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Lending Procedures

 

 

The lending proceduce of Thanh Hoa fund for poor women have 3 easy steps:


1. Client Selection:

The target clientele are working class people with low incomes and who are living and working in the Fund’s operating area. Clients should have the ability to engage in income-generating activities and should need capital to invest in income-generating activities to improve their living conditions.


Our priority clients are women who:

- Have malnourished children

- Have children who left school before completing secondary education

- Are single

- Have the ability to engage in income-generating activities and need capital

- Have no access to other legal source of financial credit

 

Common selection criteria to be eligible for loans, clients must:

- Have registered permanent residency and living in the program operation area

- Be 18 or older

- Not have a record of bad debt

- Not engage in illegal activities and other socially undesirable activities

- Be the only member of their household currently borrowing from the program

- Not invest in the same income-generating activity as all the other members of their groups. For example, groups cannot invest all of the loan capital into one activity and run that activity together

- Not take out loans with monthly repayments exceeding 150% of the previous cycle’s monthly repayment.

Selection criteria for members borrowing 12 months loan products: Members borrowing 12 months loan products must satisfy all the selection criteria in Common selection criteria, in addition to meeting the following criteria. Clients must:

- Have used the 6 months loan products for 4 or more continuous cycles.

- Have a good record of repaying loans

- Participate in group meetings as required by the program

- Maintain a saving account as required by the program


Those who cannot borrow are Fund staff and their immediate family members.

 

2. Lending Procedures:


Group formation: Borrowers must form group of 5-7 members. Groups operate on the following principles:

- Groups are formed voluntarily

- Groups make use of the group guarantee method

- Groups elect leaders who manage the group’s activities

- Groups have meetings at least once a month

Application form: New members who want to borrow for the first time and old members who want to take out another loan need to submit an completed application form provided by the program.

 

3. Disbursal and Repayment:

Disbursal is done immediately after the client completed the registration procedures properly and approved by the Fund staff.

Repayment collection and loan disbursment time: monthly.

Repayment collection and loan disbursement venue: credit officers go to village/street to disbursal and collect client's repayment

In case a borrower cannot make the monthly payment in the repayment meeting, the person has to bring the payment to the branch’s office in that same day. Failing to do so will result in fines being imposed on the borrowers.

Repayment methods:

- For all loan products, borrowers need to repay principal and interest on a monthly basis.

- Borrowers can make the payment prior to the required day but they still have to pay the amount of principal and interest  agreed to in the contract.

- Members who complete the repayment 31 days prior to the required day (or earlier) will be eligible for higher loan amount in the next borrowing cycle.

- If the borrowers relocate their home before the end of the loan cycle they need to fully repay interest and principal before moving.

 

 

Credit Products

 

1. Loan periods from 3 to 24 months, with monthly repayments

· 6 months loans: these smaller loans suit borrowers in need of a small amount of capital and help familiarize them with microfinance products.

· 12-18 months loans: these larger loans are for borrowers who want to invest in larger scale income generating activities.

2. Loan amounts vary from 3000.000 VND (about $150) to 25.000.000 VND (about $1200).

3. Loan limits increase when members manage to repay on time.

4. Group guarantee is used, there is no material collateral.

5. Monthly loan collections and disbursements are carried out in field.

6. Loan products are linked with compulsary savings, which is added as a supplementary service.

7. There are 3 types of loans:

· Multi-purpose loan

· Employees and officials loan

· Clean water - Biogas system - Sanitary latrines loan