GROUP LENDING ENHANCEMENT WORKSHOP
Group Stages and Membership in Group Lending
Group Lending: Stages in Group Lending: Stages in Center/Group and Membership Life Center/Group and Membership Life
Cycle Cycle • Formation Stage• Maintenance Stage• Transition or Graduation Stage
Center LifecycleCenter Lifecycle
TIME
Formation Stage: CharacteristicsFormation Stage: CharacteristicsZero to 2 yearsZero to 2 years
• Increase in Group/center membership• Rapid expansion in membership recruitment• Members still adhere to credit & group guarantee “tapal”
obligations• Some delinquencies may be experienced• Novelty of group lending experience to a new AO may inspire AO
to do good and well
Maintenance StageMaintenance StageLess than 2 to 4 yearsLess than 2 to 4 years
• Members experience “tapal” fatigue• Attendance in meetings decline• Group/center experience member drop outs• Delinquencies may worsen• Bank staff may resort to collection techniques that treat clients poorly • Good payers and those with growing businesses may leave• AO fatigue or burnout
What processes happen in a center during What processes happen in a center during Maintenance Stage?Maintenance Stage?
Transition or Graduation StageTransition or Graduation Stage2 years & above2 years & above
• Borrower has had at least 4 loan cycles• Center may have 2 categories of clients:
– Clients wanting to and qualified for individual liability credit. Individual credit responsibility is key to keeping these clients.
– Clients that should stay under group loan liability: not qualified for the maximum loan amount available under group loan; or have poor repayment record
Framework: Stages of Group & Framework: Stages of Group & Membership in Group LendingMembership in Group Lending
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Framework: Stages of Group & Framework: Stages of Group & Membership in Group LendingMembership in Group Lending
Framework: Stages of Group & Framework: Stages of Group & Membership in Group LendingMembership in Group Lending
It is important to recognize the symptoms
Framework: Stages of Group & Framework: Stages of Group & Membership in Group LendingMembership in Group Lending
It is important to transition clients in time before they leave you
Criteria to Consider in doing the Criteria to Consider in doing the product enhancement or product enhancement or
transitioningtransitioning
• Aging Centers/membership• Repayment Performance• Readiness of the Clients• Clients’ demands
Thank You!