Frequently Asked Questions

What is group lending, and how does it work?

Group lending involves forming a group of individuals who collectively guarantee each other's loans. Each member of the group receives a loan, and the group members support each other in loan repayment. If one member defaults, the group is collectively responsible for making the repayment.

Encourages mutual support and accountability among group members. Often results in lower interest rates and easier access to credit. Builds a sense of community and collective responsibility.

Focus of Sanghamithra loans is on creating business assets or income-generating loans, Sanghamithra also offer loans for other purposes such as housing, education, or emergencies.

You can contact Sanghamitra via phone on 18004250508 or email us at info@sanghamithra.org.

Loan installments are structured to be easily understandable for members. On the scheduled repayment date, the Loan Officer visits the village to meet with SHG Leaders and collect the repayment amount. SHG members can also deposit their repayment directly into the Sanghamithra Bank collection account. Members can also make the UPI payment to the specified Bank account.

Process for repayment of loan

The repayment terms of loans are fixed in a manner that the installments are easy to understand. All repayments are through post-dated cheques. However to maintain regular contact with the SHGs only two PDCs are taken at a time. Every time a cheque is banked, the SHGs are informed to ensure that there is sufficient balance in the banks.

The processing time can vary, but it generally takes between 1 to 2 weeks after the submission of all required documents.

The maximum loan amount varies but can range from INR 10,000 to INR 1,00,000, depending on the MFI's policies and the borrower's repayment capacity.

Repayment periods can range from 6 months to 24 months, depending on the loan type and amount.

Defaulting on a loan can impact your credit history and your ability to borrow in the future.

Who is eligible to apply for a loan from an MFI?

The following individuals are eligible: Low-income individuals and families. Small and micro-entrepreneurs. Women, especially those in self-help groups (SHGs).

Collaborative Identification of Clients Sanghamithra Microfinance Institution (SM) identifies clients in close association with Community Based Organizations (CBOs). These CBOs utilize participatory appraisal techniques to identify client groups. Loans are disbursed through Self-Help Groups (SHGs), and by collaborating with CBOs, Sanghamithra creates an institutional control mechanism that provides an effective referral system.

While the selection of ultimate clients is entrusted to the SHGs, Sanghamithra ensures the safety of the money lent through a thorough assessment process. This process includes: Introduction by CBOs: A CBO introduces the SHG to Sanghamithra. Appraisal by Credit Officer: A credit officer visits and appraises the SHG, classifying them into three categories: Category A: Ready to be linked. Category B: Requires meeting some parameters to be linked but can achieve standards with some inputs. Category C: Not suitable for linking at present. Registration of Category A Groups: Category A groups are registered for loan disbursement. Feedback to CBO: The feedback on group classification is provided to the CBO.

Commonly required documents include: Proof of identity (Aadhaar card, Voter ID, Passport, etc.). Proof of residence (Ration card, utility bill, etc.). Photographs (passport-sized).

An SHG becomes eligible for loan after six months of its formation urban programme and 12 months in case of the rural programme. The loan application has to be made out in the prescribed format and it should be accompanied with letter of introduction from the partner NGO/CBO. A loan committee comprising of two of the directors, unit head and portfolio managers, appraise the loan applications. There is a standard format for assessment of SHGs. The loan committee meets once in a week. Once the loan in sanctioned, SRFS prepares a sanction letter, a repayment schedule and a disbursement cheque. The SHG signs a loan agreement (stamp paper), a demand promissory note and a letter of continuity. The distribution of loan amount is left to the SHGs. Sanghamitra is not involved in the process, though the partner NGO/CBO may sometimes choose to monitor the process. After assessment, category A SHGs pass a resolution applying for loan. The decision to grant the loan is based on the recommendations and the data provided by the credit officer. Once the loan is sanctioned, cheque is delivered to the SHGs by the credit Manager. The documentation is carried out at the time of delivering the cheque. The interest is calculated from the date of the cheque and not the date of handover. The date of handover preceded the date of cheque. Simple documentation. The objective of documentation was not to go to court. This saved stamp duty on non-defaulting accounts (expected to be more than 98%).

Sanghamithra Rural Financial Services