Shanti Microfinance, a not-for-profit organization, is raising a $772,000 (£500,000) fund backed by UK and Silicon Valley entrepreneurs and venture capitalists. The firm has already disbursed £10k ($15.4k) and plans to start its operations in Gujarat before moving to Mumbai next year.
According to a report, Shanti has been backed by Lastminute.com founder Brent Hoberman, Silicon Valley venture capitalists John Hummer, Chief Scientist of Salesforce JP Rangaswami, among others.
Shanti Microfinance is founded and headed by Sheetal Mehta Walsh, who was till recently the Director of Venture Capital Relations at software giant Microsoft. According to a brochure on its site, Shanti will charge 12% interest to pay field workers to administer disbursements, collections and repayments. Shanti will recycle the funds after principal has been paid into new loans.
The initial launch was done in the Ahmedabad, where Shanti disbursed £10k working with local NGO Saath. The firm will target 2,000 entrepreneurs in Vasana and Johapura in Gujarat, and will expand into Mumbai in 2011.