Overview
Microcredit loans are small loans offered to individuals or groups who lack access to traditional banking services. In India, they play a crucial role in empowering individuals and fostering economic growth, particularly in rural and underserved areas.
Purpose:
- Provide access to capital for self-employment and income-generating activities.
- Support micro-enterprises and small businesses.
- Help individuals meet basic needs and overcome poverty.
- Promote financial inclusion and social development.
Key features:
- Small loan amount: Typically ranges from Rs. 5,000 to Rs. 50,000.
- Flexible repayment terms: Repayment periods can be tailored to borrowers' needs and income cycles.
- Collateral-free: Often offered without collateral, making them accessible to individuals with limited assets.
- Group lending: Popular approach where groups of individuals collectively take a loan and guarantee each other's repayments.
