Post on 26-Mar-2020
Volume - II
Confidential
Policy and Procedural Guidelines
For
Bank Financing to NGO-MFIs
Confidential
Policy and Procedural Guidelines
For
Bank Financing to NGO-MFIs (Volume – II: Samples of Forms and Formats)
Prepared By
S. A. Chowdhury
Mahmuda Akter
February 01, 2007
TABLE OF CONTENTS
ANNEX: I LOAN APPLICATION FORM ...............................................................................................................................1
ANNEX: II ORGANIZATIONAL ASSESSMENT FORM ..................................................................................................13
ANNEX: III CHECKLIST OF SECURITY DOCUMENTS/PAPERS ...............................................................................16
ANNEX :IV ASSET CLASSIFICATION AND PROVISIONING SY STEM .....................................................................17
ANNEX: V PARTICULARS OF EXECUTIVE COMMITTEE/ADV ISORY COUNCIL/LIFE MEMBERS ...................20
ANNEX: VI MONTHLY LOAN PERFORMANCE STATEMENT ....................................................................................21
ANNEX: VII CHECKLIST OF MONITORING INSTRUMENTS ......................................................................................22
ANNEX: VIII FORMAT OF LOAN AGREEMENT BETWEEN THE WHOLESALE/NETWORK ...............................23
ORGANIZATION AND THE BORROWER NGO-MFIS
ANNEX: IX MAIN PROVIISONS OF MEMORANDUM OF UNDERSTANDING (MOU) BETWEEN.......................27
THE WHOLESALE/NETWORK ORGANIZATION AND THE BANK
ANNEX – X SAMPLE LETTER FOR NON-PAYMENT OF INSTALLMENT ................................................................28
FINAL REMINDER TO RECOVER OVERDUES.......................................................................................29
LOAN CALL UP NOTICE...............................................................................................................................30
ANNEX : XI SAMPLE OF UNDERTAKING BY THE FACILITATING AGENCY (NETWORK ORGANIZATION) ..31
ANNEX: XII MAIN FEATURES OF THE TERM SHEET FOR A SYNDICATED CREDIT FA CILITY ......................33
ANNEX: XIII CONTENTS OF INFORMATION MEMORANDUM WITH SUPPORTING DOCUMETNS.................35
ANNEX: XIV LIST OF MAIN SYNDICATED LOAN DOCUMENTS ................................................................................37
ANNEX: XV GUIDELINES AND PROCEDURES FOR ON-LENDING TO .................................................................38
TO MICRO ENTREPRENEURS BY NGO-MFIS
ANNEX: XVI STATEMENT OF LOAN DISBURSED UNDER THE MICRO ENTERPSIE ........................................44
REFINANCING SCHEME THROUGH NGO-MFIS
ANNEX: XVII GUIDELINES AND PROCEDURES FOR ON-LENDING .....................................................................45
TO HARDCORE POOR BY NGO-MFIS
ANNEX: XVIII STATEMENT OF LOAN DISBURSED UNDER THE HA RDCORE POOR .......................................49
PROGRAM THROUGH NGO-MFIS
ANNEX: XIX FLOW CHART OF SECURITIZATION PROCESS...................................................................................50
ANNEX: XX CHECKLIST OF SECUR ITIZATION DOCUMENTS ................................................................................51
1
ANNEX: I (Sample)
ABC BANK LTD. Principal Branch
33, Dilkusha, Dhaka-1000
LOAN APPLICATION FORM
(NGO-MFI will fill up the Form)
Managing Director/ Deputy Managing Director/ General Manager/ Executive Vice President ABC Bank Ltd. 33, Dilkusha, Dhaka-1000 I/We............................................................................................................................................... ..........
......................................(Organization’s Name) am/are interested to borrow loan from your Bank for
extension of credit to the poor observing all formalities and conditions.
Particulars of the Organization
1. Organization’s Name:
a. In Bangla: ........................................................................................................................
In English .............................................................................................................. .............
b. Registered Address: ...........................................................................................................
2. Organization’s Permanent Address:
Village/City: ..................................... Road: ......................................... P.O. Box ....................
Thana: ....................................... District: ....................................... Post Code ........................
Tel: ............................................................... Mobile: ..............................................................
E-mail: ......................................................................................................................................
Mailing Address: ......................................................................................................................
.................................................................................................................................................
Photograph of Chairman (Attested)
Photograph of the
Executive Director
(Attested)
2
3. Parti culars of the Executive Director/Chief Executive Officer:
a. Name: In Bangla .................................................................................................................
In English ............................................................................................................................
b. Age: ...................................................................................................................................
c. Father’s Name: .................................................... Mother’s Name: ...................................
d. Husband’s/wife’s Name: .....................................................................................................
e. Academic Qualification: ......................................................................................................
f. Permanent Address: ...........................................................................................................
g. Present Address: ................................................................................................................
h. Tel No./ Fax/ E-mail/ Mobile No. (if applicable) .................................................................
4. Particulars of the Chairperson:
a. Name: In Bangla .................................................................................................................
In English ............................................................................................................................
b. Age: ...................................................................................................................................
c. Father’s Name: .................................................... Mother’s Name: ...................................
d. Husband/wife’s Name: ......................................................................................................
e. Academic Qualification:......................................................................................................
f. Permanent Address: ....... ....................................................................................................
g. Present Address: ................................................................................................................
h. Tel No./ Fax/ E-mail/ Mobile No. (if applicable) .................................................................
5. Year of Establishment: .......................................................................................................... 6. Legal Status:
Registration Authority Registration Number
Date of Registration Place of Registration
Please attach copies of all the registration certificates
7. No. of Branches:.......................................... No. of Regional Offices (if applicable): ......... ......
8. Head Office: (please tick any of it) Own Rented
3
9. Descriptions of Asset and Liabilities: as on_______________________ (if necessary please attach separate pages)
Assets: i. Fixed Assets (Land, Building, Equipment, Furniture, etc.) Taka .....................
ii. Current Assets
(Bank Balance, Fixed Deposit, Investment, Loan Outstanding) Taka ......................
iii. Other Assets Taka .....................
Total Assets (i+ii+iii) Taka .....................
Liabilities and Equity:
i. Long Tem Liability Taka ......................
ii. Current Liabilities Taka .....................
iii. Other Liabilities Taka .....................
iv. Equity/Reserve/Net Income Taka ......................
Total Liabilities and Equity (i+ii+iii+iv) Taka .....................
10. If the organizati on is involved with any network (national , international and both), please
attach membership certificate(s)
11. In case of wholesale credit, please mention the following:
a. Membership ID No. of the Network Organization
b. Annual membership fee paid: Yes No
c. Do your NGO-MFI has any unpaid liability: Yes No
d. Are you a partner organization of PKSF? Yes No
If yes, please mention the nature of involvement (with relevant papers)..................... ....................
Information on Organizational Activities
1. a. Starting year as NGO operation: …………………………………………………....................;
b. Name of Programs of the organization:
• Credit Programs
• Other Programs:
2. a. List of Credit Programs
Fund Received Name of Donor(s)
Date of Fund Receipt
No. of beneficiaries Loan
(Taka) Grant (Taka)
Total (Taka)
Loan maturity/ repayment date
(Please attach program related documents)
4
b. List of other Programs:
Name of projects/programs
No. of beneficiaries
Name of donor(s)
Amount of fund received
Project/program Duration
Date of Fund Receipt
(Please attach all related papers of the programs/projects) 3. Name of other organizations working in the same operational areas (Please specify below):
a……………………………………………………....b……………………………………………………
c. …………………………………………………… d. …………………………………………………
e.………………………………………………………. f. …………………………………………………
Description of Credit Programs
Starting Year of Microfinance: ……………………………………………………………….. 1. Please tick (v) the relevant program(s) that your organization has been operating:
a. Rural Microcredit Program
b. Urban Microcredit Program
c. Micro Enterprise Program
d. Hardcore Poor Program
e. Others, if any
2. Group Information:
No. of Groups No. of borrowers No. of Savers Name of District
Name of Thana
No. of Union M F Total M F Total M F Total
Note: M = Male and F = Female (If necessary, please attach extra page) 3. Member Information:
a. Number of active members (as on ...............) .......................……........... ..........................
b. Member drop out rate (annually): ..........................................…………………....................
4. a. Types of group meetings: (please tick) Weekly Quarterly Monthly
b. Types of group savings: (please tick) Weekly Quarterly Monthly
c. Weekly/quarterly/monthly savings received : Taka………………………………......................
5
d. Forms of savings: (please tick): Normal/Forced savings Special savings (if your organization has more savings product please attach extra page) e. Savings management: (please tick): Group bas is Individual f. Information of credit related staff:
Designation Number 1.
2.
3.
g. Books /registers maintained by the group: (please tick) R esolution book S avings Passbook Loan Passbook Credit Ledger
Others (please name it) ...................................................................................... ..........................
h. Do you pay interest on savings? (please tick) Yes No
If yes, what is the interest rate on savings? ...............................................................................
5. Utilization of Group Savings:
Distribution of net savings No. of groups
No. of savers
Rate of savings
Total savings
(amount)
Savings withdrawal (amount)
Net savings (amount)
RLF Cash in hand
Cash at
bank
6. Current Revolving Loan Fund position (total loan outstanding + cash in hand + cash at Bank)
Revolving Loan Fund
(as on ..............................)
Donor Fund
Own Fund
Group Fund
PKSF Loan
Bank Loan
Others (please specify)
Total Fund
7. Credit information of last three years: (Amount in Taka)
No. of borrowers Total Outstanding
Loan recovered
Overdues Year Total disbursement
Total receivables
M F Total Prin. Int. Prin. Int. Prin. Int.
Recovery rate
6
8. Please mention the following (as on ……………………..)
i. Loan ceiling: minimum Taka .......................... and maximum Taka .............................
ii. Cumulative position of:
a. loan disbursed: Taka.......................................................................................
b. amount recovered: Taka .................................................................................
c. recovery rate: ...............................................................................................%
iii. Last 12 months recovery position:(amount in Taka )................................................%
9. a. Recovery system of different loans:
Installment per thousand Taka Loan Duration
Grace period (if any)
Repayment period (wkly/forntly/mntly)
No. of installment Prin. Int./service
charge Others Total
Up to 1 year
1 – 3 years
3 –5 years
Above 5 years
b. Mention main sector/programs under which loans are disbursed: 1. ........................................ 2. ............... ...................... 3. ............................ 4. ............................. 10. Aging/Classification of Loans:
Past due Loan No. of Groups No. of Borrowers Total Amount Interest rate on dues
5 weeks past due
6-10 weeks past due
11-20 weeks past due
21-30 weeks past due
31-40 weeks past due
More than 40 weeks
11. a. Loan loss reserve/bad debt reserve(amount in Taka): ........................................................
b.Do you maintain any other risk management fund (yes/no), if yes, mention the amount in
Taka...........................................................................................................................................
7
12. Accounting Information:
Does your organization maintain the following books of accounts? (Please tick):
Cash Book General Ledger Subsidiary Ledgers
Others (please specify):1. ........................................ 2. ..................................... 3. ......................
13. Whether your organization collects money from its members in the following heads:
a. Member Admission Fee ......................................Taka (Non Refundable)
b. Price of Passbook ................................................Taka (Non Refundable)
c. Loan Application Fee ............................................Taka (Non Refundable)
d. Group Insurance ..................................................Taka (Refundable/Non refundable)
e. Group Fund ..........................................................Taka (Refundable/Non refundable)
f. Disaster Fund .......................................................Taka (Refundable/Non refundable)
g. Others (Please mention) ......................................Taka (Refundable/Non refundable)
14. a. Bank Related Information Name of
Bank Name of Branch
Account No. Account Particulars
Name of Signatories
Designation of the
Signatories
b. In case loan application is processed through the wholesale organization, please mention the following: Name of
Bank Name of Branch
Account No. Location of the branch
15. Particulars of Executive Committee:
a. Date of formation of the present Executive Committee ......................................................
b. Particulars of present Executive Committee members
Sl. No.
Name and designation
of the members
Father’s /Mother’s
name
Qualification Present address
Permanent address
Present occupation
01 02 03 04 05 06 07
8
16. a. Profit and Loss position of last 3 (three) years:
Year Net profit/ net loss Higher/lower than previous year
b. Last 3 (three) years Financial Statement:
Particulars
Year 1 ....................... Year 2 ........................ Year 3.......................
Fixed Assets (Less Depreciation)
Current Assets
Current Liabilities
Maintenance Expenses
Service Charge/Interest Income
Other Income
Net Savings
Loan Disbursement
Loan Loss Provision
Information on the Proposed Loan Program
1. Name of the proposed Credit Program:
a. Rural Microcredit Program
b. Urban Microcredit Program
c. Micro Enterprise Credit Program
d. Credit for Hardcore Poor
e. Others
9
2. Particulars of Proposed working areas and groups:
Members Name of District
Name of Thana
No. on Union
No. of Village
No. of Groups Male Female
Savings (Taka)
3. On-lending activities/sectors:
a. ………………………….b. ………………………… c. ……………………… d. ………………….
4. Proposed no. of borrowers: Male …………………………………………………………… ….
Female …………………………………………………………….
Total ……………………………………………………………….
5. Maximum loan amount: per borrower …………………………………………………………..
per group ………………………………………………………………
6. Expected bank loan (amount in Taka) ………………………………………………………….
7. Funding sources for proposed credit program:
NGO-MFI’s own fund: Taka …………………………………………………
Borrowed from PKSF: Taka.......................................................................
Borrowed from Bank: Taka …………………………………………………..
Others (if have any): Taka …………………………………………………….
Total Taka …………………………………………………..
8. Information on loan taken from this Bank:
9. a. Did you apply for loan previously in this Bank? Yes No
b. If loan sanctioned, please mention loan amount: Taka ……………………......................,
c. Date of last disbursement: …………………Loan Outstanding: Taka……………................ (if not fully repaid)
d. If rejected, please attach its photocopy
10
10. Information on bank loans taken from other Banks/FIs:
a. Did you apply for loan previously in any Bank/FI? Yes No
b. If Loan sanctioned, please mention:
Name of the Banks/FIs: ………………………….... Loan amount: ……………………......
Date of last disbursement: …………………Loan Outstanding: Taka……………................ (if not fully repaid) c. If rejected, please attach its photocopy
I/We, the undersigned,......................................................................declare that, I/we will use bank
loan for the purpose of extension of credit facilities to the poor people. I/we will follow all terms and
conditions of the bank that are mentioned and agreed in the Memorandum of
Understanding/Sanction Letter/Loan Agreement.
I/we also declare that, the information supplied by me/us in this Loan Application Form is accurate.
I/we undertake to be legally liable for any false or incorrect information. On the basis of stated
information, I/we am/are hereby, applying for loan of Taka …………………............................ (in
words ...................................................Taka).
Date: ……………………….. 1. Signature of Chairman…………………………………
(Organization’s Name Name: …………………………………………………..
along with Seal)
2. Signature of Executive Director……………………
Name: …………………………………………………..
11
LIST OF ENCLOSURES SL
No.
Documents, Reports, Papers Obtained Not
Obtained
Remarks
01 Attested copy of the Charter
02 Attested copy of the list of Governing
Body/Executive Committee members
03 Copy of Registration (s) including license of
MRA
04 Parti culars of Governing Body, Executive
Committee and life members (as per format
shown in Annex V of volume II)
05 Particulars of the key officials
06 Last 3 (three) years Audit Report (Balance
Sheet, Income-Expenditure Statement,
Receipt-Payment Statement and Cash Flow
Statement)
07 Last 3 (three) years Annual Report (where
applicable)
08 Latest Financial Report attested by the Chief
Executive (if loan application is submitted
after six months of Audit Report preparation)
09 Resolution of the Governing Body/Board of
Directors for obtaining loan
10 Copy of Operational Manual (if applicable)
11 If applicable: • Papers related to collateral securities
• Membership certificate from the network
organization
• Donor Fund Contract
• Copy of NGO Bureau Affairs registration
12 Trade License (if applicable)
13 Power of Attorney
14 Up-to-date Rent Receipt
15 Up-to-date Electricity Bill
16 Up-to-date Telephone Bill
17 Up-to-date Gas Bill
18 Income Tax Clearance Certificate
19 Bank Statement/Loan Account Statement
20 NOC from other bank(s) (if applicable)
12
SL
No.
Documents, Reports, Papers Obtained Not
Obtained
Remarks
In case of Joint Stock Company--
Certificate of Incorporation
Memorandum & Articles of Association
21
Letter of Commencement (In case of Public
Limited Company)
In case of Equitable or Registered Mortgage--
CS, SA, RS, BS Khatians
Mutation Khatian/ Parcha along with DCR
Up-to-date rent receipt (khazna)
Non-encumbrance certificate
Mouza Map
Photocopy of Original Title Deed
22
Photocopy of Baya-deed
23 Certificate of Training Received by the Chief
Executive and other key officials
24 Other papers (as may be specified by the
particular bank)
13
ANNEX: II (Sample)
XYZ Wholesale/Network Organization
....................Address........................
ORGANIZATIONAL ASSESSMENT FORM
Name of NGO-MFI:...........................................................................................................................
Name of Execu tive Director/Chief Executive Officer:.......................................................................
Year of Establishment:.......................................................................................................................
Tel:..................................................Fax/E-mail:.....................................Web:...................................
Score Different aspects of appraisal
4 3 2 1
Remarks
A. System Improvement
1. Regular rotation of EC members
and performance evaluation of CEO
2. EC meetings held and minutes kept
properly as per charter/rule
3. EC reviews budget and analyzes
financial/audit reports
4. Standard supervision and
monitoring tolls and guidelines
5. Installed FIS and MIS
(Manual/Software)
6. Aging schedule practice and
maintenance
7. Written financial procedure and
guidelines
B. Policy and Planning
8. The NGO-MFIs clear vision,
mission and objectives in writing
9. Service rules with job descriptions
and staff evaluation system
10. Administrative policies and
guidelines
14
Score Different aspects of appraisal
4 3 2 1
Remarks
11. Baseline survey for program
planning
C. Operational Strategy
12. Separate books of accounts for
each program and cross checked by
senor manager regularly
13. Exists Microcredit operational
manual/guideline
14. Recovery Rate
a. On time: OTR
b. Cumulative Repayment: RR
D. Resource Generation
15. Budget preparation and review
16. Long Term projection for RLF
increase
17. Affiliation with any forum/network
E. Technical Skill
18. Level of accounting skill and
procedure of accounting method
19. No. of professional staff in the
credit program
20. Group management with working
manual
21. Exist internal audit system and
financial control.
Engages CA firm for external audit
F. Sustainable Approach
22. Cost per unit of money lent
23. Operational self-sufficiency
24. Financial Self-Sufficiency
25. Loan Loss Provision
Total Score
Score Analysis: Good: 80-100, Moderate: 60 -79, Marginal: 40-59 and Unacceptable: 0-39
15
Formula: 1. Operational self-sufficiency:
Financial Income ----------------------------------------------------------------------------------- (Financial Cost + Operating Cost +Loan Loss Provision) X100%
2. Financial Self-Sufficiency:
Financial Income ----------------------------------------------------------------------------------------------------------- (Financial Cost + Operating Cost + Loan Loss Provision + Imputed Cost)X100%
3. Imputed cost:
[Inflation x (Net worth – Net Fixed Assets)+(inflation -interest rate paid x concessional loans) ---------------------------------------------------------------------------------------------------------------------------
Average performance assets
Date:
Signature of the Assessment Officer: ...........................................
Name and Designation: ............................................................
Authentication by the Authorized Officer ...................................
Name and Designation: ............................................................
16
ANNEX: III
CHECK LIST OF SECURITY DOCUMENTS/PAPERS Sl No.
Document Title Required Date of Receipt
1 Sanction Letter Duly Accepted 2 Demand Promissory Note
3 Letter of Arrangement
4 Letter of Continuity 5 Letter of Undertaking
6 Memorandum of Understanding (MOU) 7 Loan Agreement (if applicable) 8 Extract of the Governing Body/Board Resolution to borrow 9 Trade License
10 Corporate Letter of Guarantee 11 Personal Letter of Guarantee 12 Letter of Hypothecation Of Moveable and Immovable assets
13 Letter of Hypothecation Of Receivables 14 Charge On Fixed Assets
15 Letter of Lien and Authority for shares, stocks and securities if accepted as collateral
16 If applicable, Lien of Fixed Deposit/Short Term Deposit/Margin Deposit/Other Deposit Receipts and Reserves
17 Original Title Deeds
18 Deed Of Conveyance (Baya Deed) 19 Mutation Certificate & DCR
20 Rent (Khajna) Receipts & Municipal Rent Receipts 21 All Relevant Land Documents (such as Parchas & Others) 22 Non-Encumbrance Certificate
23 Search Report of The Status of the Land 24 Memorandum Of Deposit of Title Deeds (Mortgage Deed) 25 Irrevocable Power Of Attorney 26 Affidavit Before The Sub-Registrar of Land
27 Mortgage/Power of Attorney Registration Receipt 28 Lenders' Pari Passu Security Sharing Agreement (if
applicable)
29 Insurance Policy (if applicable) 30 Bank Statement of the Borrower
31 Bank Clearance Certificate 32 Any other documents/papers, as may be needed Note: Depending on conditions of funding, documents/papers from serial no. 12 to 29 will be supplied by the borrower.
17
ANNEX :IV
ASSET CLASSIFICATION AND PROVISIONING SYSTEM
(I) SHORT/MEDIUM TERM LOAN FACILITIES (UP TO 5 YEARS):
CLASSIFICATION DETERMINANT TREATMENT OF INCOME
PROVISIONS TO MADE
(1) (2) (3) (4) 1. Special Mention Accounts (SMA)
Where mark-up/interest or principal is overdue (past due) by 90 days or more from the due date.
Not Applicable No provision is required
2. Unsatisfactory Where mark-up/interest or principal is overdue (past due) by 120 days or more from the due date.
Unrealized mark-up/interest to be put in suspense Account and not to be credited to income Account except when realized in cash.
Provision o f 10% of the difference resulting form the outstanding balance of principal less the amount of liquid securities with the bank.
3. Substandard Where mark-up/interest or principal is overdue (past due) by 180 days or more from the due date.
Unrealized mark-up/interest to be put in suspense Account and not to be credited to income Account except when realized in cash.
Provision of 20% of the difference resulting form the outstanding balance of principal less the amount of liquid securities with the bank.
4. Doubtful Where mark-up/interest or principal is overdue (past due) by 12 months from the due date.
Unrealized mark-up/interest to be put in suspense Account and not to be credited to income Account except when realized in cash.
Provision of 50% of the difference resulting form the outstanding balance of principal less the amount of liquid securities with the bank.
5. Loss Where mark-up/interest or principal is overdue by 18 months or more from the due date.
As above. Provision of 100% of the difference resulting form the outstanding balance of principal less the amount of liquid securities with the bank.
18
(II) LONG TERM LOAN FACILITIES (OVER 5 YEARS):
CLASSIFICATION DETERMINANT TREATMENT OF INCOME
PROVISIONS TO MADE
(1) (2) (3) (4) 1. Special Men tion Accounts (SMA)
Where mark-up/interest or principal is overdue (past due) by 90 days or more from the due date.
Not Applicable No provision is required
2. Unsatisfactory Where mark-up/interest or principal is overdue (past due) by 180 days or more from the due date.
Unrealized mark-up/interest to be put in suspense Account and not to be credited to income Account except when realized in cash.
Provision of 10% of the difference resulting form the outstanding balance of principal less the amount of liquid securities with the bank.
3. Substandard Where mark-up/interest or principal is overdue (past due) by 12 months or more from the due date.
Unrealized mark-up/interest to be put in suspense Account and not to be credited to income Account except when realized in cash.
Provision of 20% of the difference resulting form the outstanding balance of principal less the amount of liquid securities with the bank.
4. Doubtful Where mark-up/interest or principal is overdue (past due) by 18 months from the due date.
Unrealized mark-up/interest to be put in suspense Account and not to be credited to income Account except when realized in cash.
Provision of 50% of the difference resulting form the outstanding balance of principal less the amount of liquid securities with the bank.
5. Loss Where mark-up/interest or principal is overdue by 24 months or more from the due date.
As above. Provision of 100% of the difference resulting form the outstanding balance of principal less the amount of liquid securities with the bank.
19
(III) CONTINUOUS /DEMAND LOAN FACILITIES :
CLASSIFICATION DETERMINANT TREATMENT OF INCOME
PROVISIONS TO MADE
(1) (2) (3) (4) 1. Special Mention Accounts (SMA)
Where mark-up/interest or principal is overdue (past due) by 90 days or more from the due date.
Not Applicable No provision is required
2. Unsatisfactory Where mark-up/interest or principal is overdue (past due) by 120 days or more from the due date.
Unrealized mark-up/interest to be put in suspense Account and not to be credited to income Account except when realized in cash.
Provision of 10% of the difference resulting form the outstanding balance of principal less the amount of liquid securities with the bank.
3. Substandard Where mark-up/interest or principal is overdue (past due) by 180 days or more from the due date.
Unrealized mark-up/interest to be put in suspense Account and not to be credited to income Account except when realized in cash.
Provision of 20% of the difference resulting form the outstanding balance of principal less the amount of liquid securities with the bank.
4. Doubtful Where mark-up/interest or principal is overdue (past due) by 270days from the due date.
Unrealized mark-up/interest to be put in suspense Account and not to be credited to income Account except when realized in cash.
Provision of 50% of the difference resulting form the outstanding balance of principal less the amount of liquid securities with the bank.
5. Loss Where mark-up/interest or principal is overdue by 12 months or more from the due date.
As above. Provision of 100% of the difference resulting form the outstanding balance of principal less the amount of liquid securities with the bank.
20
ANNEX: V
Particulars of Executive Committee/Advisory Council/ Life Members Of The Partner NGOs/MFIs
When Selected in the Committee
Sl. No.
Name Name of Father/ Mother/Husband
Age Position in the
Committee
Academic Qualification
Profession Present Address
Permanent Address
Membership Date and Duration
Date Duration
Specimen
Signature
21
ANNEX: V I
MONTHLY LOAN PERFORMANCE STATEMENT …………………………….Bank Limited
For the Month of …………… 200…
(Amount in Taka)
Realizable Realized Due/Arrears Disbursement
No. of Borrowers Principal Service Charge Principal Service Charge Principal Service Charge
Sl No.
Name of Borrower
NGOs-MFIs
Current Month
To Date
Current Month
To Date
Current Month
To Date
Current Month
To Date
Current Month
To Date
Current Month
To Date
Current Month
To Date
Current Month
To Date
Outstanding Principal (Portfolio)
Signature Signature:
22
Annex: VII
CHECK LIST OF MONITORING INSTRUMENTS
Banks/FIs along with the borrowers (both wholesale and retail borrowers) will ensure
proper utilization and timely recovery/repayment of loans through constant monitoring. The
following check list may be used as indicative instruments suiting to their requirement.
1. Field visit analysis (including attendance of group meetings)
2. Review of books of accounts
3. Review of collection sheets related to bank credit
4. Loan disbursement master roll and relevant papers
5. Review of the level of loan utilization
6. Review of FIS and MIS reports
7. Evaluation of the aging schedule
8. Review of the loan loss provisions
9. Review of the safety reserve position
10. Assessment of the efficiency of fund management (fund flow statement analysis)
11. Analysis of cash flow statement
12. Trend analysis of savings
13. Analysis of loan recovery statement
14. Review of interest rate fixation both on savings and loans
15. Review of level of ‘Operational Se lf-Sufficiency’ and ‘Financial Self-Sufficiency’
16. Examination of o ther periodical reports and returns based on the lending mode
23
ANNEX: VIII
FORMAT OF LOAN AGREEMENT BETWEEN THE WHOLESALE/NETWORK ORGANIZATION AND THE BORROWER NGO-MFI
1. This agreement is signed on ........................... 2007.
1st Party: XYZ (the wholesale/ network organization), established for the purpose of
coordinating and assisting member NGO-MFIs, located at ....... (address)......... will be
termed as the ‘1 st party’. The Executive Director/ Chief Executive Officer or any other legally
authorized representative of the wholesale/network organization will be treated as the ‘1 st
Party’.
AND
2nd Party: ABC (name and address of the borrower NGO-MFI), will be termed as the ‘2nd
Party’, the ‘borrower’. The Executive Director/ Chief Executive Officer or any other legally
authorized representative shall be treated as the ‘borrower’.
2. WHEREAS, the 1 st Party has constantly been assisting its member NGO-MFIs (who are
involved in poverty alleviation and empowerment of the poor people), to develop their
organizational capability and is willing to extend credit facility through commercial
banks/financial institutions.
And WHEREAS, ...................... Bank/FI has sanctioned a loan of Taka .................... @
.......% interest and is willing to disburse the loan in phases through the 1st Party.
And WHEREAS, the 2nd Party has applied to the 1st Party for loan to support their
microfinance activities to the poor people.
24
Therefore, it has been decided by both the parties to sign this agreement on mutually
agreed terms and conditions to disburse the credit. The agreed ‘Terms and Conditions’ are
as follows:
3. Terms and Conditions:
a. The 1st Party has approved Taka ..................... loan to the 2 nd Party.
b. The loan duration will be of ............ years with a 6 - 12 months grace period.
c. The loan repayment will start after 6 -12 months of disbursement and will be
repaid through .................... equal quarterly/half-yearly installments. The
borrower POs/MOs will repay these installments (principal plus interest) to XYZ
through Demand Draft/ Pay Order.
d. The 2nd Party will keep records and maintain books of accounts in line with the
requirement of the 1 st Party.
e. The borrower POs/MOs will arrange guarantee(s) from members of Executive
Committee /Governing Body, will execute all documents and complete all legal
formalities before disbursement of loan.
f. The borrower or the 2nd Party will pay .........% interest rate annually to the lender
with an agreed rate of service charge to the XYZ on declining method.
4. Both the parties further agreed that,
a. The 2nd Party will have to distribute the loan amount to the poor people as per
their credit manual. All beneficiaries will have to attend weekly group meetings
and save regularly.
b. Collection/recovery of loans from the beneficiaries (poor people) will be the sole
responsibility of the 2nd Party. Repayment of loan will neither be related to
recovery of installments from beneficiaries nor to any other excuses of the 2nd
Party.
25
c. If the 2nd Party fails to repay loan installment, the1st Party can take any legal
action against the 2nd Party as per agreement.
d. The1 st Party reserves the right to supervise and monitor the credit utilization of
the borrower (2nd Party). The 2nd Party will be obliged to supply all required
information, records, reports, etc. to the 1st Party, as and when needed.
e. In case of mismanagement or improper utilization of loan, the 1st Party has the
right to ask the 2nd Party to instantly repay the outstanding loan (before the
expiry of loan duration) along with interest and service charge to the 1st Party.
f. If there are reasons to believe that the credit facility or the loan amount has not
been utilized for the purpose it is actually provided for or is being utilized for
other activities, the 1st Party has the right to cancel the agreement without
assigning any reason whatsoever to the 2nd Party. The 2nd Party will be bound to
repay the outstanding loan amount along with interest and service ch arge to the
1st Party instantly.
g. The following documents will be treated as part of this agreement:
i) Demand Promissory Note
ii) Personal guarantee of the ED/CEO (as the head of the organization)
iii) Guarantee(s) from the member of the Executive Committee /
Governing Body
iv) Repayment schedule
5. Other Terms and Conditions:
a. In case of conflict, dispute, misunderstanding, claims, etc. between the parties,
only the legal advisor(s) engaged by the wholesale/network organization will act
as arbitrator and his/her decision will be treated as final. This arbitration process
will be conducted as per provisions of the Arbitration Laws of Bangladesh.
b. The 2nd Party will take necessary steps and send monthly
statements/reports/returns as per prescribed format of the 1 st Party.
26
c. The 2nd Party will maintain a jointly operated bank account, where ED/ CEO will
be a signatory. This account will be operated by officials nominated by the
Executive Committee/Governing Body of the borrower POs/MOs.
d. The 2nd Party will collect a flat rate of interest (not above 15%) from the
beneficiaries (poor people) annually.
e. The 2nd Party will ensure recovery of loan (principal plus interest) on weekly
basis within the loan period.
f. The 2nd Party will disburse the loan to the selected borrowers (women will get
preference) of a particular area as per operational norms followed by the
borrower. This will also be informed to the 1st Party in writing.
6. We are signing this agreement expressing our consensus on the terms and conditions
laid down and without suffering from any fear or doing any favor to any of the party.
1st Party: On behalf of XYZ 2 nd Party: On behalf of ABC
Signature Signature
...................................... ...................................
Name and Designation Name and Designation
Witness: Witness:
27
ANNEX: IX
MAIN PROVISIONS OF MEMORANDUM OF UNDERSTANDING (MOU) BETWEEN
THE WHOLESALE/NETWORK ORGANIZATION AND THE BANK
The Memorandum of Understanding (MOU) between the wholesaler/network organization
and the lending bank will mainly contain:
1. Purpose of the agreement
2. General conditions
3. Mode of loan disbursement
4. Loan type and duration
5. Interest rate
6. Moratorium/ grace period
7. Loan repayment schedule
8. Bad debt reserve
9. Incentive/rebate
10. Monitoring and reporting
11. Requisites/documents
12. Other conditions (as per agreement)
13. Negotiation and arbitration
14. Termination and provision of legal action
28
ANNEX – X
SAMPLE LETTER FOR NON-PAYMENT OF INSTALLMENT
Date Ref: Name 1 Address 1 Address 2 Address 3 Sub: Non payment of monthly installment. Dear Customer, Thank you for maintaining your valuable banking relationship with …………………… Please be informed that your Loan Account with us is overdrawn (as at date) for Tk. --------- due to non-payment of monthly installment. We would appreciate if you arrange to deposit sufficient amount in your deposit account to adjust the dues and to avoid penal interest over the overdue amount. For any clarification, please feel free to contact our collections department at Tel : XXXXXXXX- XXX, XXXXXXXX.
Please disregard this letter if you have already deposited sufficient amount.
This is a computer-generated letter. It does not require any signature.
29
FINAL REMINDER TO RECOVER OVERDUES Date Name 1 Address 1 Address 2 Address 3 Dhaka Dear Sir, Your Loan Account No. XX XXXXXXX XX Ref. Our previous letters The overdue balance in your above loan account as at date is TK. XX,XXX.XX. Despite our several reminders through our letters & phone calls, we regretfully note that you are not responding towards the regularization of the dues of your above loan account. This letter will be treated as final reminder for the payment. Failure of placing the payment within 10(ten) days after the issuance of this letter will compel us to take the following actions: 1. Shall send your name as “Defaulter” borrower to the Bangladesh Bank /
Microcredit Regulatory Authority as well as circulate this to the all Banks and financial institutions /network organizations.
2. Shall employ collection agent. 3. Shall go for legal action against you. Hope you will perceive the urgency of the issue and come forward to settle this immediately. For any clarification please contact our collection department at telephone numbers XXXXXXX - XXX Ext XXX. Yours sincerely, Signature
XXX XXXXXXXXX XXXXXX XXXXXXX XXXXXXX Copy : XXXXXX XXXXXX, as Guarantor
30
LOAN CALL UP NOTICE Date Ref: --------------/ PL Name 1 Address 1 Address 2 Address 3 Dear Mr.XXXXXXX, Your Loan Account No : XX-XXXXXXX-XX Present Outstanding : Tk. XX,XXX.XX ________________________________________________________________ Please be informed that your above loan account has been irregular since long. Despite our repeated reminders through phone calls and letters to your available address, it is apparent that you have neither taken any steps to rectify the irregularity nor put your accounts in order. Accordingly we are constraint to cancel the above facility. We therefore, call upon you to repay the entire outstanding liability against the above facility together with interest within 15 days from the date of issuing this letter. Please note that in case of your failure to repay the loan within the stipulated time, the Bank will initiate such action against you as deemed appropriate under the law of the land at your cost and responsibility. Hope you will come forward to settle the loan account permanently within the stipulated time. Should you require any clarification, please contact the undersigned at telephone Nos. XXXXXXX-XX Ext. XXX or XXXXXXX (direct). Yours sincerely, XXXXXX XXXXXXX XXXXX XXXXX XXXXX XXX
31
ANNEX : XI
SAMPLE OF UNDERTAKING BY THE FACILITATING AGENCY (NETWORK ORGANIZATION)
WHEREAS .......... Bank (hereinafter referred to as “the Bank”) has agreed to sanction in
favor of ‘XYZ’ (hereinafter referred to as “the Borrower” wish expression shall, wherever the
context so admits, mean and include its successors-in-interest, assigned and legal
representatives) a credit line for an aggregate sum of Taka ..................... only for the
purposes and on the terms and conditions contained in the sanction letter issued by the
Bank to the Borrower.
2. AND WHEREAS under the said sanction letter, the above loan together with interest
and other charges (if any) thereon is payable within a period as mentioned in the
said sanction letter of the Bank.
3. AND WHEREAS the borrower has agreed to accept the terms offered and the Bank
has agreed to accept an UNDERTAKING from the network organization (say CDF)
(hereinafter referred to as “CDF”) ..........................................(address)......................
to secure the repayment of the loan and interest with other charges (if any) thereon.
4. AND WHEREAS CDF has agreed at the request of the borrower to furnish in favor
of the Bank an UNDERTAKING in favor of the borrower.
NOW, in consideration of the aforesaid, CDF hereby agrees and undertakes to the
Bank:
a. To exert its (CDF’s) influence over the borrower with regard to and assist the
Bank in realization of the aforesaid loan and interest thereon with other
charges (if any);
32
b. Due time repayment by the borrower of the loan with interest and other
charges (if any) thereon as and when become due in terms of the said
sanction letter, and
c. Due compliance by the borrower of all other monetary obligations towards
the Bank under the said sanction letter failing which CDF will exert its
influence forthwith and assist the Bank until full realization of the loan plus
interest and other charges (if any) thereon from the borrower.
5. This UNDERTAKING shall remain in force for a period of ............ (from the date of
first disbursement under the limit to recovery of the loan in full).
6. This UNDERTAKING shall be binding on CDF and on its successors-in-interest,
assigns and legal representatives during the period of validity.
7. In the event of any incidence or conduct by the borrower which may have
implications on the repayment of the debts (plus interest and other charges) shall
immediately be brought to the notice of CDF.
For and on behalf of the network organization: Signature :........................................
Name:...............................................
Designation:......................................
Date:.................................................
Witness:
1.
2.
33
ANNEX: X II
MAIN FEATURES OF THE TERM SHEET FOR A SYNDICATED CREDIT FACILITY
1. Name of the Borrower
2. Name of the Lead Arranger
3. Nature of facility
4. Currency
5. Syndicated loan amount
6. Names of participating banks
7. Purpose
8. Final maturity
9. Repayment
10. IDCP (Interest During Construction Period)
11. Debt –Equity ratio
12. Pricing/Interest rate
13. Loan processing fee (flat)
14. Syndication fee/Arrangement fee (flat)
15. Agency fee (flat)
16. Participation fee (flat)
17. Management fee (Annual)
18. L/C commission (if applicable)
19. Escrow account
20. Guarantor and guarantee
21. Availability period/disbursement period
22. Security packages
34
23. Documentation packages
24. Legal Expenses
25. Taxes
26. Transferability
27. Governing laws
28. Syndication strategy
29. Expiry date
30. Requisites
31. Special/other conditions
32. Monitoring and reporting
33. Cancellation process
34. Negotiation and arbitration
35. Termination and provision of legal action
35
ANNEX: XIII
CONTENTS OF INFORMATION MEMORANDUM WITH SUPPORTING DOCUMENTS
A: Contents of Information Memorandum (IM) 1. Circulating page (Cover Page of IM)
2. Disclaimer (second page of IM) (Statement to be made by the Lead Arranger as representative for the syndicate that
certain information provided in the IM was supplied by the borrower. Therefore, it is not the
responsibility of the Lead Arranger to certify the authenticity of such information).
3. Contact persons
4. Table of contents
5. Executive summary
6. Management of the organization
7. Market aspect
8. Financial information of the organization
9. Latest performance of the organization
10. Resource base and credit need of the organization
11. Risk and mitigants
12. CIB reports (contents)
13. Representation
14. Appendices of market survey
15. Other information depending on the nature of the organization
36
B: Copies of supporting documents of IM
1. Copies of Credit report/ Rating report
2. Copies of certification of valuation of land and building
3. Copy of BOI registration, if applicable
4. Trade license
5. NOC from competent authority (i.e., Union parishad, etc.)
6. TIN certificate
7. Copy of MRA’s license
8. Environment clearance (if needed)
9. Proce ss flow chart
10. Bio-data of all Governing Body members/d irectors and ED or CEO
11. Net worth statement of all d irectors
12. Bio-data of all technical persons/key officials
13. Copy of Certificate of Incorporation (for limited companies)
14. Copy of Memorandum of Association and Articles of Association
15. Bank’s certificate/ declaration regarding liability position of the organization
16. Organogram along with job descriptions of key pe rsons
17. A short report on the overview of the organization along with its specialty
The IM will be transmitted to the potential syndicate members (Banks and FIs) for
commitment. The cover letter will be addressed to the Managing Director/CEO of the
prospective participating banks and financial institutions. The letter should indicate the
background and overview of the borrower NGO-MFI along with name of contact persons,
specific closing date of syndicate deal, etc.
37
ANNEX: XIV
LIST OF MAIN SYNDICATED LOAN DOCUMENTS
1. Loan Facility Agreement
2. Pari Passu Security Sharing Agreement
3. Escrow Account Agreement
4. Agreement for Assignment of Insurance
5. Agreement of Assignment of Contract
6. Project Funds and Share Retention Agreement
7. Sub-ordination Agreement
8. Deed of Mortgage
9. Letter of Hypothecation (movable or immovable assets)
10. Letter of Hypothecation of Receivables
11. Power of Attorney to sell the hypothecated assets
12. Letter of Undertaking
13. Personal Guarantee of all Governing Body Members/Directors
14. Corporate Guarantee
15. Demand Promissory Note
16. Letter of Comfort
17. Other documents (as may be required) depending on the structure of loan
38
ANNEX: XV
GUIDELINES AND PROCEDURES FOR ON-LENDING TO MICRO ENTREPRENEURS BY NGO-MFIs
Micro entrepreneurs who have neither access to micro credit nor bank loans have been
identified as the “missing middle” in the credit market. Recently, many NGO-MFIs are
coming forward to finance them and taken this as one of the major lending programs. The
objectives of this program are generation of income, creation of employment through
entrepreneurship development, establishment of backward-forward linkages and also
creation of wage employment for those who are not capable of starting new business. In
order to enable NGO-MFIs to concentrate more on this mode of lending, appropriate
guidelines and procedures are illustrated here.
1. Eligibility for Availing of Loan Facility by a Potential Borrower
The loan applicants (men/women) must have successful business experience for at least 2
years. They must also have to fulfill the following criteria to apply for loan under the “Micro
Enterprise Refinancing Scheme (MERS)”.
• The borrowers must be between the age of 20 to 55 and must be physically fit.
• The entrepreneur must have necessary knowledge and experience relevant to the
business s/he is involved.
• The entrepreneur must have specific source of income and ability to save .
• The borrower entrepreneur must have a bank account in his/her residing area.
• The prospective borrower should have the ability to give token amount of collaterals
depending on the size of loan.
The enterprise/business must satisfy the following criteria:
• The business must be in operation for at least 2 (two) years.
• The business must be legally valid, i.e. it has valid trade license, income tax or VAT
registration (where applicable).
39
• The business place (possession) must be either in the name of the borrower or
his/her spouse’s name and in case of rented possession it must be taken at least for
2 (two) years.
• The premises of the business must be legally occupied and stable enough with no
potential threat of eviction, river erosion, demolition, etc.
• The business must have fixed assets and working capital of at least Taka 1.00 lakh
for highly potential business and Taka 50,000.00 (Taka Fifty Thousand) for potential
business.
2. Target Groups
• The enthusiastic graduated members who have the ability and scope to expand their
business with the loan.
• Non-group members who need money to increase their working capital or fixed assets
of the business and have entrepreneurial ability to handle money.
3. Loan Ceiling
The range of ‘Micro Enterprise Loan ’ will be from Taka 50,000 to Taka 500,000. The
borrowing NGO-MFIs may increase the ceiling based on borrowers’ performance.
Year-wise Loan Ceiling (Potential Bus iness) Amount in Taka
1st Year 2nd Year 3rd Year 4 th Year 5th Year and Above
50,000 to 100,000 150,000 250,000 350,000 500,000
4. Nature of Loan, Limit and Duration
Nature of Loan
Loan Limit Loan Duration Grace Period
Fixed Assets purchasing loan (Term Loan)
Up to Taka 5.0 lakhs
3 to 5 years 2 to 3 months
Working Capital loan Up to Taka 2.0 lakhs
Up to 1.5 years 1 to 2 months
Seasonal Loan Up to Taka 0.50 lakhs
3 to 6 Months no grace period
40
5. Interest Rate
Interest will be 12% - 15% (flat rate) per annum. This rate will be offered based on the
interest paid to the banks by the NGO-MFIs.
6. Admission and Processing Fees
Borrowers will pay admission and processing fees @ 0.5% of sanctioned loan, which will
be non-refundable due to utilization of fees for legal formalities.
7. Rebate
NGO-MFIs may give rebate to the good borrowers for advance repayment of loan
installments. The rebate amount may vary from 10% - 15% of interest paid in advance.
8. Debt –Equity Ratio
The Debt-Equity ratio should be at least 80:20
9. Essential Security
• Borrower must give his/her personal guarantee to repay the full amount of loan in time.
• A third party guarantee acceptable to the lender will be required. In case of possession
deed and rent prepayment as security, the actual owner shall be the guarantor.
• Hypothecation of business assets, memorandum of title deed and mortgage deed will
be needed depending on loan size.
• In Bangladesh, very few women have land, which they can mortgage. Considering this,
NGO-MFIs will arrange third party mortgage for the women. In this case female
entrepreneur can mortgage husband’s/father’s or any other relatives’ land with their
consent.
10. Loan Documents/Papers
• Copy of Trade license and license for specific business like drug certificate, if necessary
• Copy of ownership of possession or possession deed in case of rented possession
• No Objection Certificate (NOC) (if needed)
• Post dated cheques
• General loan agreement
41
• Demand Promissory Note
• Letter of continuity
• Letter of arrangement
• Letter of undertaking
• Letter of hypothecation of goods, stocks
• Letter of hypothecation of plant and machinery (where applicable)
• Letter of installment
• Right of set off
• Letter of disclaimer
• Letter of pledge
• DCR
• Original deed
• Baya deed
• SA/RS/Mutition
• Besides, 90% of value of DPS (Deposit Pension Scheme), FDR (Fixed Deposit Receipt)
and savings certificate.
11. Guarantor Selection Criteria
• The guarantor must be financially sound with good reputation and should have the
ability to repay the loan.
• The guarantor must be aware of his obligations and legal bindings.
• The guarantor must know the entrepreneur very well and reside in the same area.
• Preferable guarantors may include relatives, local elites, government officials,
professionals and man with social standing.
12. Repayment System
Based on the nature of loan, repayment schedule may be fixed either monthly or quarterly.
42
13. Application Process
The eligible borrowers will have to fill-up and submit the prescribed loan application form (to
be supplied by the lender) with all required papers and documents. All loan applications will
be primarily scrutinized by the credit/program officer. The whole process of loan
sanctioning (from receipt of application to disbursement) should not take more than 30 to
45 days.
14. Approval Process
On receipt of loan applications with due recommendation from the credit/program officer,
the program coordinator/manager will appraise the viability of each and every loan proposal
carefully and will ensure that all preconditions are met. Being satisfied about the credit
worthiness of the borrower, he will accord necessary approval and will advice the
credit/program officer to disburse the loan.
16. Disbursement Process • On completion of proper documentation, disbursement of loan installment will be made
by the NGO-MFI through issuance of cheques in favor of entrepreneurs/enterprises.
• Sanctioned loan may be disbursed in a single installment or several phases depending
upon the nature, amount and purpose of loan.
• In case of fixed assets procurement loan, cheques will be issued directly in favor of the
suppliers instead of the borrower.
• Working capital loan, if necessary may also be disbursed like fixed asset procurement
loan.
• The loan giving organization may disburse cash through proper voucher if it deems fit.
17. Recovery Process • The borrowers will pay loan installments based on loan types by equal monthly
/quarterly installments.
• The borrowers will pay loan installments by post-dated cheques duly signed and
submitted to the NGO-MFIs at the time of loan disbursement.
43
• Head office or branch will keep post-dated cheques in a safe place and at due date loan
officers will deposit the cheque (s) and will encash the amount.
18. Information Management All lender NGO-MFIs will preserve credit information systematically and maintain separate
loan records. They will prepare periodical reports to track individual borrowers as well as
overall performance of the credit program.
A.19 Monitoring Process Program/credit officers will undertake regular monitoring on the business activity of the
borrowers and submit monthly report to their supervisor about the progress. The loan
officers will use prescribed monitoring/follow-up forms and preserved them in the “Client
File’. In the monitoring process, the program/credit officers will ensure the following:
• Ensure that entire loan has been utilized in the intended manner.
• Ensure that the business is running well
• Scrutinize the production/marketing activities of the business and problems being faced
by the entrepreneur.
• Review the monthly sales revenue (including credit sales), cash flow, etc.
• Check whether money is blocked in raw materials that can create fund (working capital)
crisis.
• Ensure that the loan is repaid as per repayment schedule without disturbing the normal
business operation of the borrower.
44
ANNEX: XVI
Name of the Bank/Financial Institution ....................................
Statement of Loan disbursed under the Micro Enterprise Refinancing Scheme through NGO-MFIs
For the period from ..................... to .............................
(Figures in lakh Taka)
Sl. No.
Name of the NGO-MFI
Address of the NGO-MFI
Nature of loan
Particulars of the micro enterprise
loan program
Amount of fixed asset of the NGO-
MFI
Amount disbursed/ withdrawn
Date of Disbursement
Loan Duration
Remarks
1
2
3
4
5
Signature: ...................................................... Date: ..................................
Authorized Executive ’s Name and designation : ..........................................
45
ANNEX: XVII
GUIDELINES AND PROCEDURES FOR ON-LENDING TO HARDCORE POOR BY NGO-MFIs1
Hardcore Poor means people who live at the lowest level of subsistence and cannot afford
three square meals in a day. Generally, people who a re unable:
§ to earn less than 1.0 US$ per day
§ to ensure quality food especially for elderly, lactating and expecting mother
§ to ensure minimum housing and clothing
§ to ensure their healthcare
§ to establish rights in access to common resources and
§ to establish their existence in the society
2. Target Groups § Beggars
§ Ex and floating sex workers
§ Slum dwellers
§ Landless
§ Day labors and unskilled labors
§ Domestic helpers
§ Bonded labor
§ Female headed household
§ Physically disabled and elderly persons having no source of income
§ Families with irregular income
§ Seasonal labor who are affected by river erosion, monga, etc.
§ Char dwellers, highly indebted poor people (mainly from mohajons)
§ Forward labor sellers
§ Poor tribal people
1 This guideline is prepared in line with the guideline being followed by PKSF in lending to its POs.
46
3. Group Management § Hardcore poor needs to be identified properly
§ A profile of the hardcore member needs to be filled up
§ Group size 10-30 (vary with the availability of the hardcore poor)
§ Separate groups for male and female members
§ No multiple membership
§ Succession in group leadership
§ Flexible group meeting
§ No extra fees or processing fees both in time of admission into groups and
subsequent loan disbursement.
4. Savings Management § Rate of regular savings is flexible but mandatory for subsequent borrowings
§ High and competitive interest on member savings
§ Scope to withdraw savings whenever they need
§ No link between borrowed money and savings especially for first loan
5. Credit Management § Loan ceiling:
o 1st loan: Taka 500 to Taka 4,000
o 2nd loan and later: Taka 1,000 to be added with the previous loan amount
§ Interest rate: 9% to 10% (maximum)
§ Flexible repayment schedule and it should be determined before disbursement
§ Encourage to use the loan for income generating activities. However, a portion of
loan may be given for consumption purpose in Monga/disasterprone areas, if
needed.
6. Formation of Emergency/Disaster Management Fund An emergency/disaster management fund will be created by the NGO-MFIs for facing
disasters or any other emergency by the hardcore poor. This fund may be created out of
47
interest earnings of the participating NGO-MFIs. Grants or loans may be given to the
beneficiaries from this fund as and when emergency arises.
7. MIS and Accounting § Maintain basic information for every member according to the prescribed format
§ Separate MIS with visible classification
§ Separate head of accounts in ledger, cash books and other registers/formats
§ Creation of loan loss provision
§ Maintenance of safety reserve fund
8. Training § NGO-MFIs will impart training for organized members on social mobilization,
environment, healthcare, sanitation, safe drinking water, etc.
§ NGO-MFIs will impart training to beneficiaries to change their mindset and enhance
their confidence level for making appropriate choices and successfully implement
them to achieve desired results.
§ Arrange necessary beneficiary training to ensure development of required skill,
§ Arrange necessary training and workshop for employees of NGO-MFIs in order to
develop their operational knowledge and skill
9. Follow-up and Monitoring § A monitoring cell has to be established separately under the Executive Director/
Chief Executive Officer of participating NGO-MFIs.
§ Constant follow-up by the program/credit officer will have to be ensured so that
identification of problems and instant solution would be possible.
§ Ensure proper review of periodical reports/returns and evaluation of performance to
bring necessary changes for sustenance of the program in consultation with banks
and other funding organizations.
48
10. Other issues § Involve beneficiaries in other activities of NGO-MFIs like health, sanitation,
education, etc.
§ Promote labor intensive activities
§ Prepare and take necessary action for proper dissemination of information
Coordination between participating NGO-MFIs operating in a particular region/area will
have to be ensured to help sustain hardcore credit programs on continuous basis.
11. Linkage with Other Interventions
§ Within a given time, hardcore poor beneficiaries may be linked with other
microcredit programs.
§ Linkage with micro enterprise may be encouraged to create wage employment.
§ Projects/programs with focus on crops, livestock and other agricultural activities
may be established.
49
ANNEX: XVIII
Name of the Bank/Financial Institution ....................................
Statement of Loan disbursed under the Hardcore Poor program through NGO-MFIs
For the period from ..................... to .............................
(Figures in lakh Taka)
Sl. No.
Name of the NGO-MFI
Address of the NGO-MFI
Nature of loan
Particulars of the hardcore poor loan program
Amount of fixed asset of the NGO-
MFI
Amount disbursed/ withdrawn
Date of Disbursement
Loan Duration
Remarks
1
2
3
4
5
Signature: ...................................................... Date: ..................................
Authorized Executive’s Name and designation : ..........................................
50
ANNEX: XIX
FLOW CHART OF SECURITIZATION PROCESS
SPECIAL PURPOSE VECHILE
Or SPV
REVENUE/ RECEIVABLES
Cash flows before securitization
ORIGINATOR
Return of residual cash
Sale price
Administration Asset/
Receivable sale
Cash flows after securitization
Sale price of securities
Return on securities
INVESTOR
51
ANNEX: XX
CHECK LIST OF SECURITIZATION DOCUMENTS
1. Accounts Agreement
2. Subscription Agreement
3. Common Terms Agreement
4. Fee Letter
5. Guarantee Documents
6. Counter Guarantee Agreement
7. Recourse Agreement
8. Sale and Servicing Agreement
9. Substitution Deed of Assignment
10. Trust Deed
11. Assignment Agreement
12. Eligible Loan Agreement
13. Consulting Services Agreement, if such services are taken
14. All other documents/letters/undertakings as may be needed (as transaction
documents) depending on the type of securitization.