Photo credit: The Economic Times
By Varad Pande and Priya Naik
Padmaja, a 26-year-old beautypreneur, lives with her parents in a rented house in Chikmagalur, Karnataka, where she runs her own beauty parlor. In March 2020, COVID-19 struck a stinging blow to her entire family. Her income fell from Rs 11,600 in March to Rs 5,000 in September 2020. Living in a rented house, and in possession of no other physical collateral, taking a loan from a bank was not a viable option. From a local NGO, she heard about a new financial product – a ‘returnable grant’ – being offered through REVIVE, a new blended finance platform launched post-Covid-19. With this timely access to working capital, she was able to support her family at the height of the lockdown and restart her beauty parlor business once physical restrictions were lifted. As she paves the way to economic recovery, she is hopeful of surpassing her pre-COVID-19 income levels soon.
The returnable grant (RG) is a new type of financial instrument that aims to leverage the best of a grant and a loan. It is like a loan in that there is an expectation of repayment. It is like a grant in that there is no legal obligation to repay; the expectation is only ‘moral’, i.e., the recipient is encouraged to repay when she has achieved some intended milestones of financial recovery.
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