Kiva launches in India with poor product experience

August 20th, 2012 by Dave Leave a reply »

The leading crowd-sourced microcredit platform, Kiva.org, has recently launched micro-lending in India.

I am a big fan of Kiva and I am a personal lender on the platform having made more than 200 loans — see my Kiva lender page.

But their micro-lending product for India is very different than what they offer for other countries.

Unfortunately, it is a very poor consumer lending experience. Here are a few of the issues:

  • all loans are for 3 years (minimum) — even though loan term is only typically for 6-12 months
  • loan capital is auto re-loaned to whomever the MFI wants to lend to during remainder of the period
  • no details provided on loan repayments until the end of 3 years
  • lender takes currency downside risk (but not upside!)

And there’s a warning that India regulations are really unpredictable, so you might not get your money back even if it’s repaid.

I don’t think most lenders are going to be excited about these terms! If there’s a high likelihood that a loan is never going to be repaid — implied in Kiva warnings — then most funders would want to structure their loan as a donation and take the tax write-off upfront … not in 3 years.

I’m very surprised that Kiva would launch such a poor quality micro-lending product. They have historically been a leader in delivering quality micro-lending products. I don’t think this is going to work well for them.

I am very familiar with some of the challenging regulatory issues in India, but platforms like Milaap.org* are providing a much better consumer micro-lending experience without all of these limitations. I do hope that Kiva quickly fixes their product as there is huge demand for micro-lending in India.

*Full disclosure: Unitus Seed Fund is an investor in Milaap

 

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3 comments

  1. Julian Omidi says:

    I also believe that Milaap has a better micro-lending product. Plus 100% of what is donated goes directly to the end-borrower.

  2. Hariharan PV says:

    It is wrong to assume that Plans/ Ideas/Concepts that have been developed or thought of by people who have no experiences in the Tropics (where there is Poverty) could be extrapolated to overcome the Poverty problems. Poverty is a condition whereby an average family would not be able to have enough food/clothing/shelter/medicine as needed for minimum decent living. This would need that families EARN enough Income through work/Wages. The minimum living Need for an average family in a country Like India is $3,000. But then, it is a sad fact that the average incomes of families in Villages in India is about $600. The Government and all National/International Institutions do not understand this fact. http://pvhramani.wordpress.com/2011/01/18/poverty-is-the-result-of-plundering-and-muzzling-of-the-peace-loving-majority/

  3. Milaap says:

    Milaap is a group of professionals driven by a team of passionate members and we are bound to make a difference in India through our Microlending Platform by providing the necessary fund towards better education, clean drinking water, sanitation , women empowerment and helping the small entrepreneurs to realize their dreams through online donations and micro lending.

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