Milaap: connecting different worlds through loans

I met Anoj last Sunday at Milaap.org‘s office.

Or rather just outside the office as Milaap’s developer had forgotten to leave the key at the reception, after spending Saturday evening and night coding. Anoj found himself locked out when he came to office on Sunday and was working at the reception when I met him.

Anoj works on Sundays, in the finance sector. But no, he is not an investment banker. He has co-founded Milaap.org and is dedicating every day to making this venture a success.

What is Milaap?

“Milaap is an online platform that connects and enables individuals around the world to make a microloan to a specific low income/poor individual or community in India.”

Its mission is simple: to take low cost capital (loaned by people like you and me) to the people who need it the most, “providing them with the means to a sustainable income and access to necessities for a healthy and dignified life”.

Milaap’s founders do not believe ‘microfinance can make poverty history’. Not on its own. Anoj is against romanticization and the ‘superstar effect': his goal is not to end poverty, he’d rather focus on a specific need and fulfill it.

In order to reach its goals, Milaap works in close partnership with NGOs who are strongly dedicated to their social mission. The NGOs don’t only provide capital to lend, they provide a safety net and ‘services’ to those who borrow.

Milaap has a say in the interest rate charged by the NGO, since they provide the capital. The rates range from 12 to 16%, which is quite low compared to the industry’s standards (and which is similar to the interest rate Selco’s bank partners charge).

Milaap focuses on ‘livelihood enhancing projects’ in the following sectors: Education and training, Energy, Enterprise Development, Healthcare, Sanitation, Sustainable farming and Water (see links to these different sector pages at the very end of this post).

Some types of projects you can sponsor

What makes Milaap’s co-founder go to office on a Sunday morning?

1st reason to go to work on a Sunday: Transforming punctual and anonymous giving into sustainable giving.

“10 years ago, Makemytrip.com changed the way Indians travel, now flipkart.com (Indian Amazon) is changing the way Indian are shopping. In the same way, we want to change the way people give. People think of giving to someone at the traffic signal [so true] or to the blind school, and the intention is great, but they don’t know the impact it has on the person.”

Anoj recently asked a man when was the last time he made a donation. This man proudly answered he just had a few days ago. What did he give? He gave books to a young girl. Good, and what was the name of this little girl, what did she do? The man couldn’t answer. And I would have added: do you know if the young girl needed those books? That man lives in his world, generously donates books to the young girl from the other world. But their worlds never meet.

“When you lend on Milaap, expect yourself to be hammered with news about the person you have lent to”. In the process of understanding how the borrower is going to repay, the lender learns what he is doing, how is he repaying, how is project is doing. The borrower will not only remember the first name but he will end up knowing what the borrower has experienced in the last months. This is what Anoj calls “engaging giving”: you know who you have lent to and you can measure the impact your loan has had on the borrower’s life.

2nd reason to go to work on a Sunday: Giving out loans that make sense for those who
receive them.

 “We want to give a loan that people believe in and that will enhance their livelihood in a lasting way.”

India has more than 50% of its population that is below 25 years old. Getting a loan to buy a goat is not what they aspire to. They want a job, they want training to be able to take those jobs. “They see what is happening in modern India through their TV and they want their share of it”. Milaap wants to give these people the training and assets they aspire to, those that will enable them to have a brighter and more ambitious future. They too can have access to the other world.

In a parallel world, Milaap could have been a hedge fund…

In a parallel world, Anoj is a successful investment banker who was, until very recently, dedicating all his time to his career in Lehman Brothers, the thriving U.S. company that announced record profits for this third semester of 2011. He studied very hard in NUS (National University of Singapore) to become what he is today.

He did have some kind of interest for microfinance earlier in his life but he thought it wouldn’t be able to make an impact. And having an impact is, as you might have noticed, a key driver for him.

He started Milaap recently, a hedge fund. And he’s working day and night to make this venture a success. That’s why I found him working on a sunny Sunday afternoon in his IIMB office.

For the record, the parallel world could have been ours if Lehmann Brothers had not collapsed four days after Anoj started his internship there!

In a future world, Milaap will change the way people give in India (and abroad)

Over the past 12 months, since Milaap started their pilot, they have: (1) Raised nearly 160K USD (~Rs 76 Lakh) as loans impacting over 4000 lives, (2) Been selected by the incubator at IIM-Bangalore, (3) Kickstarted 5 loan programs in Maharashtra, Tamil Nadu, Karnataka and West Bengal, (4) Been backed by industry giants such as Yunus Social Business Fund and First Light Ventures, (5) Obtained the required approvals to source fundings from all over the world (which is, trust me, a big challenge given the RBI’s drastic conditions), (6) Won the Village capital original peer funding contest and went to SOCAP 11 to discuss about it (learn more about this great initiative)

They can look at the future in an optimistic way. They are thinking about partnering with similar platforms around the world to create synergies and reach as many lenders as they can. I already know who could be interested…

And who would not be interested, knowing that Milaap is the only platform who has the license to source money from abroad to fund projects in India?

Milaap's banner for their Diwali campaign

In the present world, Milaap has understood the importance of ‘acting local’ and getting things done

If you are in Bangalore, Milaap is running a campaign for Diwali and is looking for volunteers. This could be you!

Otherwise, Anoj and I invite you to pick your favorite link, “loan a little and change a lot”:)

Education and training, Energy, Enterprise Development, Healthcare, Sanitation, Sustainable farming and Water.

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