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.

How MicroGraam Works


Operating Model

  1. Borrower fills in online application form and submits all required documents including bank details.
  2. One or more Lenders select a Borrower’s loan and commit the amount of funds they are willing to lend.
  3. The loan is considered funded only when the entire loan amount is financed.
  4. Based on loan amount agreed to by the Lender(s), MicroGraam sends a collection request to the Lender(s)
  5. The Lender(s) transfer loan funds to the disbursal bank account (escrow account #1 managed by a duly appointed Trustee).
  6. MicroGraam sends a payment instruction to Trustee on behalf of the Lender(s) to transfer agreed loan amount from the disbursal bank account to the Borrower.
  7. The Trustee initiates transfer of the loan funds from the disbursal bank account to the Borrower’s bank account.
  8. When repayment (EMI) is due, MicroGraam sends a collection request on behalf of the Lender(s) to the Borrower
  9. The Borrower transfers repayment funds (EMI) to the repayment bank account (escrow account #2 managed by Trustee).
  10. MicroGraam sends a payment instruction to the Trustee on behalf of the Borrower to transfer the repayment amount from the repayment bank account to the Lender’s bank account.
  11. The Trustee initiates a transfer of funds from the repayment bank account to the Lender(s)

Business Model

    a. The following will be the components of loan pricing

  1. A: Lender's interest rate
  2. B: MicroGraam service fee.
  3. The total interest rate paid by the Borrower will be a combination of A and B. Please see the sample calculation for how interest and fees will be charged and the impact of interest and fees on Annualised Percentage Rate (APR).

    b. The Lender will get a fixed interest rate as decided by MicroGraam based on market rates and other factors.

    c. MicroGraam service fee will be charged as a percentage of the loan amount availed by the borrower. The fee will be added to the first EMI to be paid by the Borrower.

    d. While currently, no late payment penalty or fee is charged, MicroGraam may choose to charge late fees or penalties on late repayments of loans availed in the future.

Credit Assessment Model

    Credit appraisal of individual Borrowers is done through a scorecard-based approach. The following are the key factors that make up the scoring methodology:

  1. Financial Strength: family income, average savings, household assets, etc.
  2. Borrower Profile: age, education, family size, work experience, etc.
  3. Repayment Track Record: past track record in debt repayment
  4. Transaction Risk: loan tenure, loan purpose, etc.

  5. Based on the score, the prospective Borrower is assigned to a risk grade as follows: Grade A (Low Risk), Grade B (Medium Risk) and Grade C (High Risk). This can guide the Lender in deciding whether or not a loan should be extended to a Borrower.