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 Unitus Ventures investee 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.
