Note: – Additional documents may be demanded according to scheme’s requirements.
Social appraisal aims to verify character and credibility of the applicant by visiting his residential place. After receiving the Application, unit manager performs social appraisal through following methods.
- Information from existing borrowers
- From the living style of the applicant
- Views of neighbors about the applicant
- Personal interview/ family interview
Through the scrutiny of business plans the business idea of the intended borrower will be evaluated to see if it is viable and whether it can generate income beyond the household expenses sufficient for loan repayment. Business requirement is evaluated in business appraisal. This will also help fine-tune the applicant’s business idea itself. The applicant’s family will also be interviewed to make sure that they know about the loan and support the business idea.
After initial appraisal by the unit manager, the application will be forwarded to Branch Manager who will appraise the social and business appraisal process once again and conduct a meeting with borrower and their guarantors.
Guarantors of Loans
In cases of individual lending every applicant will provide two guarantors who vouch for his/her credentials and accept the responsibility of monitoring the borrower and give assurance to persuade the borrower for timely payment of loan. Whereas in group lending the members of the group would guarantee each other and thus formally constitute a group.
Loan Approval Committee (LAC)
Every branch will have its own Loan Approval Committee (LAC). The committee is headed by the Area Manager, and other members of the committee are unit managers and Branch Manager. All credit cases will be reviewed by the committee. If the committee approves the case, loan is finalized and is ready to be disbursed. The whole process takes almost 3 to 4 weeks.
Fund Request & to head office
Once loans are approved by Loan Approval Committee (LAC), required amount of funds is requested to head office through Regional Manager. Head office makes necessary arrangements for transfer of funds into their respective bank account for disbursement. Area accountant has been intimated once funds are transferred to their bank account. Area accountant prepares the cheques for disbursement for approved applicants.
Disbursement will take place once in a month and loans would be disbursed through event usually held at mosque or church. In case of individual lending, applicant has to be accompanied by at least one of the guarantors. In case of group lending all group members should be present at the time to disbursement.
Following are some points relevant to the loan disbursement event:
- Every individual will be present at time of the disbursement. In case any borrower is absent, loan will not be disbursed and may be cancelled.
- All borrowers will bring their original CNIC in the disbursement event.
- Borrowers would receive cheques of the loan amount sanctioned to them.
- Acknowledgement of cheques would be taken from each borrower.
- The disbursement event would be monitored by Area Manager.
Social Guidance is also briefed simultaneously at the disbursement events in which the capacity of borrowers will be built to carry on their work more efficiently and effectively particularly keeping in view the Islamic or ethical principles.
Social agenda items include:
- Emphasis on girls’ education
- Serving the community at large
- Protection and improvement of environment
- Importance of plantation
- Observance of traffic rules and local laws
- Following highest ethical values in business
Recovery & Follow up
Once the loan has been disbursed, the unit manager monitors the client with regular visits to his residence and place of work. The loan repayment has to be made at the branch till the 7th of each month. If a payment is not in by the 10th, the unit manager visits the client to remind and if repayment is still not made then the guarantors are contacted and asked to make the payment.
Summary of Loan process
Following table provides brief summary of loan process and steps with precise objectives and their place of occurrence.
|Office / Mosques
|Social & ethical screening
|Place of residence
|Business requirement Screening
|To verify social & business appraisal
|Residence & business place
|Guarantors of loans
|To ensure guarantee of loans
|Loan Approval committee (LAC)
|To approve loan
|Delivery of loan & social Guidance
|Mosque / Church
|Ensuring recovery and social guidance