Prime Ministers Interest Free Loan Scheme Rs.50,000/-

Prime Minister Interest free loan scheme of Rs. 50000/- through Pakistan Destitution Lightening Asset, Pakistan Poverty Alleviation Fund (PPAF)

Introduction:

Administration of Pakistan, in a joint effort with Pakistan Destitution Lightening Asset, Pakistan Poverty Alleviation Fund (PPAF) and Accomplice Associations, Partner Organizations(PO’s) has propelled an Intrigue Free Loan plan under which low salary families whose Neediness score card up to 40 will be given intrigue let loose loan to Rs.50, 000.There is a guiding board of trustees which is reviewing the entire Venture. Under Leader’s Without advantage loan PM-IFL) Plan, an aggregate sum of Rs. 3.5 billion has been given to PPAF and PPAF has dispensed that store to Accomplice Associations. In such manner, Akhuwat Islamic Microfinance (Point) has been chosen as an Accomplice Association by PPAF.

Significant Goals of the Task:

 

  • Making interest free loan accessible to helpless and underestimated individuals on a scale 0-40 on Neediness Score Card.
  • Guaranteeing the loan are utilized for gainful reason to build pay of borrowers/family units.
  • Designating half loan to ladies for their incorporation in monetary exercises.
  • Empowering social change among recipients of plan.

Striking Highlights of Task:

  • Interest free loan office is just for explicit UC’s apportioned according to NFC rules.
  • Most extreme loan size will be PKR. 50,000.
  • Loan will be given to individual having Destitution Score Card 0-40. are dispensed in mosques/houses of worship to guarantee straightforwardness and investment. 
  • There is no increase or enthusiasm on these loans.
  • Loans are given after due examination and evaluation as indicated by a qualification rule, on first start things out serve premise.

Eligibility Criteria:

  • Candidate having the best possible strategy.
  • Candidate having Destitution Score Card up to 40.
  • Having age between 18-60 years.
  • Candidate ought to have substantial CNIC.
  • Candidate should be monetarily dynamic.
  • Candidate ought not be indicted for any criminal offense in lieu of which continuing are in progress.
  • Candidate ought to have great social and good character in his locale.
  • Candidate ought to have ability to give two underwriters other than relatives.

Eligibility Criteria for Loans

Following general points are compulsory for eligibility of loan:

  • Applicant should have valid CNIC.
  • Having the ability to run / initiate business activity having age between 18-62 years.
  • Applicant should be economically active.
  • Applicant should not be convicted of any criminal offence in lieu of which proceeding are in progress.
  • Applicant should have good social and moral character in his community.
  • Applicant should have capacity to provide two guarantors other than family members.
  • Applicant should be resident of operational area of branch office which might be around 2-2.5 KM radius.

Note: – Project specific eligibility criteria may be varied.

Lending Methodology

 

  • AIM’s lending policy involves disbursement of interest free or Qard-e-Hasan loans through
  • Group Lending
  • Individual Lending
  • However, decision of lending methodology depends upon the loan product as well as project specific requirements.

Group Lending

Group Lending includes disbursement of Qard-e-Hasan loans among groups of men and women who are looking forward to enhance their family income but are unable to do so due to scarce resources. In group lending methodology groups of 3 to 6 members will be formed, all group members would guarantee loans and credentials of each other. Group Lending enables group members to resolve their social and economic problems through mutual understanding and decision making.

Before applying for a loan, applicant is supposed to constitute a group of 3 to 6 members residing nearby to each other and members shouldn’t be close relatives to each other.

Individual Lending

Individual Lending includes disbursement of Qard-e-Hasan loans among individuals. Loans are offered to certain individuals that fulfill the eligibility criteria of scheme in order to facilitate them to meet their needs through interest free loans. In case of individual lending two guarantors will be provided by applicant for availing interest free loan.

Application Submission

The loan process will start with the submission of application. The application fee may vary from scheme to scheme. The unit manager will then evaluate the application through eligibility criteria. Thus, these loans will be given out on social collateral. The following steps will be followed in application submission.

 

Applicant will visit nearest AIM branch along with his/her relevant documents (mentioned below) for submission of loan application.

Unit manager will discuss with the applicant to check whether applicant falls under eligibility criteria of the scheme.

Potential candidate will submit loan application on prescribed form. Loan application will be provided and filled by AIM staff in branch office.

Unit manager will check documents and application will be processed after completion of required documents.

The following are the details of collaterals that may be applied for loans:

  1. Personal responsibility
  2. Two guarantors
  3. Postdated cheques
  4. Any additional collateral in special case.

Note: – Additional documents may be demanded according to scheme’s requirements.

Social Appraisal

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.

  1. Information from existing borrowers
  2. From the living style of the applicant
  3. Views of neighbors about the applicant
  4. Personal interview/ family interview

Business Appraisal

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.

Second Appraisal:

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.

Loan Disbursement

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

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.

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