Methodology Of Extending Credit

Asmitha follows the “Joint Liability Group model” to provide collateral-free credit services to women clients. The methodology of loan delivery is initiated through a public orientation meeting organized at villages, designed to brief not only the women but all the villagers present during the loan delivery programs.

Based on the willingness of the women to join as a member, the company verifies the KYC details of the member with the Credit Bureau for the details of the credit history, indebtedness and other requisite details as per the internal guidelines from time to time. Upon satisfactory due diligence and compliance to the common Code of Conduct agreed by all the MFIs the members will be formed into group of five members at their choice based on general criteria.

Once the group of five members is formed, the new members will have to undergo Compulsory Group Training for a period of five to seven days which covers topics related to principals & responsibilities of the individual client and the group in sanctioning and availing a loan, financial education, calculation of principle & interest, loan disbursement, repayment modalities, business development skills etc., After the Compulsory Group Training (CGT), the group will further undergo a Group Recognition Test (GRT), by the senior officers of the company who assess the quality and preparedness of the group to take up income generation projects with the financial support from the company. Once the group is recognized, it will be attached to a centre at the village.

The centre consists of a maximum of ten group’s i.e. 50 clients, each group consisting of five members, the centre members meet once in a week / month / fortnight for about 30 - 45 minutes to undertake the responsibility of loan approvals, disbursals, loan repayments and monitoring & utilization check and other social development activities.

The Field Credit Assistant (FCA) will collect the application from the members by filling all the columns carefully (Member Name, Loan Amount, Purpose of the Loan etc) and upload in the system for approval of HO with the consent of Branch Manager. Once the approval is received, the loan will be disbursed in cash at branch office subject to submission of KYC, income proof and other necessary information by the client.

The members repay the loan on weekly, fortnightly or monthly installments after moratorium period. The center and group takes the responsibility of the repayments, hence the group leader collects the installments of her group and ensures that all the members have brought their repayment amounts and hand over to the FCA. Then the FCA verifies and confirms the repayment and updates all the passbooks and collection registers at the weekly center meetings.

Asmitha opens branches in mandals / district headquarters within a radius of 25-30 km, with about 5-6 staff members to extend financial services to 3,000 - 5,000 women clients and help them build their small enterprises.