A loan is considered as a microfinance loan when certain

Solution

A loan is considered as microfinance loans when it is:  

• a collateral-free loan , irrespective of end use and mode of application/ processing/ disbursal (either through physical or digital channels), provided to low-income households, i.e., households having annual income up to ₹3,00,000 .    
• For this purpose, the household shall mean an individual family unit, i.e., husband, wife and their unmarried children.  
• To ensure collateral-free nature of the microfinance loan, the loan shall not be linked with a lien on the deposit account of the borrower.  
• The REs shall have a board-approved policy to provide the flexibility of repayment periodicity on microfinance loans as per borrowers’ requirement.  
• No pre-payment penalty on microfinance loans. Penalty, if any, for delayed payment shall be applied on the overdue amount only