Loan amount in Micro-credit process

The highest amount of the loan for the members is known as the loan limit. The success of the micro-credit process depends on the family status and condition of the member, after study of the highest investment, the loan proposal loan disbursement, loan utilization and ensuring income.

At the time of the loan proposal, the member himself after discussion with the family members will decide the loan amount and submit to the group members. Other members generally used to study the loan proposal of the applicant to ascertain the loan amount for onward submission to the somity chief/ gr: leader. If the applicant member is a candidate for more than one time, his previous transaction and success are to be taken into consideration. The somity chief/ group leader on the basis of the opinion of other members will consider the loan purpose, utilization & assurance of income and decide the loan limit.

To fix up the loan limit, the collection rate of the somity, the collection rate of his own small group, whether the somity is in full strength or partially filled up, amount of savings of own share in the proposed investment, failure installments, presence in the somity meeting, behavior of the member, etc will have to be counted. Considering aforesaid matters, on the basis of demand, time limit of the organization, the loan limit is to be fixed up.

• To verify regular attendance of the member to the central meeting.

• To verify regular installment and saving.

• To verify the ideas of the member on the ethics of micro-credit.

• To verify previous transactions and success.

• To share with the family members.

• To verify the opinion of other members.

• To verify the necessary documents and papers.

• To accomplish verification of the feasibility and justification etc of the loan.

• To study the proposed loan by the somity chief/ group leader.

• To verify the member’s other loan and family status.

At the time of loan proposal, personal and family status of the member along with all matters of the somity are to be taken into consideration. But his personal amount of savings is very important.

The amount of saving deposition and withdrawal system is different in a different organization or it is being done as per the organization’s own process. In some of the organizations, withdrawal of saving amount is not allowed so long his membership remains in force. In some of the organizations, partial withdrawal is allowed. Again some of the organization, keeping depositions percentage (%) of the disbursed loan to a member allow partial withdrawal during his membership. Considering the above-mentioned facts, the loan limit is decided on the basis of the amount of savings. Such as:

a) Whatever may be the amount of savings, the loan limit will be fixed upon the efficiency/ investment capacity of the member.

b) During membership, if the system of partial withdrawal remains in force, on the basis of efficiency and amount of savings or keeping deposition, a percentage of the proposed loan the demand is to be decided and the loan limit will be fixed up.

After receiving a loan, if the loan limit is reduced, the system is known as reducing the loan limit. Reducing the loan limit will be effective in case of installment deposition failure, unreasonable absence in the somity meeting and utilization of loan money not in the right truck, investment capacity reducing, etc.