By Vaibhav Aggarwal, Rupee Times

The new breed of micro finance companies that have come up, are adopting unconventional methods of micro lending which are proving to be more successful than the previously used methods. These micro lenders are increasingly using methods like internet based funding, crowd sourcing and peer to peer model of raising money to provide small loans at low rates of interest to their customers.

One such micro finance company, the Bangalore based MicroGraam, provides small loans to rural entrepreneurs. It provides loans from Rs. 5000 up to Rs. 30,000 at interest rates of 10-15 percent, which is very low as compared to the industry average of 24 to 36 percent interest rates.

Talking on this matter, the founder and Chief executive of microgram, Mr. Rangan Varadan said, “Our operating costs are half of traditional microfinance companies, because we are not dependent on banks for capital and do not have a brick and mortar structure.”

Through his website, Rangan accepts funds from any individual interested in micro lending business. By adopting this method he has been able to raise capital of about Rs. 2 crore from sole investors. Till now, Microgram has disbursed loans amounting to Rs. 2.02 crores, with repayments in 90 percent of cases, across different states like Tamil Nadu , Maharashtra , Karnataka, and West Bengal.

Another micro lending company, Rang De, was started in Bangalore by Ramakrishna NK and Smita Ram. Both started the venture with an initial seed capital pool of Rs. 5 lakh and later went on to receive Rs. 1.6 crore from the private sector lender ICICI Foundation.

Rang De uses internet to raise capital by peer to peer lending method. It has raised 8 crore by adopting this method and has disbursed total loans amounting to Rs.8 crores at interest rates lower than 15.3 percent.