Microfinance Institutions

Microfinance institutions (MFIs) are financial institutions that provide several financial services (such as loans, savings and insurance) to small business owners who lack access to banking services. 

These microfinance companies in India aim to reduce poverty, promote financial inclusion, and empower individuals by providing access to financial and capital tools. It also helps individuals and business owners to start or expand their businesses by providing microloans or microcredits.

In this post, we will discuss the objectives of microfinance companies and the top 10 microfinance company list in India.

Objectives of Microfinance Institutions in India

The following are the primary objectives of microfinance institutions:

• Financial Inclusion: MFIs aim to provide access to financial services to individuals and small businesses by offering microloans, savings accounts, and other financial products. MFIs seek to empower low-income individuals and marginalized communities, enabling them to participate in economic activities and improve their livelihoods.

• Poverty Alleviation: One of the primary objectives of MFIs is to alleviate poverty. They aim to provide financial resources and opportunities to individuals and communities by facilitating income generation, enterprise development, and asset accumulation.

• Social Empowerment: Micro Finance Institutions often have a social mission to empower individuals, particularly women, by providing them with access to financial resources and opportunities. 

• Sustainable Development: MFIs promote sustainable economic development by supporting small businesses. They provide financial services, business training, and mentorship to help individuals start or expand their businesses.

• Financial Education: Many Micro Finance Companies prioritize financial literacy and education as an objective. They aim to improve the financial knowledge and skills of individuals by promoting responsible financial behaviour, effective money management, and long-term financial planning.

Top 10 Microfinance Company in India

Given below are the top 10 microfinance companies lists in India:

BSS Microfinance Limited

It offers microloans to women belonging to economically weaker sections to help them generate an income and to alleviate poverty. BSS Microfinance is operational in Maharashtra, Karnataka, Tamil Nadu, and Madhya Pradesh.

Given below are the loan amount and interest rates offered by BSS Microfinance Limited:

• Loan Amount: Rs.8,000 - Rs.60,000
• Interest Rate: 25% p.a.
• Processing fees: 1% + GST (for loans above Rs.25,000)
•  Equitas Small Finance Bank

It offers small loans ranging from Rs.2000 to Rs.35000 to the Economically Weaker Section (EWS) and Low Income Group categories in the country. It charges zero processing fees and an interest rate of 24% per annum for a loan amount up to Rs. 25000. 

For loan amounts above Rs.25000, it charges an interest rate of 23% per annum and a processing fee of 1% + GST. 

Annapurna Finance Limited

Annapurna Finance Private Limited, based in Odisha, was created in 2009. It provides various financial products and services like loans, deposits, and insurance to the EWS category to assist them in establishing sustainable lives.

It also aims to empower women in rural areas who do not have access to retail banking or cannot obtain a loan owing to a lack of collateral. It offers collateral-free loans, allowing them to earn more and generate an income.

The loan amount and interest rate provided by this microfinance company are:

Arohan Financial Services Limited

Arohan began microfinance operations in Kolkata in 2006. Among the products offered by Arohan are credit products such as income-generating loans and other loans for household purposes. It also provides insurance products such as healthcare and life insurance for the lowe-income group categories.

Given below are the loan amount and interest rates offered by Arohan Financial Services Limited:

Loan Amount: Rs.1100 - Rs.50,000

Loan Tenure: 3 months - 24 months

Interest Rate: 25% p.a.

Asmitha Microfin Ltd.

Asmitha Microfin Ltd., formed in 2002, is regarded as one of India's best microfinance firms. Its headquarters are in Hyderabad, and it strives to provide small loans to disadvantaged village women in order for them to start small businesses and become self-sufficient. Having a presence in 13 Indian states, Asmitha Microfin Ltd only goal is to assist women living below the poverty line who do not have access to regular banks in improving their lives.

Muthoot Microfin Limited

Muthoot Microfin Ltd is a subsidiary of Muthoot Pappachan Group. Its sole mission is to provide micro-loans to rural women entrepreneurs from low-income families. 

Spandana Sphoorty Financial Ltd.

It was established in 1998 and offers a variety of loans, including Income Generation loans, Small Ticket Personal loans, Micro-Enterprise loans, Group Loans, and Gold Loans. Spandana Sphoorty Finance Ltd. aims to help financially disadvantaged women, enabling them to live a decent and sustainable existence.

Asirvad Micro Finance Limited

It offers microloans to women from low-income households to generate an income for their small businesses. The loan amount and interest rate provided by this microfinance company are:

Bandhan Financial Services Private Limited

The main aim of this financial institute is to reduce the socio-economic conditions by providing employment opportunities for low-income households.

Fincare Small Finance Bank Limited

The company aim to offer financial help to semi-urban and rural households of economically weaker sections.  It offers Microenterprise Loans (MEL) and loan against gold with quick disbursals. It consists of two fincare groups, i.e., Disha Microfin Ltd. (now referred to as Fincare Small Finance Bank) and Future Financial Services Pvt. Ltd. (FFSPL).