Key Lending Methodologies
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KEY LENDING METHODOLOGIES
Program Introduction:
Individual loans are mareted t!roug! a"areness cam#aign in #oor localities$
maret #laces and t!roug! #revious %orro"ers& 'n introduction to t!e #rogram is
also given in near%( mos)ue or c!urc! "!en #eo#le !ave congregated t!ere *or
#ra(ers& T!is !as not onl( tremendousl( saved t!e o#erational costs %ut !as also
o#ened t!e doors o* t!e religious #laces *or socio+economic develo#ment& It also
attac!es a moral res#onsi%ilit( to return t!e loan on time&
Individual Selection:
T!e loan #rocess starts "it! t!e su%mission o* a##lications %( #ersons interested
in getting ,nancial assistance& T!e -nit Manager .Loan O/cer0 t!en evaluates
t!at "!et!er t!e a##licant deserves t!e loan or not i&e& lives %elo" t!e #overt(
line$ !as a relia%le social ca#ital$ is not involved in an( illegal %usiness and
#ossesses entre#reneurial a%ilities&
Pre#aration o* 1usiness Plans:
T!roug! t!e #re#aration o* %usiness #lans t!e %usiness idea o* t!e intended
loanee is evaluated to see i* it is via%le and "!et!er it can generate income
%e(ond t!e !ouse!old e2#enses o* t!e individual so t!at t!e loan could %e re#aid
easil(& T!e a##licant3s *amil( is also intervie"ed to mae sure t!at t!e( no"
a%out t!e loan and su##ort t!e %usiness idea&4redit '##raisal:
'*ter initial a##raisal %( t!e -nit Manager$ t!e a##lication is *or"arded to 1ranc!
Manager "!o a##raises t!e tec!nical section o* t!e a##raisal #rocess& T!en t!e
case is re*erred to Loan '##roval 4ommittee& T!e committee com#rising o* -nit$
1ranc! and 'rea Mangers "!ic! revie"s t!e credit case& I* t!e committee
a##roves t!e case loan dis%ursement is done& T!e "!ole #rocess taes almost 5
"ees&
Guarantors o* Loans:
Ever( %orro"er also #rovides t"o individual guarantors "!o vouc! *or !is6!er
credentials and acce#t t!e res#onsi%ilit( o* monitoring t!e %orro"er and give
assurance to #ersuade t!e %orro"er *or timel( #a(ment o* loan& One o* t!e t"o
guarantors ma( %e *rom t!e same *amil(&
4redit Dis%ursement64a#acit( 1uilding:
Dis%ursement taes #lace 7+5 times a mont! and 899+89 loans are dis%ursed at
one event usuall( !eld at %ranc! o/ce6mos)ue or c!urc!& Ever( %orro"er !as to
%e accom#anied %( one o* t!e guarantors& Ot!er #eo#le #resent at t!e time o*
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dis%ursement include communit( mem%ers$ '!u"at sta;$ *rom t!e %ranc! and
Head o/ce& Social Guidance events are also !eld simultaneousl( in "!ic! t!e
ca#acit( o* loanees is %uilt to carr( on t!eir "or more e/cientl( and e;ectivel(&
T!e( are also a##rised o* social agenda t!at includes:
Em#!asis on girl3s education
Serving t!e communit( at large
Protection and im#rovement o* environment
Im#ortance o* #lantation
O%servance o* tra/c rules and local la"s
<ollo"ing !ig!est et!ical values in %usiness
=ecover(6<ollo" u#:
Once t!e loan !as %een dis%ursed$ t!e -nit Manager monitors t!e client "it!
regular visits to !is residence and #lace o* "or& T!e loan re#a(ment !as to %e
su%mitted at t!e %ranc! %( t!e >t! o* eac! mont!& I* a #a(ment is not in %( t!e
89t!$ t!e -nit Manager visits t!e client to remind and i* re#a(ment is still not
done t!en t!e guarantors are contacted and ased to mae t!e #a(ment&
'!u"at?s Mutual Su##ort <und
'!u"at?s Mutual Su##ort <und "as created to su##ort its clients and t!eir
*amilies during e2treme events lie deat! or #ermanent disa%ilit(& 't t!e time o*
t!e loan dis%ursement$ t!e %orro"er ma( #a( 8@ o* t!e loan as insurance$alt!oug! loans %elo" A$ 999 ru#ees are e2em#ted *rom t!is *ee& B!ile t!e 8@
contri%ution amount is o#tional$ most %orro"ers c!oose to give it and t!ese
contri%utions go into t!e Mutual Su##ort <und& In case o* an( %orro"er?s deat! or
#ermanent disa%ilit($ t!e loan is "aived o; and t!e *amil( also receives an
additional su##ort #acage o* $ 999 ru#ees& T!e Mutual Su##ort <und is an
e;ort to not %urden t!e client or t!eir *amilies in case o* an un*ortunate event
and instead #rovide t!em "it! t!e necessar( su##ort and assistance&
Microfnance Products
8& <'MILY ENTE=P=ISE LO'N
T!e <amil( Enter#rise loans are *or esta%lis!ing a ne" %usiness or e2#anding an
e2isting one "it! t!e aim o* ena%ling t!e %orro"er to secure a sustaina%le
liveli!ood& It is t!e most common t(#e o* loan o;ered %( '!u"atC com#rising
8@ o* '!u"at3s loan #ort*olio& T!e <amil( Enter#rise loan ranges *rom 89$999
ru#ees to 59$999 ru#ees !o"ever ee#ing in vie" t!e ra#id ination in t!e
countr($ '!u"at no" gives initial loans o* u# to 8$999 ru#ees& To %e eligi%le *or
t!e loan$ t!e individual !as to come u# "it! a via%le %usiness #lan "!ic! !e ma(
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construct "it! t!e guidance and su##ort o* t!e '!u"at sta;& T!e loan is no"n
as t!e <amil( Enter#rise Loan %ecause it intended *or t!e entire *amil( and not
restricted to eit!er male or *emale mem%ers o* t!e !ouse!old& Even t!oug! t!e
entire *amil( is involved during t!e loan #rocess$ t!e %usiness is undertaen %(
one mem%er o* t!e *amil( "!o !as t!e re)uired e2#ertise& T!e <amil( Enter#rise
Loan is designed to strengt!en t!e social *a%ric %( involving t!e "!ole *amil( in
t!e loan #rocess suc! t!at t!e enter#rise %ecomes a *amil( venture instead o* an
individual e;ort&
7& LI1E='TION LO'N
Li%eration Loans are *or re#a(ment o* loans taen *rom mone( lenders on
e2or%itantl( !ig! interest rates& Bit! t!e culture o* in*ormal mone( lenders$ or
%ani(as$ #revalent in Paistan$ man( #oor #eo#le ,nd t!emselves in a c(cle o*
ongoing de%t as t!e( struggle to #a( t!e !ig! interest rates *or (ears leaving t!e
#rinci#le amount untouc!ed& Interest rates ma( %e as !ig! as 8$ 999 #ercent and
mig!t ,nanciall( cri##le t!e #oor& Man( a times$ t!e loan #ersists *rom one
generation to t!e ne2t maing it im#ossi%le *or t!e *amil( to secure a sustaina%le
and res#ecta%le liveli!ood *or t!emselves& Li%eration loans "ere introduced to
counter t!e e;ects o* t!ese loan s!ars and continue '!u"at?s ,g!t against
interest& '!u"at #a(s t!e #rinci#al amount in one go *or t!e client and t!eclient in turn #a(s %ac t!at amount in interest *ree installments to '!u"at& T!e
u##er limit o* t!e loan is 9$ 999 ru#ees !o"ever su%stantiall( large loans ma(
also %e given a*ter t!e a##roval %( a 4ommittee !eaded %( t!e E2ecutive
Director&
5& ED-4'TION LO'N
T!e Education Loan caters to t!e needs o* t!e #oor "!o are una%le to ,nance
t!eir o"n or t!eir de#endent?s education& Man( #oor students are *orced to dro#
out o* sc!ool as t!e( do not !ave enoug! savings to continue t!eir education&
Em#!asis on education !as %een an integral #art o* '!u"at?s social agenda and
t!roug! t!e Education LoanC '!u"at intends to ensure t!at #oor students are
a%le to continue t!eir education in s#ite o* t!e lac o* ,nancial su##ort& In most
cases t!e loan is utiliFed *or #a(ing *ees and dues$ #urc!asing %oos and
material$ and #a(ing initial registration or e2amination *ee& T!e u##er limit o* t!e
education loans is 7$ 999 ru#ees&
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A& HE'LTH LO'N
T!e Healt! Loan is *or t!ose "!o are una%le to su##ort t!e costs *or necessar(
!ealt! care& In most cases$ t!e #oor do not !ave contingenc( *unds or savings to
su##ort t!em in s!ouldering t!e ,nancial costs o* !ealt! care& Diseases lie
!e#atitis$ tu%erculosis and dia%etes are )uite common in underdevelo#ed areas
and "!ile t!ese diseases are not *atal in t!emselves$ t!e( !ave contri%uted to
t!e deat! o* man( #oor #eo#le "!o are una%le to a;ord necessar( treatments&
Noting t!is sc!eme o* t!ings$ t!e Healt! Loan "as s#eci,call( designed to assist
t!e #oor "it! *unds t!at could !el# save t!eir lives& T!e loans o;ered range
*rom89$ 999 ru#ees to 79$ 999 ru#ees& T!e Healt! Loan com#lements t!e !ealt!
services #rovided %( '!u"at to its %orro"ers$ em#lo(ees and t!e
under#rivileged in general$ under t!e aus#ices o* '!u"at Healt! Services&
& EME=GEN4Y LO'N
T!e Emergenc( Loan is intended to di;use t!e im#acts o* maor contingencies or
crisis situations t!at undermine t!e sustaina%ilit( o* t!e liveli!oods o* t!e #oor&
'!u"at realiFes t!at t!e economic li*e o* t!e #oor is #ertur%ed %( man(un*oreseen events and emergencies$ "it! t!e *amilies !aving little or no %u;er
amount to counter suc! s!ocs& T!e Emergenc( Loan !as %een designed to
counter suc! ino##ortune s!ocs so t!at t!e long term #rogress o* t!e client is
not com#romised& Loans in t!is categor( ma( %e used *or di;using losses in
%usiness$ !ealt! care e2#ense$ mac!iner( re#airs$ motor ve!icle re#air$
veterinar( e2#ense and admissions *ee amongst ot!ers& T!e loan ranges *rom $
999 ru#ees to 89$ 99 ru#ees and ma( %e re#aid over one (ear& It is #rocessed
"it!in 7+5 da(s and is t!e onl( loan #roduct "!ic! ma( %e utiliFed in conunction
"it! ot!er loan #roducts&
& HO-SING LO'N
T!e Housing Loan is *or necessar( renovation o* !ouses including construction o*
rooms$ roo*s and "alls& In evaluating a##lications *or t!e Loan$ great care is
taen to ensure t!at t!e intended renovation is essential and necessar( *or t!e
"ell%eing o* t!e %orro"er and is not a lu2ur(& T!e range *or t!is loan varies
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%et"een 59$ ooo to >9$ 999 ru#ees and !as to %e re#aid "it!in t"o (ears&
'!u"at started t!is #roduct in colla%oration "it! 'l+Noor -mar Bel*are Trust$ a
non#ro,t organiFation *ounded %( Mr& K!alil Mian& Over time t!ese loans !ave
%een instrumental in im#roving living conditions o* t!e #oor "!o !ad %een *orced
to live in a##alling conditions *or generation due to lac o* monetar( resources&
>& M'==I'GE LO'N
T!e Marriage Loan is to *acilitate t!e marriages o* daug!ters& T!e marriage o*
daug!ters remains a !uge res#onsi%ilit( *or #arents in t!e Paistani societ( and
man( #oor *amilies are con*ronted "it! t!e di/cult( o* arranging necessar(
*unds *or marriage ceremonies and do"ries& Over t!e (ears$ man( #oor *amilies
!ad e2#ressed t!e need *or assistance in marr(ing t!eir daug!ter "!ic! led
'!u"at to introduce t!e Marriage Loan& -# to 79$ 999 ru#ees can %e dis%ursed
*or t!is #ur#ose&