How It Works

See How Group loan Works In Dhan Rishta credit.

Here's how it works fastly:

Group Formation: A small group of individuals, typically 5 to 20 people, forms a borrowing group. They might be friends, neighbors, or members of a community organization.

Loan Application: The group collectively applies for a loan from a microfinance institution or other lending organization. They outline their business plans or financial needs.

Joint Liability: Each member of the group is jointly liable for the repayment of the loan. This means that if one member defaults on their repayment, the entire group may be held responsible.

Loan Disbursement: If the loan is approved, the funds are disbursed to the group as a whole, rather than to individual members. This fosters a sense of accountability and mutual support among group members.

Repayment: The group agrees on a repayment schedule, and each member contributes their share of the repayment amount regularly, often weekly or monthly. Group meetings are commonly held to collect repayments and provide support.

Impact: Group loans not only provide access to capital but also foster social cohesion and support networks within communities. Successful repayment of loans can lead to increased financial stability and empowerment for group members.