Zopa-Rangde: Microfinance new face

8/9/2019 Zopa-Rangde: Microfinance new face

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PRESENTATION ON

ZOPA.CO.UK

RANGDE.ORGKIVA.ORG

PHOENIX

SHARWARI CHITALE(20)

TRISHIL KASBE(46)

NEHAMEENA(47)


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Indias First Peer to Peer Microlending Site


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Small loans meant for low income households

Borrowers are usually the ones who fail to qualify

for regular bank loans

WHAT IS MICROCREDIT ?

Micro-loans are meant to spur entrepreneurship

No collateral in form of guarantee is needed


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Chennai based online micro-lending platform

No processing fee or membership fee is charged

from Rang De borrowers.

ABOUT RANG DE

All Rang De borrowers pay 8.5% interest p.a. on

loans

Loan sizes start at as low as Rs.1000


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InvestInvestors

RANGDE MODEL

Rang De

Borrowers

Rang De


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Every Borrower returns the loan with 8.5%

interest rate p.a.The breakup is as follows :

5% goes to the field partner

INTEREST RATES BREAKUP

2% goes to t e socia investor 1% goes to Rang De to cover its operations.

0.5% goes to a contingency fund


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STATISTICS AS ON 16TH FEB 2010

Borrowers Impacted 2427

Social Investors 1035

Social Investments Raised Rs. 1,25,98,500

Social Investments Repaid Rs. 63,25,712

Repayment Rate 98.9%


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ZOPA, UK


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PEER-TO-PEER LENDING,A.K.A. SOCIAL

LENDING Zopa, a person-to-person lender founded in 2005 in the

U.K., offers loans without banks.

The name is drawn from the term Zone Of Possible

Agreement, a negotiating term identifying the bounds

within which agreement can be reached between two

parties

Zopa was the worlds first social lending and borrowing

marketplace.


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HOW ZOPA WORKS How lending works

1. Choose a lending

rate, risk level andtime period

2. Transfer money in

How borrowing works

1. Checks todays rate

2. Apply for your loan

3. The loan is reserved

for you.

and its madeavailable to

borrowers at the

terms set by you.

3. Your money gets lent

out


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WHO CAN BORROW AT ZOPA

About the market:

All lending and borrowing happens in the Zopa markets. The

Zopa markets are a way of grouping borrowers according to

their credit score and how long they want to borrow for.All Zopa borrowers have

An identity they can confirm

A good track record of repaying debt

An income that makes theirs loan affordable

And they dont have

x Lots of maxed-out credit cardsx Very high level of unsecured debts

x Poor debt history


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ZOPAS MARKET:

There are 4 markets:

A* A (A36 & A60)

B (B36 & B60)

They look at the credit score of every member to

work out whether theyre an A*-, A-, B- or C-

rated borrower.

A*-rated borrowers are those with the highestcredit scores, followed by A-rated borrowers, then

B-rated borrowers and C-rated borrowers.


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LOW DEFAULT RATES

Zopas weighted average of overall defaults: 0.1%

Does the social aspect of lending reduce defaults?


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ABOUT KIVAKiva was founded in October 2005 by Matt and Jessica

Flannery.

PayPal provides Kiva with free payment processing. Kiva's

is the first account at PayPal with a free payment

.

The minimum amount that can be loaned to an

entrepreneur on Kiva is $25.

It currently employs 34 full-time staff members.


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Loan applicants post the amount needed for their loans in U.S.dollars and include what the money will be spent on like agriculturalsupplies or purchasing wholesale items for resale.

Users on Kiva may contribute as little as $25 to an applicant'srequested loan amount. Users contribute until the loan is 100%funded.

Kiva and How it works

At this point, the loan will either be issued to the loan applicant or alending group associated with the site will be reimbursed for the loanit's already issued to the applicant.

Microlending Web sites typically use third-party lenders (i.e. Localfield partners) to actually issue the money to the recepient.

Nonprofit sites like Kiva are populated by people who seemicrolending as a socially responsible cause; their loans will be

repaid, but without interest.


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KIVAS OPERATIONAL COSTS

You dont donate through Kiva, you loan. The entire$25 (or any other amount invested) goes to the MFIField Partner and is earmarked for the borrower.

None of this mone oes towards o erational costs

not for Kiva nor for the MFI Field Partner.

Kiva does ask for an optional donation to cover their

administrative costs, but this is not mandatory.

Currently, the suggested donation is 15% of the loanamount, or $3.75 for the usual $25 loan, which

most lenders do contribute.


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KIVAFIELD PARTNERSWhen the entrepreneur repays the loan, they repay the principal

loan amount (this is the amount listed on the Kiva website)

plus interest to the Field Partner.

The Field Partner passes the principal loan amount to Kiva,

retaining with it the interest amount paid.

This interest amount goes towards covering the operational costsof the Field Partner. As per Kiva policies, they are free to

charge interest to the entrepreneur.

On the other hand, the field partner is not required to pay

interest or other payment to Kiva which helps reduce their costof capital.

Kiva passes the principal loan amount back to all lenders who

contributed to the loan.


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WHYHIGH INTEREST RATES:HSPFI

(HAGDAN SAPAG-USWAG FOUNDATION,INC)

Interest rate charged per month approx 3%.

Hence for a first-time borrower with a loan of P5,000 to be repaidover 5 months, he would be paying back P1000 as principalamount and P150 as interest every month.

The current exchan e rate is 46 Phili ine esos to 1 USD so the USD e uivalent is$21.74 in capital, and $3.26 in interest.)

Interest collected goes towards covering:

1. Salaries and benefits of the project or loan officers who collectthe client repayments on a weekly basis and administrative staff

at the branch.2. Administrative costs for printing, office supplies, utilities,

trainings.

3. Contribution towards head office functioning.

4. Travel expenses of the project or loan officers.


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Partial Operating Costs for HSPFIs Camiguin Branch in January 2010

Branch Staff Wages & Salaries P27,500 (~$598 USD)

Head Office Management Fee P53,400 (~$1,161 USD)


(HAGDAN SAPAG-USWAG FOUNDATION,

INC)

Project Officers Travel P4,500 (~$98 USD)

Administrative Expenses P26,150 (~$568 USD)

Total P111,550 (~$2,425 USD)


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Kiva is not the only funder for the HSPFI, and the other funders docharge interest on their loans. Thus the operational costs would

further increase.

Therefore a 1st time HSPFI borrower pays $3.26 USD in interestper month on a loan of P5,000 which is 0.13% of operational costs.


(HAGDAN SAPAG-USWAG FOUNDATION,

INC)

If the loan amount is increased to P30,000, the long-time, repeatborrower would pay P3,000 on the loan capital and P900 (or$19.57) as interest per month which 0.8% of operational costs. This

P900 definitely goes farther towards contributing towardsoperational costs.


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THANKYOU..

Documents

Zopa-Rangde: Microfinance new face