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Internal
Controls |
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DELINQUENCY MANAGEMENT
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A
credit programme cannot succeed if it is lax on repayments.
This is the very first lesson Saadhana learnt out of
its experiences in microfinance and has thereafter strived
to create a culture of zero tolerance with regard to
non - repayment. As a first step towards inculcating
zero tolerance, clear responsibility has been fixed
with the COs and their UMs who are fully responsible
for collecting timely repayments for the portfolio under
their management. The COs should not leave a center
meeting without 100% repayment. To assist the COs and
UMs in this task, a system has been created that provides
them repayment information weekly and enables them to
conduct effective and timely follow up of loan repayments
for managing their portfolios efficiently. Portfolios
of individual COs in a Unit are constantly tracked by
the respective UMs on payments due, time and amount
overdue.
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cases where the delay payment occurs in the meeting,
the immediate line of action should be as under: |
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The COs should try and understand the reasons for
default in the group meeting itself
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In
cases where the reasons are genuine, they should
persuade members to repay
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If they find it to be a case of willful default,
they should persuade the other members to bring
pressure on the defaulter and make her pay
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The
CO along with the UM and other officers, wherever
required, will visit the defaulting member along
with the other group members and persuade them to
repay on the same day
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Consult other COs and devise a strategy to make her
pay
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Delinquency
Management is followed in two ways at Saadhana. They are
as follows:
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Pre-
Delinquency Management
SAADHANA
believes
that delinquency management is a concurrent prerequisite
process that begins with the selection of clients itself.
Therefore, our systems are designed in a manner to reduce
the scope for delinquency.
Screening of clients:A
methodical client screening process is in place since
beginning to spot the risky clients. An informal debt
history analysis of the client is made to understand
their monetary discipline. Apart from this, it is also
mandatory to confirm that the particular client resides
in the same slum for at least one preceding year. Another
effective screening factor is avoiding those members
to be in one group who have blood relation.
Check on dual/ Multiple Memberships: As experience
shown, availing credit in more than one group/organization
virtually throws the client in debt trap. The clients
who caught up in debt trap are prone to delinquency.
SAADHANA being aware of the fact discourages the clients
to hold dual/multiple memberships.
Debt Absorption Capacity: SAADHANA also looks
into clients' debt absorption capacity before lending.
Credit more than the absorption capacity may lead to
delinquency. Thus, the organization sized its loan products
to suit the client absorption capacity. Above all the
transparent transactions, inbuilt control systems and
the humane relationship being maintained by the staff
with the clients resulted in arresting any sort of delinquency
and working as long run guarding factors.
Post-
Delinquency Management
As
SAADHANA
is good at pre - delinquency management, it achieved
100% repayment from clients. Never had it faced the
problem of non-Payment of installments from clients.
So the question of Post - delinquency management does
not rise yet.
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