India Microloans Programs and Providers

India has a thriving microloans industry, with numerous programs and providers catering to diverse needs. Some of the most notable microloans programs in India include the Self-Help Group (SHG) Bank Linkage Programme, which has disbursed over 100 billion rupees to over 10 million SHGs.

The SHG Bank Linkage Programme is a government-backed initiative that provides financial support to SHGs, which are typically formed by women from rural areas. This program has been instrumental in empowering women and promoting financial inclusion in India.

Microfinance institutions (MFIs) such as ShareMicrofinance and Satin Creditcare Network Limited are also major providers of microloans in India. These MFIs offer a range of financial products and services to low-income individuals and small businesses.

The loan process for microloans in India is quite straightforward. You can apply for a microloan online or offline through various lenders.

To be eligible, you typically need to be an Indian citizen between 21 and 65 years old, with a stable income and a good credit history.

The loan amount and tenure can vary greatly, with some lenders offering up to ₹500,000 and repayment periods of up to 36 months.

Interest rates for microloans in India can range from 12% to 36% per annum, depending on the lender and your creditworthiness.

Most lenders require a minimum annual income of ₹150,000 to ₹200,000 for loan approval.

You'll need to provide identification documents, income proof, and bank statements to apply for a microloan.

The SHG-Bank Linkage Programme, launched by NABARD in 1992, encourages women to form groups and contribute their savings to access loans.

Loans are offered to group members from pooled savings, enabling them to fund income-generating activities. This model has been highly successful in empowering women.

The LCIF Microenterprise Development Program provided loans to 5,000 women in Eastern India, impacting an estimated 20,000 people.

These women used the loans to boost their businesses, including farming, small shops, tailoring, and cleaning services, allowing them to provide for their families.

BSS Microfinance offers small ticket, unsecured loans to women from marginalized communities, along with financial education and holistic support.

Microloan programs offer a variety of loan types to cater to the diverse needs of borrowers. These loans promote economic growth, self-employment, and poverty reduction in India.

ICICI Bank provides financial assistance to members of Joint Liability Groups (JLGs) through its Business Correspondent (BC) network. This enables ICICI Bank's resolve towards financial inclusion.

The types of microfinance loans in India include loans for individuals, disbursed during the Oct to Dec quarter of FY 2025. These loans exclude subsidy and government schemes.

ICICI Bank offers small ticket size microfinance loans to enable financial inclusion. The maximum interest rate currently offered to Microfinance customers is 24%.

The following table summarizes the types of microfinance loans in India:

ICICI Bank's microfinance loans aim to promote economic growth, self-employment, and poverty reduction in India.

Income generation loans are designed to support small businesses and microenterprises. They determine the loan amount based on the borrower's repayment ability and business needs.

These loans can be a game-changer for individuals with low incomes, providing access to credit and financial services. In India, microfinance loans facilitate financial inclusion, bridging the gap between the unbanked population and formal financial systems.

By offering flexible repayment terms, income generation loans ensure that borrowers can repay the loans in manageable installments. This flexibility reduces the risk of financial strain and promotes successful loan repayment.

Microfinance institutions in India provide financial literacy programs and support services, educating borrowers on financial management, budgeting, savings, and responsible borrowing. This empowers them to make informed financial decisions and improve their overall well-being.

The loan portfolio of microfinance institutions in India is dominated by East, North-East, and South India, accounting for 67% of the total. Among the states, Tamil Nadu holds the largest share of microfinance loans, followed by West Bengal and Bihar.

Income generation loans have a positive social impact, supporting sectors such as education, healthcare, and agriculture. Borrowers can invest in education for their children, access better healthcare services, and improve agricultural practices, contributing to holistic community development.

To be eligible for a microfinance loan in India, you'll need to meet certain criteria. You must not have any existing loans from other microfinance institutions (MFIs).

To ensure you're not overburdened with debt, your pending loan amount from any source should not exceed Rs.1 lakh.

A steady income is essential to demonstrate your ability to repay the loan and establish your creditworthiness. This means you should be a working professional generating a regular income.

You'll also need to have all the necessary documents ready for the loan application process. These typically include identification proof, address proof, income proof, bank statements, and any other documents specified by the MFI.

Having an active bank account is usually a requirement for microfinance loans, as it allows for seamless loan disbursal and repayment transactions.

Here are the key eligibility criteria to keep in mind:

The SHG-Bank Linkage Programme, launched by NABARD in 1992, is a model that encourages economically disadvantaged women to form groups of 10-15 members.

These groups, known as Self-Help Groups (SHGs), pool their savings on a regular basis, allowing them to access loans from these collective funds.

As SHGs become more stable, they can access bank loans for income-generating activities, helping them to break the cycle of poverty.

This model has been highly successful in empowering women and has played a significant role in promoting financial inclusion in rural areas.

The SHG-Bank Linkage Programme operates with minimal support from organizations like NABARD, SIDBI, and NGOs once the SHGs become self-sustaining.

Loans are offered to the members of the group from these pooled savings, providing them with a much-needed financial boost.

The programme has been instrumental in promoting women's economic empowerment and has helped many women to start their own businesses.

The LCIF Microenterprise Development Program is a shining example of how microloans can change lives. This program was a collaborative effort between the Lions of MD 322 in India and the Lions Clubs International Foundation (LCIF). Five thousand women took advantage of the program, which provided loans to small-business entrepreneurs in poor areas of Eastern India.

The program's success can be measured in the positive impact it had on an estimated 20,000 people, assuming each of the 5,000 women who received a loan has, on average, a husband and two children. This is a remarkable outcome, and it's a testament to the power of microloans in empowering women and their families.

To qualify for the program, women and disabled citizens in poor areas of the world were given the opportunity to use a loan to give their business a boost. The types of businesses eligible for the program included farming, small shops, tailoring, and cleaning services.

The women in the program gathered once per week to discuss business and make their loan payments. This social aspect of the program helped to build a sense of community and support among the participants.

The program's success can be attributed to the partnership between LCIF and ASA International India Microfinance, Ltd. This partnership provided the necessary resources and expertise to make the program a reality.

ICICI Bank supports initiatives to enhance access to financial services, bridging gaps in missing markets to improve livelihood opportunities and productivity in India.

The Bank believes that Micro Finance Institutions (MFIs) can play a significant role in enhancing financial inclusion by reaching out to the 'last mile' and sharing responsibilities with the government and mainstream financial sector.

ICICI Bank has been engaging with MFIs over the past decade and is one of the key lenders to such institutions.

The Bank's engagement with MFIs has evolved over time, focusing on establishing a healthy and profitable lending business through relationships with select MFIs.

To achieve this, ICICI Bank provides financial assistance to select MFIs in the form of term loans.

The Bank also invests in Pass Through Certificates where the underlying comprises of loans originated by MFIs.

In addition to lending, ICICI Bank provides other value-added services to MFIs, such as cash management services, made-to-order current accounts, and savings/salary accounts for their staff.

ICICI Bank's offerings to MFIs enable them to invest their liquid funds through treasury products.

In India, microfinance loans grew by 10 per cent sequentially to Rs 2.53 trillion in January-March 2021, from Rs 2.31 trillion in December 2020. This significant growth is a testament to the increasing demand for microloans in the country.

Banks dominate the market share of microfinance loans in India, accounting for 42 per cent. This is a notable fact, as it highlights the significant role that traditional banking institutions play in the microfinance sector.

The geographical spread of microfinance loans in India is also worth noting, with East, North-East, and South India accounting for 67 per cent of MFIs' loan portfolio.

In India, microfinance operates through two main channels.

One of these channels is the formal channel, which includes banks and other financial institutions.

These institutions provide loans to individuals and small businesses through various schemes and programs.

The other channel is the informal channel, which includes non-governmental organizations (NGOs) and microfinance institutions (MFIs).

MFIs play a crucial role in providing financial services to the underserved population in rural and semi-urban areas.

Paytm is a fintech company that offers mobile payment services, but it recently expanded into the microloan sector. It partnered with banks and non-banking financial companies like Hero Fincorp and Aditya Birla Finance to offer personal loans through its app.

Paytm facilitates microloan repayments for several larger NBFC companies. This shows how Paytm is adapting to meet the changing needs of its users.

In 2022, Paytm entered the personal loan market, offering loans through its app. This move is a significant step for the company, expanding its services beyond mobile payments.

India microloans have become a lifeline for many small businesses and individuals. Fi and Arohan Financial Services are two top microfinance companies in India that offer financial services to those in need.

Arohan Financial Services is a notable player in the microfinance industry, providing financial services to underserved communities. Their services include low-interest loans to small businesses.

Fi, on the other hand, is a leading microfinance company that offers a range of financial services to its customers. Ujjivan Small Finance Bank is another top microfinance company in India, catering to the financial needs of small businesses and individuals.

NatWest Group and Grameen Bank are also notable mentions in the microfinance industry, although they are not exclusively focused on India. BharatPe is a digital payment solutions company that offers microfinance services to small merchants and grocery stores across India.

Here are some top loan providers in India:

India microloans have numerous advantages and benefits that can positively impact borrowers and their communities. Microfinance loans facilitate financial inclusion by providing access to credit and other financial services to underserved individuals.

Financial inclusion is a significant advantage of microfinance loans in India. They bridge the gap between the unbanked population and formal financial systems, fostering inclusivity. This allows individuals to access financial services that were previously out of reach.

Poverty alleviation is another key benefit of microfinance loans. Through these loans, individuals can receive financial support for income-generating activities and small businesses, empowering them to improve their livelihoods and break the cycle of poverty.

Microfinance loans also encourage entrepreneurship and self-employment, enabling individuals to start or expand small businesses. This fosters economic growth, job creation, and reduces reliance on traditional employment.

Microfinance loans have a positive social impact by supporting sectors such as education, healthcare, and agriculture. Borrowers can invest in education for their children, access better healthcare services, and improve agricultural practices, contributing to holistic community development.

Flexible loan terms are another advantage of microfinance loans. They offer repayment terms tailored to the borrower’s income and cash flow, ensuring that borrowers can repay the loans in manageable installments.

Here are some of the benefits of microfinance loans in India:

Two-Wheeler Finance is a great option for those who need a little boost to get on the road. You can get a two wheeler loan to help you purchase your dream bike or scooter.

The process is relatively straightforward, and you can get a loan amount of up to ₹50,000. This can help you cover the costs of the vehicle, as well as any additional expenses like insurance and registration.

Many lenders offer flexible repayment options, including EMI plans, to make it easier to manage your loan. This can be a huge relief, especially if you're on a tight budget.

With a two wheeler loan, you can enjoy the freedom of owning your own vehicle, while also spreading the cost over time.