The Reserve Bank of India has made it mandatory that the aggregate exposure by an investor across all Peer to Peer Lending Platforms should be less than or equal to Rs. 10,00,000 and
the total exposure of a lender to a single borrower should be less than or equal to Rs. 50,000.

Frequently Asked Questions


  1. Why do you work with NGO partners?
  2. How does MicroGraam screen NGO partners?
  3. How does MicroGraam identify borrowers?
  4. How should I choose a borrower?
  5. Why can’t I see a borrower who need an education loan?
  6. How much should I lend?
  7. How do the Gift Card work?
  8. What interest rate should I specify?
  9. How do I transfer funds (payment)?
  10. Does MicroGraam charge investors any fees?
  11. How can I view the status of investments?
  12. What does "Investments In Progress" mean?
  13. What Interest Rates Do Borrowers Pay?
  14. How do you ensure that funds are used properly?
  15. How does MicroGraam measure the impact of funds?
  16. Can I meet the borrowers?
  17. What is the repayment rate? What does it tell me?
  18. Is there any guarantee that I will get my funds back?
  19. How does the principal guarantee fund work?
  20. How soon will I get my loan back?
  21. How will the funds be transferred back to me (or how am I repaid)?
  22. Why should I invest through MicroGraam?
  23. Are there other ways that I can help?
  24. I am an Indian living abroad. Can I still invest?
1. Why do you work with NGO partners?

MicroGraam works with established, local NGO’s who better understand the needs of rural borrowers. Our NGO partners play an important role in identifying deserving borrowers, transferring funds, and collecting repayments. Lastly, MicroGraam strives to lower the interest rate of microloans to our borrower, and working with partner organizations saves in expenses, which lower the costs to our borrowers. The NGO’s have the following responsibilities:

  • Help identify credible micro-entrepreneurs
  • Work with borrowers to develop a business plan or improve their existing businesses
  • Identify the size of the microloan that each borrower requires
  • Organize training programs and teach borrowers the necessary skills to be successful in their businesses. For example, some NGO’s train the borrowers on proper techniques for caring for dairy cows to optimize milk production.
  • Collect repayments from borrowers and send repayments to MicroGraam
  • Send updates to MicroGraam and MicroGraam investors in the progress of borrowers
2. How does MicroGraam screen NGO partners?

MicroGraam partners with existing local NGOs in India who are engaged in providing livelihood programs. We conduct an exhaustive due diligence process, which evaluates each organization on the following criteria:

  • Experience with microcredit borrowers, self help groups, and financial inclusion. The organizations must show that they maintain a high quality of microcredit services and repayment history of clients.
  • The organization must provide holistic development services in addition to microcredit to help the borrowers succeed.
  • The NGO has the goal of improving the lives of low income borrowers through sustainable methods and conducts measurable evaluation to assess their own progress
  • Good governance practices which ensure the NGO is managed by experienced professionals
  • Validation that the NGO has the proper legal registration to conduct micro-lending activity under the Reserve Bank of India guidelines
3. How does MicroGraam identify borrowers?

We work with our NGO partners to identify individuals in their local community who require loans for agricultural inputs, employment training programs, or micro-enterprise development. The borrowers are typically people from extremely low-income households who require funds for education or working capital for their tiny businesses. Over 80% of our borrowers are considered ‘below the poverty line’ however, the even those living slightly ‘above the poverty line’ are not earning enough to provide for the basic needs (food, clean water, health care, and education) for their families. The borrowers are evaluated to verify their loan history, credit history, various income streams, willingness to repay, training needs, and experience with the business they want to use their micro-loan on. Only then is the borrower approved for a loan through MicroGraam. After the loan is disbursed, the NGO partners work closely with the borrowers in helping with job placement (in case of education loans) or helping their business succeed (in case of microenterprise loans).

4. How should I choose a borrower?

The easiest method is to choose one of the featured borrowers shown on the Invest page. You can sort through the hundreds of borrowers posted by using the filters on the left side if you want to find a person with specific needs, for example a woman who wants a dairy cow can found by choosing the filter for Women and Microenterprise. Although MicroGraam provides loans for a wide array of needs, you may not be able to find the particular kind of loan you are looking for. Loans are posted on MicroGraam for 4-5 weeks, afterwards they expire, and are no longer available to lend to. Certain types of loans like education and agricultural loans are available seasonally depending on when a college course or growing season begins. If you have any further questions on why a particular loans is not available, feel free to Contact Us and we can explain which loans are available and why.

5. Why can’t I see a borrower who need an education loan?

Education loans are only posted on the MicroGraam website shortly before the educational course begins. For example, Vidya Poshak’s employment training program last for 3 months, so loans for students who want to participate in the program are posted a few months prior to the program beginning.

6. How much should I lend?

For each loan you have to specify the amount of money you would like to loan, as well as the desired interest rate. We suggest that you divide your total investment among multiple borrowers to diversify your investment and help more borrowers. The amount you should lend and the interest you want to earn is a personal decision. The lower the interest rate you choose, the less the borrower needs to pay, and the more they are able to save.

7. How do the Gift Card work?

Many of our lenders enjoy sharing their involvement with MicroGraam.You can choose any amount to give to a friend as a MicroGraam Gift Card and your friend can choose a borrower and an interest rate. The gift recipient cannot withdraw the money and interest after one year; instead they can re-lend the repayment to another borrower. It is truly the gift that keeps on giving!

8. What interest rate should I specify?

For each loan, we have listed the maximum interest rate the borrower is willing to pay you. You can specify any rate lower than the maximum allowed for the loan. If you do not wish to receive any interest, simply enter '0'. The lower the interest rate you choose, the less the borrower needs to pay, and the more they are able to save.

9. How do I transfer funds (payment)?

MicroGraam has created many different methods to transfer funds for your loan. Please note that the funds must be in INR. We cannot accept funds in foreign currency at this time. Once you choose a borrower and want to make a loan, you are given the following three options for payment.

  • Payment Gateway: Use our secure payment gateway to make a transfer simply and securely, for most major banks.
  • Net Banking: For all other banks, you may use net banking to make the transfer.
  • You can send a cheque to the MicroGraam address (MicroGraam Marketplace 63/A,40th cross 7th Main Road, 5th Block, Jayanagar Bangalore - 560041, the cheque should me made out to ‘MicroGraam Social Development Foundation.

More detailed information for each payment option is given after you choose a borrower. You can call or email us through the Contact Us section if you have further questions.

10. Does MicroGraam charge investors any fees?

MicroGraam does not charge investors any fees. However, depending on the payment method you use, the service provider may charge nominal fees.

11. How can I view the status of investments?

You can login to your account to view the status of your investments any time, by clicking the 'My MicroGraam' tab. For any investment related queries, please write to support@micrograam.com

12. What does "Investments In Progress" mean?

This means that we are waiting for more investors to fund your borrower to reach the requested loan amount. You can help speed up this process by asking your friends to invest funds in your investees. On the borrower profile, we have provided easy links for Facebook, Twitter, and other social media platforms to share your borrower’s story and help fully fund his or her loan.

13. What Interest Rates Do Borrowers Pay?

MicroGraam works hard to minimize all fees and charges so that borrowers pay as low a cost for the loan as possible.

Education Loan Example :
Interest earned by lender (you)8% APR* (Max)
Fees and charges :
MicroGraam (Upfront Fees) **1.5% 3% APR
Training Institute***Charges are included in course fees 0%
Total cost to borrower11% APR* (Max)
Microenterprise Loan Example
Interest earned by investor (you)8% APR* (Max)
Fees and charges
MicroGraam (Upfront Fees) **1.5% 3% APR
NGO Partner ***6% APR
Total cost to borrower17% APR* (Max)

* APR (Annual Percentage Rate) is the annualized rate that represents the actual yearly cost of funds over the term of a loan.

** MicroGraam fees cover expenses incurred for identifying and screening NGOs, as well as program administration. 1.5% upfront fees on a 12 month loan approximately equals 3% APR.

*** NGO fees cover expenses incurred for identifying and screening borrowers, as well as collection of repayments and program administration.

14. How do you ensure that funds are used properly?

Our contact with borrowers does not end with disbursal of loans. In fact, through our NGO partners we are in regular touch with borrowers before, during and even after the loan duration.

Once the loan is disbursed, the NGO partners are in regular contact with borrowers to provide additional support as well as to collect repayment installments. The NGO partners work closely with the borrowers in helping with job placement (in case of education loans) or helping their business succeed (in case of microenterprise loans).

Most importantly, MicroGraam field staff, interns, and investors go to meet our borrowers and collect information on the progress of the loans. MicroGraam field staff includes an NGO coordinator, program managers, and usually interns who frequently visit the various partners and meet the borrowers. They collect information to assess the impact of each micro-loan and to ensure the NGO’s are providing the necessary support so that each borrower can be successful. If you want to come with us to meet borrowers, please contact us through Get Involved section so see how you can work with us.

15. How does MicroGraam measure the impact of funds?

We measure the impact of funds in terms of the increase in income of the borrowers at the end of the loan repayment term. We conduct random surveys of our borrowers and non-microfinance recipients to evaluate the change in the quality of life that our borrower experience as a result of our loans. This information is collected through qualitative surveys, baseline survey information from the NGO partners, and census data of the region.

16. Can I meet the borrowers?

We encourage you to join us on field trips to meet borrowers. To stay informed of upcoming field trips, please contact us on the Get Involved page, and follow us on Facebook and Twitter.

17. What is the repayment rate? What does it tell me?

The repayment rate indicates the percentage of the loans that an NGO has repaid. If an NGO has repaid 80% of their loans, then 20% of the borrowers defaulted and were not able to repay investors. Over the last two years, MicroGraam has maintained a 100% repayment rate to our investors, over the last three years a 99% repayment rate. The repayment rate of each individual NGO can be found on the Partners page. This information is available to you to aid your decisions about which borrowers to lend to.

18. Is there any guarantee that I will get my funds back?

Repayment rate for all MicroGraam loans is 99% since we began. Over the last two years, we have maintained a 100% repayment rate. This percentage indicates the likelihood of getting your funds back.

Our field partners make a security deposit of an amount equivalent to 10% of their total loans posted on MicroGraam. In case of non-payment by some borrowers, these funds will be used to repay investors whose loans are in default. However, since the security deposit does not equal the total amount of loans given by all investors, it cannot guarantee return of your loans in case of mass default of all borrowers.

As with any investment, there are certain risks that may lead to default. Some common reasons for borrower who cannot repay are:

  • Natural disasters: Disasters may cause borrowers financial damage, medical issues and loss of jobs resulting in their inability to pay loans
  • Unfavorable weather: Agriculture related loans may face risk of non-payment if weather conditions are unfavorable for crops
  • Unforeseen family emergencies: Some borrowers may be unable to pay back loans due to medical emergencies, theft, etc. Sadly, many of our borrowers do not have access to adequate medical care and often end up spending their entire life savings if a family member is injured.
  • Default by NGOs or misuse of funds: If an NGO closes operations, loans to borrowers through the NGO may not be paid back. It is possible that an NGO or its staff may misuse funds and be unable to pay back the loans.

To mitigate these risks, MicroGraam rates all NGOs on a five-star scale to validate their credentials, past repayment rates and conducts other due diligence such as visits to the field. You can see these ratings on the Partners page. Additionally we have developed a principle guarantee fund, which covers 20% of all default. Please see next question for more information.

19. How does the principal guarantee fund work?

In traditional philanthropy, donors give funds one-time to a beneficiary. The funds get used only once. In a lending approach, the same funds can be used for a new beneficiary after each repayment cycle.

Currently, the rural poor can obtain loans from different sources at rates ranging from 24-36% per annum. MicroGraam caps the loan charged to borrowers at 18%, avoiding unsupportable interest rates.

Thirdly, MicroGraam enables you to earn interest on your funds. The interest rates are very competitive relative to bank Fixed Deposits of similar amounts. By investing through MicroGraam, not only do you get a reasonable rate of return, you also help rural youth and entrepreneurs in the process.

Through MicroGraam, your investment can change another person’s life, in a way that few other investments can.

20. How soon will I get my loan back?

Once a loan is fully funded by investors, it is disbursed to borrowers. Borrowers begin repaying loans at monthly intervals to NGO partners. MicroGraam consolidates all repayments and transfers funds back to investors quarterly. Typical loan repayment period ranges from 12 - 18 months after disbursement of loan. The duration of your loan will be clearly stated in your My MicroGraam account.

21. How will the funds be transferred back to me (or how am I repaid)?

The repayment information is available in you’re my MicroGraam account. After being repaid, investors can choose to re-invest the funds into another loan or withdraw them partially or entirely. The funds can be withdrawn from MicroGraam and deposited into your bank account We find that most investors prefer to re-invest.

22. Why should I invest through MicroGraam?

In traditional philanthropy, donors give funds one-time to a beneficiary. The funds get used only once. In a lending approach, the same funds can be used for a new beneficiary after each repayment cycle.

Currently, the rural poor can obtain loans from different sources at rates ranging from 24-36% per annum. MicroGraam caps the loan charged to borrowers at 18%, avoiding unsupportable interest rates.

Thirdly, MicroGraam enables you to earn interest on your funds. The interest rates are very competitive relative to bank Fixed Deposits of similar amounts. By investing through MicroGraam, not only do you get a reasonable rate of return, you also help rural youth and entrepreneurs in the process.

Through MicroGraam, your investment can change another person’s life, in a way that few other investments can.

23. Are there other ways that I can help?

Yes, you can support the cause in many ways by:

  1. Asking your friends to support the borrower you lend to on Facebook and Twitter
  2. You can write a blog post on a topic related to MicroGraam work which we will feature on MicroGraam’s social media platforms.
  3. Volunteering your time and expertise at MicroGraam. See the Get Involved page to contact us for way to support us
24. I am an Indian living abroad. Can I still invest?

At this time, we are only able to accept funds in Indian Rupees (INR). Your citizenship or residential status does not matter, what matters is if you have a bank account with India Rupees. If you have a bank account or credit card in India with INR funds, you can make an investment through MicroGraam. We cannot accept any other currency even if it is converted into INR through a credit card transaction. Please Contact Us for more information on how you can get involved or invest if you do not have an Indian bank account.