for MFI's
we created a preliminary survey for the MFI's to complete, it doesn't share anything about our solution, and therefore doesn't threaten our opportunities to present our solution in a succinct, targeted manner to the MFI's. It was believed that the project will only receive one review by the MFI's, thus when we approach them we should have everything as close to finalized as possible.
April 13, 2008
Dear Sir or Madame,
Hello, my name is Leigh Gautreau and I am a Massachusetts Institute of Technology student working on a project that hopes to deliver internet based microfinance services to Rajugella, a tiny village in Uttar Pradesh. In 2006 the India School Fund, a non-governmental organization founded by 5 Harvard students opened a school in Rajugella, in the hopes of helping this village realize its significant, untapped economic potential. Education, however, is just the first step in empowering the people of Rajugella: it is hoped that the villagers, with access to entrepreneurial loans, might be able to overcome the throes of poverty.
My group and our sponsors from the India School Fund have devised a comprehensive approach to entice microfinance institutions to consider operations in Rajugella and would like some feedback as to whether our proposals are feasible from a microfinance institutions perspective.
Questions concerning how microfinance institutions assess villager’s loan applications: Please be as quantitative as possible.
1.) What types of assets do microfinance institutions usually evaluate as collateral? Or is collateral necessary? Are references alone sufficient? Are micro loans provided to individuals without any reference ?(groups loans v/s individual loans)
2.) What are the general guidelines for a person to qualify for a micro loan? Does he need to have any source of income?
3.) What are the acceptable microloan amounts and for what use can a borrower take out a micro loan ? Are there restrictions on reasons for which a loan can be taken out ? Does the loan rate/term depend on the loan purpose ? For example a loan to start a small business is given out at a different rate/term than a loan to payoff other debt.
4.) What types of information are most relevant in a microfinance institutions decision to loan to individuals? How do you determine a borrower’s credit worthiness ?
5.) How would MFIs typically verify villagers information? In this case?
6.) Are there incentives for repeat borrowers who have a good history of loan repayment ? are their rates lowered ? Do you have access to loan repayment history of a borrower that has borrowed from other banks?
7.) Any feedback on our model would be invaluable…
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