Last updated February 27, 2014

MicroGraam Marketplace (MicroGraam) is a Bangalore-based, crowd-funding lending platform that aims to promote development and growth throughout India by providing underserved populations with access to formal loan financing.

MicroGraam focuses on poverty alleviation in rural areas and -- despite being based in Bangalore, Karnataka -- currently lends to communities across India, reaching into Tamil Nadu, West Bengal, Jharkhand, Assam and Karnataka. In order to provide critical capital in these areas, MicroGraam collaborates with various partners located across the country, applying a structure very similar to Kiva’s.

Through its partnerships, MicroGraam has been able to reach over 3,169 clients in rural underserved areas since its inception in 2010. The partner organizations currently provide clients -- most of whom are women -- with three types of loans: (1) agricultural loans, (2) educational loans, and (3) microenterprise loans.

MicroGraam’s existing network of partners is comprised of 26 social organizations (largely NGOs and MFIs). Prior to partnering with MicroGraam, each organization undergoes a strict due diligence process, ensuring that they have the proper social performance priorities and that they post qualified loans to MicroGraam’s website.

Under this structure, if a loan is fully funded on Kiva, funds are wired from Kiva to MicroGraam, and from MicroGraam to the relevant partner, who in most cases will then disburse the loan to the borrower and later collect repayments. In certain cases, and with certain partners, loans may already be pre-disbursed and will be marked as such on the loan page.

In order to cover its operational costs and those of its partners, MicroGraam loans have small, competitive interest rates. Rates typically fall between a range of 9.5% and 14.5%, with a cap at 16.5%. For MicroGraam loans not funded through Kiva, 2% of the interest paid by borrowers goes to cover operational costs at MicroGraam, and 5% goes to the partner; the remaining interest is paid to the MicroGraam lender. As part of their marketplace model, MicroGraam lenders are invited to bid on interest rates to encourage competition, keep the rates low, and -- by allowing them to collect returns on their investments -- motivate lenders to make more loans at higher volumes.

For loans funded through Kiva, interest will only be paid to cover costs at MicroGraam and the partner organization. Interest will not be paid to the lender, as is the case with all Kiva loans.

When Kiva lenders support borrowers through MicroGraam, they are in fact lending through two layers. While this system may translate into higher risk, it also gives lenders the chance to have a greater impact in these communities as each loan empowers not only the borrower, but also MicroGraam and MicroGraam’s partners. MicroGraam loans that are backed by Kiva lenders will go out to borrowers with an interest rate in the range of 9.5% and 14.5%. In addition to the operational costs, given that Kiva loans are in US dollars, there is an additional cost to cover the currency risk.

A unique lending approach:

By partnering with Kiva, MicroGraam will be able to grow its loan portfolio and expand the impact that it is making within the Indian microfinance market. With the addition of Kiva capital and access to our large network lenders, MicroGraam will be able to forge new partnerships with impactful social organizations, connecting more rural areas with critical capital and bringing financial services to those who need them the most.

Specifically, Kiva will enable MicroGraam to (1) extend its current low interest rate products and services to more clients, (2) increase funding for borrowers through access to a broader lender community, and (3) offer clients new and different types of loans.

India has 33% of the world’s poor, but also some of the strictest regulations surrounding foreign  financing. MicroGraam presents a unique opportunity for Kiva to reach entities that it would not normally be able to work with, while also giving Kiva lenders the chance to support communities that they would otherwise be unable to connect with.
 

Repayment Performance on Kiva

    This Field Partner All Kiva Partners
  Start Date On Kiva Mar 14, 2014 Oct 12, 2005
Total Loans $260,825 $608,329,400
Amount of raised Inactive loans $18,550 $582,625
Number of raised Inactive loans 50 484
Amount of Paying Back Loans $242,275 $122,320,675
Number of Paying Back Loans 412 131,367
Amount of Ended Loans $0 $485,426,100
Number of Ended Loans 0 614,300
Delinquency Rate N/A 3.71%
Amount in Arrears N/A $2,971,692
Outstanding Portfolio N/A $80,096,340
Number of loanDelinquent N/A 13,452
Default Rate N/A (See Note) 1.10%
Amount of Ended Loans Defaulted N/A $5,357,098
Amount of Ended Loans N/A $485,426,100
Number of Ended Loans Defaulted N/A 16,819
Currency Exchange Loss Rate N/A 0.09%
Amount of Currency Exchange Loss N/A $572,888
Refund Rate 0.00% 0.75%
Amount of Refunded Loans $0 $4,553,925
Number of Refunded Loans 0 5,085

Loan Characteristics On Kiva

    This Field Partner All Kiva Partners
  Loans to Women Borrowers 93.82% 74.22%
Average Loan Size $93 $419
Average Individual Loan Size $313 $656
Average Group Loan Size $670 $1,831
Average number of borrowers per group 8.2 8
Average GDP per capita (PPP) in local country $2,900 $3,423
Average Loan Size / GDP per capita (PPP) 3.21% 12.24%
Average Time to Fund a Loan 4.74 days 5.72 days
Average Dollars Raised Per Day Per Loan $19.60 $73.23
  Average Loan Term 42 months 10.42 months

Journaling Performance on Kiva

    This Field Partner All Kiva Partners
  Total Journals 1 303,265
  Journaling Rate 0.00% 42.41%
  Average Number of Comments Per Journal 0.00 0.08
  Average Number of Recommendations Per Journal 0.00 1.83

Borrowing Cost Comparison (based on 2009 data)

    This Field Partner Median for MFI's in Country All Kiva Partners
  Average Cost to Borrower 16% APR 22.00% PY 33.29% PY
  Profitability (return on assets) N/A 1.2% -1.37%
  Average Loan Size (% of per capita income) N/A 10.00% 38.28%

Country Fast Facts

Field Partner Staff

Sneha Kariyappa
Krishna Murthy
Rangan Varadan

Kiva Fellow(s)

Niaz Patwary