Scheme for Microfinance Loans

Collateral-free loans to households with annual household income upto Rs.3.00 lacs

Eligibility: Collateral free loan irrespective of end-use and mode of application, processing, disbursement (either through physical or digital channels) provided to low-income household having annual income up to Rs.3.00 lacs and to regular / nominal members of the bank.

Purpose: For any legitimate purpose to enable the poor and low-income households, increase their income levels and improve overall living standards, poverty alleviation, women empowerment ultimately promoting financial inclusion. 

Extent of finance: The Bank shall adhere to a limit of maximum 50 per cent of the monthly household income considering the outflows on account of repayment of monthly loan obligations of a household as a percentage of the monthly household income.  Loan amount does not exceed Rs.75000/- in the first cycle and Rs.125000 in subsequent cycles.

Assessment of house-hold income: Assessment of income of an house-hold shall comprise of income from primary & other sources and based on composition of the house-hold (an indicative methodology for Household Income assessment is enclosed as Annexure-I)

Rate of Interest: 9% p.a.

Margin: No security deposit/ margin shall be collected from the borrower.

Surety / Guarantee: Surety of a member, other than family member.

Processing fee & other charges: Rs.1000 as processing fee and insurance premium on actual basis shall be charged.

Repayment period: Not less than 24 months.  The computation of loan repayment obligations shall take into account all outstanding loans (collateral-free microfinance loans as well as any other type of collateralized loans) of the household.

Other terms & conditions:

There shall be no pre-payment penalty on microfinance loans.  Penalty, if any, on delayed payment shall be applied on the overdue amount and not on the entire loan amount;

  • Pricing related information shall be as per standardised simplified factsheet as per Annexure-II shall be provided to the prospective borrowers and they shall not be charged any amount which is not explicitly mentioned in the factsheet;
  • A loan card shall be provided to the borrowers incorporating details regarding identification of the borrowers, factsheet on pricing, terms & conditions of the loan, acknowledgements by the bank of all repayments including instalments received and final discharge and details of grievance redressal system including the name and contact number of the nodal officer of the Bank.
  • The loan shall not be linked with a lien on the deposit account of the borrower to ensure its collateral free nature under the policy.
  • The Bank shall mandatorily submit information regarding household income to the CICs.  However, any divergence between the already reported household income shall be specifically ascertained from the borrower/s before updating the assessed household income with CICs.
  • The Bank shall also ascertain the CIC information on level of indebtedness of the borrowers from other sources such as declaration from the borrowers, their bank account statements and local enquiries.
  • Issuance of any non-credit products shall be with full consent of the borrowers and free structure for such products shall be explicitly communicated to the borrower/s in the loan card itself;
  • The bank shall put in place a mechanism for identification of the borrowers facing repayment related difficulties, engagement with such borrowers and providing them necessary guidance about the recourse available;
  • The Bank shall not engage in any harsh methods towards recovery e.g. use of threatening/abusive language, persistently calling the borrowers, harassing relatives, friends or co-workers of the borrower or publishing the name of the borrowers etc.
  • The Bank shall adhere to recovery related grievances as per policy guidelines.
  • Any other terms / conditions received from the regulators from time to time in this regard.
  • Any change in interest rate or any other charge shall be informed to the borrower well in advance and these changes shall be effective only prospectively.

































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