The Lending Process

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Program Introduction

At Tooba Foundation, Interest Free Micro Financing facility is available for individuals in need to establish themselves in the society. Availability of individual loans is communicated via awareness campaign in poor localities, market places and through registered borrowers. An introduction to the program is also given at the Tooba Foundation Community Center during various gatherings. These awareness sessions attaches a moral responsibility to return the loan on time.

Individual Selection

The loan process at Tooba Foundation starts with the submission of applications by the  person in need of financial assistance. The Unit Manager (Loan Officer) then evaluates whether the applicant deserves the loan or not i.e.

  • lives below the poverty line,
  • has a reliable social capital,
  • is not involved in any illegal business &
  • have entrepreneurial abilities.

Preparation of Business Plans

Next is the preparation of business plan, the business idea of the intended borrower is evaluated. This is done to see if it is viable and whether it can generate income beyond the household expenses of the individual so that the loan could be repaid easily. The applicant’s family is also interviewed to make sure that they know about the loan and support the business idea.

Credit Appraisal

After initial appraisal by the Unit Manager, the application is forwarded to Branch Manager who appraises the technical section of the appraisal process. Then the case is referred to Loan Approval Committee. The committee comprising of Unit, Branch and Area Mangers reviews the credit case. If the committee approves the case, loan disbursement is done.

The whole process takes almost 3 weeks.

Guarantors of Loans

As part of the process, in every approved case the borrower also  requires to provide two individual guarantors who vouch for his / her credentials. These guarantors  also accept the responsibility of monitoring the borrower and give assurance to persuade the borrower for timely payment of loan installment.

Credit Disbursement/
Capacity Building

Loan Disbursement takes place every month. This disbursement takes places at the Tooba Foundation Community Center. Every borrower has to be accompanied by one of the guarantors. Other people present at the time of disbursement include community members, Tooba Foundation staff.

Social Guidance events are also held simultaneously in which the capacity of borrowers  is built to carry on their work more efficiently and effectively. They are also apprised of social agenda that includes:

  • Emphasis on girl’s 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 scheduled loan payment has to be submitted at the Foundation’s branch by the 7th of each month. If a payment is not in by the 10th, the Unit Manager gives a reminder visits to the client and if loan payment is still not done then the guarantors are contacted and asked to make the payment. This way the borrower is conscious of the process requirements at his/her part.