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Lending Methodology

Considering the diversity of country, MERO MICROFINANCE has adopted various lending methodologies as described below:

  • Grameen Bank (GB) Model- Following basic principles of GB model with suitable local modification, through which lending to especially group of women on centre up to 8 groups based on group/centre guarantee.
  • Community Banking (CB) Model- Following basic principles of Self-help group model, in which provide wholesale loan to group and group lend to its members and group does all the activities including meeting, book keeping, and reporting etc.
  • Enterprenerus Group (EG) Model- Enterpreneurs federated into group and provide financial services.
  • Individual Lending (IL) Model- Lend to individual members taking physical collateral.
  • Agent Banking (AB) Model- Select agent to work for MERO MICROFINANCE or work as agent on behalf of commercial banks in the remote location.

The uniqueness of the methodology are

  • Flexibility of group formation
  • Simplicity and transparent system
  • Standardization
  • Innovative models and diversified products and services
  • Delegation of authority in the field level
  • Regorous on-the-job training to staff and technical assistance
  • Simple and shorter loan processing time
  • Written policy, manual and guideline
  • Strong monitoring and supervision
  • Standard and low cost structure (furniture, fixture and adminstrative costs).

Service Quality

MERO MICROFINANCE strongly believes that the clients have every right to get transparent, efficient and qualitative services. MERO MICROFINANCE has established a mechanism to interact periodically with the clients during centre visit and attending centre chieves annual meeting to have feedbacks and suggestions on efficacy of existing products and services, procedures, and other emergence issues.

Disbursement and CollectionTechniques

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Target Clients

MERO MICROFINANCE focuses on the poor households. Women are primary target households. The target group of MERO MICROFINANCE will consist of landless, marginal landholders, tenants and other agricultural laborers. Low income groups and the families living below poverty line is the focused areas.

Members Characteristics

  • Age should be 16 to 55 years.
  • She should be married & husband has to agree for her to join the program.
  • Should be poor & permanent resident of that village/location.
  • One member can join from one family.
  • She should be able to work.
  • She should not have defaulted with any organization.

Group Characteristics

  • 5 members in a group from different family & lived in same village.
  • Member must know each other in money matters & know each other very well.
  • Must not be blood relations in same group.
  • Should take responsibility among group member.

Center Characteristics

  • Center is the basic functional unit.
  • Minimum 2 groups & maximum 8 groups in a center.
  • In a village there can be several centers.

Center/Group Meeting

  • Center/group meeting will be conducted monthly.
  • All financial transactions will be in center/group meeting only.
  • Center/group meeting will be conducted in the early morning 7:00 am onwards & also convenient to organization and members.
  • All members have to attend the center/group meetings regularly as per the schedule.

Loan Application

  • Members are eligible to make a loan application in first center meeting itself.
  • 80% attendance requirement for individual member & center attendance must be 80% on the day of the members making loan applications
  • Micro loan borrower can not be a member of more than twone microfinance institution. Also they can not borrow from more than 2 MFIs, including MERO MICROFINANCE.
  • Loan applications to be initially approved by group / center members and they have to take repayment responsibility.
  • Should be approved by credit committee of the organization.
  • Loans will be approved predominantly for income generating activities except alcohol business, arrack selling, tobacco business & other socially prohibited activities. MERO MICROFINANCE also gives loan for life quality improvement & consumption in a few cases.

Loan Disbursement

  • Disbursement will be in center meeting /branch office only.
  • The attendance of center members should be 80% on disbursement day.
  • Husband/Guardian signature is must for disbursement
  • Loan will be given predominantly for income generating activities except socially prohibited activities and given for life quality improvement & consumption in a few cases.
  • Loan is disbursed on group / center responsibility.
  • Past credit history of member, group / center must be good.
  • Loan utilization & center discipline must be good.

Security

We do not take any physical collateral/margin/security deposit for loan. Loan is given based on the group guarantee.

Loan Utilization

  • Members should utilize loan for approved purpose only.
  • After loan disbursement, all loan utilizations will be checked in next center meeting.
  • Two further loan utilization checks is must during the loan tenure by supervisory level staff.

Quantum of Loan

Loan amount limits: minimum Rs.5,000/- and maximum limit Rs. 150,000/ without collateral and 400,000/ with collateral which depends on the loan product.

Repayment Mode

Monthly.

Loan Tenure

6 months to 3 years that depend on the loan product and agreement.