Many Indian microfinance institutions (MFIs) introduced the individual lending (IL) methodology as a natural progression from the group lending methodology. The lure of “big ticket” loans and higher profitability is attracting growth oriented MFIs to aggressively push for IL without considering the inherent risks. IL has its own idiosyncratic needs like cash flow based lending; analysing business needs and risks; bringing flexibility in product features; building staff capacities and processes that must be followed for successful implementation. This IFN examines these issues and makes recommendations for MFIs considering individual lending.
Blog
External Framework and the Impact of the Financial Crisis
In this video Roshaneh Zafar, Managing Director of Kashf Foundation, Pakistan speaks about the opportunities and challenges for microfinance in Pakistan. In the context of Pakistan, Roshaneh talks about the strong infrastructure, excellent legislation and a wide network that gives boost to microfinance in the country. She further explain the different business model for clients across the country such as rural integrated programmes, specialised NGO based programmes and microfinance banks. Talking about the challenges, she shares her views on the impact of the financial crisis on microfinance clients, particularly the impact of increased food crises.
Using Technology for better Client Service and Deposits Mobilisation
In this video Roshaneh Zafar, Managing Director of Kashf Foundation, Pakistan speaks about the implementation of the deposit mobilisation strategy that Kashf has put into place. She explains the important role of technology and m-banking in microfinance and how Kashf has employed technological innovations for the benefit of their clients. She further talks about the segmentation process for savings and how it has revealed that designing savings product requires much more detailed understanding of different segments than that for credit products.
Reaching Cients and Mobilising Deposits
In this video Roshaneh Zafar Managing Director of Kashf Foundation and the founder of Kashf Bank, one of the leaders of microfinance in Pakistan, speaks about the challenges of reaching out to the female borrowers in one of most challenging markets in the world. She speaks on the importance of mobilising deposits from microfinance customers and talks about the Kash Foundation’s foray into savings product for serving low income households. She enumerated the reasons why deposits matter and what steps the foundation undertook before rolling out the savings product.
Why do Microfinance Clients Take Multiple Loans?
This Focus Note (a) presents the rationale and impact for multiple borrowings from a client perspective; and (b) discusses how the MFI and its leaders perceive the issue and its implications. It is difficult to attribute multiple borrowings just to unmet demand for credit from borrowers, or to dumping of loans by the MFIs on clients well versed with the MFI methodology. However, MFIs can reduce the incidence of multiple borrowing. The appropriateness of disbursement timing can be improved through studying microenterprise cash flows by type, and changing operational policies to reduce mismatches between client cash flows and the timing of loan cycles.
Designing savings and loan products
This paper examines the financial lives of poor people, using MicroSave’s seasonality analysis, which traces households’ income, expenditure, loans and savings over time.