Frequently Asked Questions

NBFC means a non-banking financial company that performs functions similar to banks in the absence of banks in rural areas. MFI means for microfinance institutions which operate at a further smaller level than NBFC. MFI provides very small loans to the underprivileged sections of society.

Microfinance companies are non-banking finance (NBFC) companies registered with Reserve Bank of India (RBI) that provide short term loans to people at lower interest rates than primary lenders.

Chaitanya offers micro loans with an interest rate ranging from 21.9% to 27.1% on a Reducing Balance basis.

Chaitanya shall meet the requirement of those customers by extending an individual loans, as the group lending model does not work effectively beyond a certain loan amount. Chaitanya shall build a seamless experience in giving individual loans to graduating JLG customers.

Chaitanaya provides JLG loans from 5,000/- up to Rs. 1,50,000/- .

JLG is a group of 4-10 small farmers, rural entrepreneurs, people of the same village/locality having the same socioeconomic background. The JLG is formed with the purpose of availing loan from a microfinance company without any collateral.

Bangalore, Karnataka, India

NBFCs lend and make investments and hence their activities are akin to that of banks; however there are a few differences as given below:

i. NBFC cannot accept demand deposits;

ii. NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself;

iii. deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in case of banks.

A Joint Liability Group (JLG) is an informal group comprising of 4-10 individuals coming together for the purpose of availing bank loan on individual basis or through group mechanism against mutual guarantee. Generally, the members of a JLG would engage in a similar type of economic activity.

The group-lending model of microfinance is a development intervention in which small-scale credit for income-generation activities is provided to groups of individuals especially women, who do not have material collateral.