GROUP LENDING ENHANCEMENT WORKSHOP

Group Stages and Membership in Group Lending

Group Lending: Stages in Group Lending: Stages in Center/Group and Membership Life Center/Group and Membership Life

Cycle Cycle • Formation Stage• Maintenance Stage• Transition or Graduation Stage

Center LifecycleCenter Lifecycle

TIME

Formation Stage: CharacteristicsFormation Stage: CharacteristicsZero to 2 yearsZero to 2 years

• Increase in Group/center membership• Rapid expansion in membership recruitment• Members still adhere to credit & group guarantee “tapal”

obligations• Some delinquencies may be experienced• Novelty of group lending experience to a new AO may inspire AO

to do good and well

Maintenance StageMaintenance StageLess than 2 to 4 yearsLess than 2 to 4 years

• Members experience “tapal” fatigue• Attendance in meetings decline• Group/center experience member drop outs• Delinquencies may worsen• Bank staff may resort to collection techniques that treat clients poorly • Good payers and those with growing businesses may leave• AO fatigue or burnout

What processes happen in a center during What processes happen in a center during Maintenance Stage?Maintenance Stage?

Transition or Graduation StageTransition or Graduation Stage2 years & above2 years & above

• Borrower has had at least 4 loan cycles• Center may have 2 categories of clients:

– Clients wanting to and qualified for individual liability credit. Individual credit responsibility is key to keeping these clients.

– Clients that should stay under group loan liability: not qualified for the maximum loan amount available under group loan; or have poor repayment record

Framework: Stages of Group & Framework: Stages of Group & Membership in Group LendingMembership in Group Lending

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Framework: Stages of Group & Framework: Stages of Group & Membership in Group LendingMembership in Group Lending

Framework: Stages of Group & Framework: Stages of Group & Membership in Group LendingMembership in Group Lending

It is important to recognize the symptoms

Framework: Stages of Group & Framework: Stages of Group & Membership in Group LendingMembership in Group Lending

It is important to transition clients in time before they leave you

Criteria to Consider in doing the Criteria to Consider in doing the product enhancement or product enhancement or

transitioningtransitioning

• Aging Centers/membership• Repayment Performance• Readiness of the Clients• Clients’ demands

Thank You!