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“Important Information on the Company name change to L&T Finance Limited (formerly known as L&T Finance Holdings Limited)"Click Here

How To Get Group Micro Loans

Dec 23, 2022

3 min. Read


Authored By: L&T Finance

How To Get Group Micro LoansMicro Loan

How to Get Group Micro Loans

What is a Group Micro Loans?

Group Micro Loan is designed for the upliftment of the less-fortunate group of people who fall under the unemployed or low-income category. They do not fulfill the general eligibility criteria for any kind of personal or commercial loan otherwise. Group Loan Microfinance allows people from similar walks of life and aspirations to easily avail of collateral-free small loans.

Microfinancing is gaining popularity in developing nations as a means of playing the level field. Certain occupations like farming and associated operations, home-run businesses like tiffin services, baking, etc. are the major beneficiaries of the Group Loan Microfinance scheme.

L & T Financial Services is a leading microfinance lender with more than 12 years of history of helping downtrodden women to earn a sustainable living and lead a life of dignity. Our network of well-trained, dedicated professionals strives hard to serve the needy borrower while keeping in mind that their audience may not be adept at common banking jargon.

Importance of Group Loan Microfinance in the Indian Economic System

Despite 80% of Indians holding a bank account, India ranks below sub-Saharan Africa in the rate of financial inclusion according to the World Bank. Around 190 million Indian adults don’t have a bank account and 38% of accounts are inactive. It is safe to say that almost half of the Indian population still does not have access to easy finance.

In such a scenario, they are prone to fall for Ponzi schemes or unsecured loans from friends and families in case they aspire to uplift their income source. Group loan microfinance has sprung up as a lucrative option to borrow small, collateral-free, term loans for the majority of the Indian population.

Group Loan Microfinance for Women

Women are breaking many societal and economical barriers to establish their mettle at par with their male counterparts. According to a Google and Bain and Company report, women-led enterprises constitute only 20% of the total Indian entrepreneurship. Unfortunately, many of these companies have women leaders only in papers to avail government economic reforms. Additionally, women from sub-economic or rural backgrounds are missing out on these benefits.

Also known as Mahila Group Loan, these group loan micro finances empower a small group of women involved in the same economic activity to avail of a loan to scale their operations. These term loans are easy to avail of and are targeted to serve rural or semi-urban women residing in the remotest parts of India.

The group loans are given based on the Joint Liability group concept, where in the members of a group who avail the loan provide a guarantee that in case of non payment by a particular member, the rest of the member will contribute and ensure that the payment is made as and when due.

What is Group Loan Microfinance Eligibility

The primary group loan microfinance eligibility is an informal group of women, preferably 4-10, engaged in similar economic activity. For example, a small group of women entrepreneurs from low-income groups engaged in activities like sewing, cooking, baking, etc. All the members of the group should be in the age group of 20 to 60 years. The annual income of the household of each individual should be less than 3,00,00/-.

Group Loan Microfinance Interest Rates

Group Loan Microfinance interest rates vary from lender to lender. The minimum interest rate is 18% while the maximum interest rate is 26% with an average of 24%. In some cases, interest rates also vary according to the loan size. For example, a loan amount less than 25,000 attracts 24% interest. Any amount greater than that causes 23% interest.

Indian women can avail of a group loan microfinance in two ways:

1. SHG-Bank Linkage Programme (SBLP)

This is one of the oldest models of loan disbursement to low-income group women to upgrade their earning potential. This lending facility was initiated by National Bank for Agriculture and Rural Development (NABARD) in 1992 to provide better earning opportunities to women with limited means.

Under the SBLP, a group of about 10-15 women working on similar economic activity, deposit a convenient amount from their savings at predefined intervals. Initially, loans are disbursed from the savings to those members who need them based on priority. Once these groups earn credibility, they can avail of group loan microfinance from participating banks.

2. Microfinance Institutions (MFIs)

Microfinance institutions provide specially tailored loans to individuals or groups with less credit exposure. They may be from rural or semi-urban locations without access to proper banking facilities. MFIs are known to lend small ticket size, term loans without any collateral to promote economic sustainability amongst such people.

MFIs can be formal institutions like rural banks and cooperatives or semiformal ones like non-banking financial cooperations (NBFCs). NBFCs are emerging as preferred financial assistance counters owing to their customer-centric services and widespread professional network.

L&T Finance (LTF) is a renowned group loan microfinance lender working for the upliftment of less-fortunate women since 2008. During our 14 years of operations, we have served hundreds of thousands of women in achieving financial independence through our hassle-free microloans.


Group loan microfinance creates an equal opportunity for small business owners, farmers, associated occupations, and women to scale their income despite low or no access to easy finance. As a group loan, microfinance institutions provide small collateral free, loans to a group of people pursuing similar economic activities. These term loans are easy to avail of and come with additional benefits like low processing charges. L&T Finance is one of the foremost microfinance lenders working for the upliftment of women’s economic status in India. We aim to fulfill the government’s initiative of financial inclusion of all Indians while taking pride in our social responsibility.


This article is authored by L&T Finance.

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