Scheme for Microfinance Loans

Collateral-Free Microfinance Loan

Collateral-free loans for low-income households with annual household income up to ₹3.00 Lacs, aimed at increasing income levels, improving living standards, promoting financial inclusion, and empowering women.

Eligibility

Collateral-free loan irrespective of end-use and mode of application, processing, disbursement (physical or digital channels) for low-income households with annual income up to ₹3.00 Lacs and to regular/nominal members of the Bank.

Purpose

For any legitimate purpose to enable low-income households to increase income levels, improve overall living standards, alleviate poverty, and promote women empowerment.

Extent of Finance

Maximum 50% of monthly household income considering outflows for loan repayments. Loan amount:

  • First cycle: Up to ₹75,000/-
  • Subsequent cycles: Up to ₹1,25,000/-

Assessment of Household Income

Includes income from primary and other sources and considers household composition. Indicative methodology as per Bank’s guidelines.

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.1,000 as processing fee and insurance premium on actual basis shall be charged.

Repayment Period

Not less than 24 months. Repayment obligations include all outstanding household loans (both collateral-free and other loans).

Other Terms & Conditions

  • No pre-payment penalty on microfinance loans.
  • Penalty for delayed payment applied only on overdue amount.
  • Standardised factsheet provided to borrowers; no hidden charges.
  • Loan card provided including borrower ID, factsheet on pricing, repayment acknowledgements, and grievance redressal details.
  • Loan not linked with lien on borrower’s deposit account.
  • Household income and credit information to be verified with CICs and other sources.
  • Non-credit products offered only with borrower consent and fully disclosed.
  • Mechanism in place for borrowers facing repayment difficulties, including guidance and support.
  • No harsh recovery methods – no threatening, harassing, or publishing borrower details.
  • Recovery and grievance procedures follow Bank policy guidelines.
  • Any regulatory changes or changes in interest/charges communicated in advance and effective prospectively.