In India

Posted: October 8, 2012

Kiva begins micro financing in India in partnership with socially driven non-profits who focus on the underserved and socially excluded.

By Jason Riggs for Kiva

There is a shared desire within India and around the world to support India’s working poor and socially-excluded people. Although there was tremendous growth in micro financing in India, most institutions are highly concentrated in India’s southern states and grew rapidly by only offering standardized loan products that did not reflect the distinct needs of their clients.

Entrenched rural poverty, dependence on the informal sector for sustenance, and lack of opportunity for education and skills building in the informal sector locks women and socially-excluded populations in a poverty trap. Ninety percent of India’s workforce depends on the “informal sector” for employment, but there is little or no opportunity for skills building among informal workers and enterprises. Almost 60% of women who want work cite financing as a major constraint and lack the skills training they need to succeed.

What does Kiva do for micro financing in India?

Kiva, a non-profit based in San Francisco, is the world’s first and largest microlending platform. Since their founding in 2005, Kiva has connected 800,000 individuals around the world to fund US$340 million in loans for 840,000 borrowers in 63 countries, and now India.

On August 15, Kiva announced a new initiative that enables their global community of lenders to begin funding microloans to some of India’s most geographically isolated, underserved, and socially-excluded people. Many investors funding microfinance institutions consider the populations that Kiva’s partners work with to be too “high-risk” and are unwilling or unable to serve them or provide wrap-around services and livelihood trainings.

Kiva announced a new initiative that enables their global community of lenders to begin funding microloans to some of India’s most geographically isolated, underserved, and socially-excluded people.

Kiva’s lending community in India and worldwide has consistently shown interest in supporting people in India. More than 800 Kiva lenders identify themselves as being from India and have lent US$ 160,000 to 29,500 borrowers outside of India. Last year alone, there were over 400,000 visits to Kiva.org from people in India. Many Kiva lenders form their own lending teams around shared interests and 15 of Kiva’s lending teams have expressed a strong interest in India. Together they have 3,485 members who have funded more than US$ 2million toward 60,000 loans, all outside of India. This interest and energy has been met with no opportunity to support people in India, until now.

What can you do for micro financing in India?

You can visit kiva.org/india to learn about the borrowers and their businesses, and connect with someone who you would like to support with a loan of $25 or more. The loans you fund help borrowers access critical capital they need to start or expand their business and receive livelihoods skills, financial literacy training, and social support services. Historically, loans funded through Kiva have a 98% repayment rate, so the money you lend is truly a loan.

When you lend to a person through one of these non-profits, you aren’t just funding a loan for them to start or expand their business. You are helping to fund a chance for them to learn the skills they need to support themselves and their families. This is especially critical in India where the vast majority of the workforce has very few, if any, opportunities for skills training.

In addition to lending money, you can also join lending teams expressing an interest in India or create a new lending team based on their interests by visiting: http://www.kiva.org/team/india

Kiva’s non-profit partners in India

Kiva’s initiative in India is made possible by partnering with three non-profit organizations in India: People’s Forum and Mahashakti Foundation in Odisha and WSDS-Initiate in Manipur.  Kiva selected these non-profits because of their holistic approach to poverty alleviation through microfinance services, livelihoods training, and social support programs. Kiva has carefully vetted these partners to ensure that they have policies, practices and community relationships in place to assess the needs of their clients and tailor their programs toward those needs.

People’s Forum and Mahashakti Foundation both operate in the state of Odisha and reach populations underserved by other microfinance institutions. The districts they work in are considered to be among the poorest in the country.

Mahashakti Foundation provides clients with an array of services, business training and microloan products for sustainable livelihoods, community development, fair price pharmacy services, food security, support for farmers, and loans for water and sanitation.

Kiva selected these non-profits because of their holistic approach to poverty alleviation through microfinance services, livelihoods training, and social support programs.

People’s Forum in addition to microloans, offers other services including programs for mental health, elementary education, support for survivors of human trafficking, drought mitigations and health awareness. Their financial services include financial literacy training, livelihoods training, business development and market linkages to support the success of their clients.

People’s Forum is dedicating their Kiva funded loans to expand and launch programs with some of India’s most vulnerable populations including widowed women, transgendered women, disabled individuals, and families affected by leprosy. Without  low-cost funding, People’s Forum cannot scale up these programs. Now with Kiva, People’s Forum is able to launch an entirely new loan product for individual widowed women, single mothers, and unmarried women. This will include livelihoods training and supplies for income generating activities such as weaving, petty shops, stitching, tailoring, and fast food stalls.

WSDS-Initiate is an inclusive non-profit that works with all tribes and minority communities in Manipur, located in the remote northeast region of India. Most organizations concentrate their work in the plains regions of Manipur, WSDS is among very few organizations operating in the isolated hilly regions. Political unrest and frequent economic blockades in the area make it very difficult to provide services, resulting in Manipur having the lowest penetration of financial services in the country.

WSDS’s board is entirely local and their board members are well respected among the communities they work with. WSDS lends to women over the age of 55, which is unusual for microlending organizations in India. WSDS also provides clients with loans to purchase solar lamps. This is especially impactful because most of the areas WSDS works in do not have electricity and economic blockades makes kerosene extremely expensive. WSDS will use Kiva funds to expand existing client programs and to pilot new loan products that other lenders will not fund.

WSDS, Mahashakti Foundation and People’s Forum are compliant with the Reserve Bank of India’s guidelines on microfinance and have put additional policies in place that demonstrate their integrity as non-profit microfinance institutions.  Each non-profit has a policy of not lending to clients with more than one loan outstanding and they regularly meet with other lending institutions in their area. Each organization has endorsed the SMART Campaign’s client protection principles, three of the six principles revolve around the best -practices and policies between microfinance staff and clients.

*Photo credit: Kiva (Jhuni, a young widow from Odisha who set up her tailoring business with a loan from Kiva.)

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