Group Loan In South 24 Parganas
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Group Loan in South 24 Parganas
Microfinance steadily has been increasing in popularity and plenty of microfinance organizations are cropped for providing Group Loan in South 24 Parganas. Most microfinance organizations are based on two platforms namely- group loan or group lending and individual loan or individual lending. This post will discuss the pros of group lending.
Group lending rationale
Since micro-financing primarily benefits the poor, most of them don’t have any guarantee. It is very hard to lend them money. This is a lack of guarantee. In addition to a severe lack of financial and personal information relating to each potential client put the lender in the impossible situation of figuring out who is going to return and who will default or run away with the money. Bank uses this level for determining the interest rate for each loan but with a lack of information, this is not possible to do so.
Group loan or group lending resolves this problem. In this model, if one member of the group is not able to pay back the loan, the other group members must pay back that individual’s share. This provides a form of insurance to the bank as they will get back the amount even if a single person defaults or fails to pay the money.