Microfinance is a category of financial services targeted at individuals and small businesses who lack access to
conventional banking and related services. Microfinance includes microcredit, the provision of small loans to poor
clients; savings and checking accounts; microinsurance; and payment systems.
Types of Microfinance
1. Microloans - Microfinance loans are significant as these are provided to borrowers with no collateral.
2. Microsavings – Microsavings accounts allow entrepreneurs operate savings accounts with no minimum balance.
3. Microinsurance - Microinsurance is a type of coverage provided to borrowers of microloans.
* The borrowers are generally from low income backgrounds
* Loans availed under microfinance are usually of small amount, i.e., micro loans
* Microfinance loans do not require any collateral
* These loans are usually repaid at higher frequencies
* The purpose of most microfinance loans is income generation
* Application form
* PAN card, copy of Passport, ration card
* Proof of office address, Passport-size photos of the applicants and co-applicants
* Certified copies of AOA/MOA/Partnership deed
* Track record of repayment
* Audited financials of the previous 2 years
* ITR of partners/directors for the previous 2 years
* Bank account statements for the past 6 months
* Proforma invoice to the equipment that is to be financed
* For lawyers, CAs, architects, and doctors - Professional qualification certificates
* The borrowers are generally from low income backgrounds
* Loans availed under microfinance are usually of small amount, i.e., micro loans
* Microfinance loans do not require any collateral
* These loans are usually repaid at higher frequencies
* The purpose of most microfinance loans is income generation