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Microfinance & Financial Inclusion

Microfinance is the provision of financial services to individuals and families operating outside the traditional banking system. At Dhanam, our Microfinance services are fundamentally about **financial inclusion**, offering small, accessible loans and other services to support **income-generating activities** in underserved communities.

These services empower entrepreneurs at the grassroots level, particularly women, to build sustainable livelihoods, manage household emergencies, and secure their economic future.

Dhanam’s Group Lending Methodology

Dhanam primarily utilizes the **Group Lending Model**, which is the backbone of successful microfinance. This model replaces traditional collateral with **social collateral**, where a small group of members (typically 5 to 10) co-guarantee each other's loans.

This approach fosters a sense of collective responsibility and peer pressure, which historically leads to extremely high repayment rates, ensuring the sustainability of the program and allowing more people to access funds.

  • >Social Collateral: No traditional collateral (like gold or property) is required, making the loans accessible to the poorest segment of society.
  • >Weekly Repayments: Small, frequent repayments (weekly or bi-weekly) simplify debt management and align with the weekly cash flow of small businesses and daily wage earners.
  • >Focus on Women: A significant portion of our microfinance portfolio is dedicated to women entrepreneurs, recognizing their proven capacity to utilize funds for family and community upliftment.

Micro-Loan Eligibility and Application

Unlike large commercial loans, micro-loan eligibility focuses on the borrower's economic activity and willingness to adhere to the group methodology.

CriteriaRequirementPurpose
Income StatusLow-income households in rural/semi-urban areas.Targeting the economically marginalized.
Group FormationMust be part of a Self-Help Group (SHG) or Joint Liability Group (JLG).Establishing social collateral and reducing risk.
End UseLoan must fund a verifiable income-generating activity.Ensuring loan utilization contributes to repayment capacity.

Why Choose Dhanam for Microfinance?

Dhanam is dedicated to responsible lending practices in the Microfinance sector. We offer more than just credit; we offer financial partnership and support.

  • >**Transparent Terms:** Clear communication on interest rates and fee structures, adhering strictly to RBI guidelines for Microfinance Institutions (MFI).
  • >**Local Presence:** Field staff embedded in local communities provide face-to-face services, training, and support to the groups.
  • >**Focus on Empowerment:** Our programs are designed to enhance the economic status of members, focusing heavily on financial literacy and capacity building alongside lending.
Microfinance Frequently Asked Questions
Microfinance refers to a range of financial services, primarily small loans (micro-loans), savings, insurance, and money transfer facilities, provided to low-income individuals, households, and groups who typically lack access to conventional banking services.
The main objective is financial inclusion—to alleviate poverty by providing the poor, particularly women, with opportunities to become self-sufficient through starting or expanding small income-generating activities (like running a small shop, tailoring, or livestock farming).
Dhanam offers Micro-loans primarily through the **Group Lending** model, where borrowers guarantee each other's loans, leveraging social collateral. We may also offer certain small loans to individuals based on specific schemes and eligibility criteria.
Micro-loans are usually small in size, ranging from a few thousand rupees up to a regulated maximum amount. The tenure is short, typically ranging from 6 months to 2 years, with weekly or bi-weekly repayment schedules to ensure better repayment discipline.
No, most Micro-loans are unsecured and do not require traditional collateral (like property or gold). Instead, they rely on **social collateral**—the collective responsibility and guarantee of the borrowing group—for repayment assurance.
While Microfinance interest rates may appear higher than standard commercial bank rates due to the high operational costs of serving dispersed, low-income clients and managing small transaction volumes, Dhanam adheres to regulatory caps set by the RBI to ensure affordability and fair lending practices.