a) What is outstanding or overdue loan and why

At the time of the loan proposal, the purpose of the loan and time limit is decided. The loan and the service charge are to be paid up through certain installments within the stipulated time. If the scheduled installment is not paid up in time, the amount of the installment is known as current outstanding and the total loan amount along with service charge is not paid up within the stipulated time is called the overdue loan.

b) Problems created due to overdue loan

  • Loan distribution circle is hampered.
  • The difference in loan and savings are created among the members.
  • Poverty alleviation of the poor is hampered.
  • Cannot pay up regular installments.
  • Rules and regulations of micro-credit cannot be implemented.
  • Indiscipline prevails in the somity.
  • Family welfare is hampered and hardship prevails there.
  • Indiscipline prevails among the members and confidence to each other is destroyed.
  • Capital gets reduced.
  • Business is hampered.
  • The problem arises in the deposition of regular savings.
  • Members present in the meeting is less.
  • Confidence in micro-credit is lost.
  • Mental unrest increases.
  • Personal and family prestige is hampered.
  • Afterwards, the loan limit reduces.
  • The loan is not paid up in time.
  • Different steps need to be taken by the organization to collect the overdue loan.
  • The organization suffers a lot.