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1 LOAN POLICY 1. Preface This paper has been drawn by way of consolidation, updation and additions to our existing lending norms with a view to present a comprehensive policy document for favour of the Board’s approval. The policy seeks to maintain consistent improvement in asset quality, improvement in net interest margins and operational efficiency particularly in the areas of compliances and risk management. 2. Regulatory regime As a Non Banking Financial services company registered under the Reserve Bank of India Act , our lending policy is guided by the directives and guidelines issued by The Reserve Bank of India from time to time . As such, this policy document is subject to review based on periodic changes in regulatory norms. 1. Single / Group Exposure norms - Lending to any single borrower will not exceed 15% of owned funds and to any single group of borrowers not to exceed 25% of owned funds. 2. Maintain a Capital to risk weighted asset ratio of 15%. 3. Prudential lending norms - Asset classification, provisioning requirements as per RBI Prudential norms. 4. Fixation of maximum loan per gram based on the Loan to Value (LTV) guidelines of RBI 5. Compliance with Anti money laundering / countering financing of Terrorist Activities as elucidated in our Anti Money Laundering (AML) policy 3. Risk management We have a zero tolerance policy on risk. The different tiers of control already implemented, begins at the branch level. Regional Managers, Audit Managers, Operational Managers and Vigilance Managers have a clear job role to enforce routine check on enforcement of quality assurance measures. CO functionaries will also undertake random check on related issues, whenever they visit the branches. The Risk Management Committee, of the Board, is entrusted with the task of identification, measurement, monitoring and mitigation of the risk factors on an ongoing basis.
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Loan Policy - Muthoottu.M.Mathew Group

Apr 30, 2022

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Page 1: Loan Policy - Muthoottu.M.Mathew Group

1

LOAN POLICY

1. Preface

This paper has been drawn by way of consolidation, updation and additions to our existing lending norms with a view to present a comprehensive policy document for favour of the Board’s approval. The policy seeks to maintain consistent improvement in asset quality, improvement in net interest margins and operational efficiency particularly in the areas of compliances and risk management.

2. Regulatory regime As a Non Banking Financial services company registered under the Reserve Bank of India Act , our lending policy is guided by the directives and guidelines issued by The Reserve Bank of India from time to time . As such, this policy document is subject to review based on periodic changes in regulatory norms.

1. Single / Group Exposure norms - Lending to any single borrower will not exceed 15% of owned funds and to any single group of borrowers not to exceed 25% of owned funds.

2. Maintain a Capital to risk weighted asset ratio of 15%. 3. Prudential lending norms - Asset classification, provisioning requirements as per RBI

Prudential norms. 4. Fixation of maximum loan per gram based on the Loan to Value (LTV) guidelines of RBI 5. Compliance with Anti money laundering / countering financing of Terrorist Activities as

elucidated in our Anti Money Laundering (AML) policy

3. Risk management We have a zero tolerance policy on risk. The different tiers of control already implemented, begins at the branch level. Regional Managers, Audit Managers, Operational Managers and Vigilance Managers have a clear job role to enforce routine check on enforcement of quality assurance measures. CO functionaries will also undertake random check on related issues, whenever they visit the branches. The Risk Management Committee, of the Board, is entrusted with the task of identification, measurement, monitoring and mitigation of the risk factors on an ongoing basis.

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As a part of our ongoing risk mitigant initiatives, the Company has implemented rating matrix system to assess vulnerability at branch as well as at corporate office levels. This rating exercise will be a part of periodic audits. Notwithstanding, given the short term nature of our Loan assets cushioned well by net interest margins, the secured nature of business, vulnerability to credit, operational as well as market risks is limited.

4. Resources Our funding needs are presently sourced out of debentures and also partly through working capital facilities from Banks. Reckoning our ambitious growth plans, steps have been initiated to source additional banking facilities, in addition to periodical issue of non-convertible debentures. As a part of our initiative to raise cheaper source of funds and also to draw parity with our assets maturity profile, alternative short term sources of funding would also be added to the resources.

5. Loan Pricing policy The interest rates on gold loans will be fixed by the company on the basis of the following internal valuations.

1. The company lends varying amounts per gram of the gold (LTV) depending upon the market value and the purity of the gold. As per the risk assessment of the company a higher LTV is riskier than a lower LTV. Accordingly, lower LTV attracts lower rate of interest and higher LTV attracts higher interest rate. Further, in case of schemes where the interest rate varies with tenor of the loan, the borrower can remit the monthly interest alone and continue to enjoy the loan at lower interest rate.

2. In terms of RBI guidelines, maximum LTVrate that can be fixed should not exceed 30-

day average of the closing rate for standard gold (22k) fixed by India Bullion and Jewellery Association.

3. No allowance has been provided for add-ons such as making charge, sales tax, etc.

4. The maximum permissible LTV (Loan-to-Value) of the pledged ornaments will, however, be within the ceilings stipulated by RBI from time-to-time (The maximum permissible LTV is 75% at present).

5. Cost of funds: Interest on loans will be levied as a mark up on the current cost of funds.

The current cost of funds for this purpose means the incremental cost of borrowings of

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3

the company, its operating cost, loan loss provision and taking into account the operating margins required for growth of the Company.

6. The interest rates charged by the Company shall be expressed in compound rates with

monthly rests.

6. Products The Company’s assets are advances granted against the security of gold. Therefore the products profiles are reviewed regularly with a view to customize products in line with market expectations, availability of funds and competitor analysis. Variants of loan products through different schemes within the policy framework are done after periodic review of market conditions, duly approved by the board. Gold loan schemes of the company are extended for a period upto 12 months from the date of initial sanction . The existing Gold loan products are described below:-

Smart Loan

i) Customers are always looking for interest rates and value for their gold to get maximum loan amount to meet the financial requirement. Smart Loan will meet the financial requirement, if the customer want to avail loans with higher rate per gram. The scheme is designed for those customers who have the habit of paying interest monthly.

ii) Easy Loan Easy Loan will meet the immediate financial requirement, if the customer want to avail loans at lower rate of interests. If the customer have the habit of paying interest monthly, this scheme will be suitable.

iii) Quick Loan

Quick Loan is the best financial solution, if the customer want to avail loans at lower rate of interests. Speedy disbursal of the loan will be ensured without waiting too much in the Branch.

iv) Mahila Loan

Through Mahila Loan we help to empower women customers by providing timely credit which will satisfy thier immediate requirement without waiting too much. Self-help groups, women engaged in making handicrafts, tailoring, vegetable dealers,

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women drivers and all other working women in the country are eligible for this specialised product. Muthoottu Mini Mahila Loan is a solution which will speed up theier efforts to support their family. We are also inclined towards giving additional benefits of interest to women.

v) Aaswas Loan

Aaswas Loan will meet the immediate requirement of the customers who want to avail loans at lower rate of interests for a shorter period. This product is available in all Branches of Muthoottu Mini.

vi) Premier Loan Premier Loan is best suited if the customer require higher loan amount with lower rate of interest. Traders, business people, people engaged in constructions and all those people who require higher loan amount with enough gold jewels in your hands are eligible for this product.

vii) EMI Loans An EMI scheme where the borrowers have the option to borrow money at lump sum and pay back on a monthly basis by pledging your gold ornaments. Maximum repayment period under this scheme is 12 months from the date of loan.

viii) Daily Collection Schemes A scheme which attracts the traders and daily income segments of the society. Customers can repay the loan in daily instalment. The borrower can close the loan by remitting daily instalments in 99 days. This loan product is available in selected branches of Muthoottu Mini.

ix) Online Gold Loan Our Online Gold Loan integrate the technology and our efficiency to bring the customer convenience as never before. Customers can avail gold loan from any branch.

x) MM PrePay Muthoottu Mini have come with a solution to maximize the customer satisfaction. MM Pre Pay is a solution to meet the financial requirements of the people by paying the interest in advance without the burden of accumulating interest by the end of the loan period.

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xi) 90 paisa Scheme 90 paisa scheme is one of the lowest interest scheme presently available in Muthoottu Mini. This gives customers more money to spend by reducing their interest burden, which can create a ripple effect of increased spending throughout their life.

xii) Loan Against Property

Loan Against Property is given against equitable mortgage of property. Maximum Loan granted will be 3 crores with maximum tenure at 36 months.This loan is given at a fixed rate of Interest of 22.81%. The Board of Directors will sanction each loan on case to case basis after considering the valuation report on the property and legal opinion on the property documents.

xiii) Microfinance Loans

Microfinance loans are loans given to Female clients for Income Generating Activities on the basis of joint liability. Loans are repayable in equated instalments over a period of time.

Loans are given for declared legal end use, like business expansion, working capital needs, purchasing raw material, purchasing animals, Marriage, education, debt consolidation etc. Clients are organized in center consist of 5-25 females divided in to sub groups and each woman takes joint liability for the other members of the group. The clients have weekly meetings where they pay back the loans to the field officers called Relationship officers of the company. All process and procedures are formulated based on RBI’s NBFC – MFI guidelines and MACC issued by SRO -MFIN issued from time to time.

Microfinance Loan Policy is as per Annexure-1

7. Purpose

While we are not required to ascertain the purpose of the loan, since KYC requirements are met, it will be essential to confirm that the funds raised out of our gold loans are not to finance terrorist activities and or for money laundering purposes.

8. Quantum of advance and discretionary limits

While no minimum loan level is prescribed, company has stipulated that the minimum quantum of gold ornaments that can be ledged at one time will be two grams of gold content.

Maximum loan - no maximum cap, though individual loans of Rs 5,00,000/- and above should bear the respective RM’s prior approval. RMs can approve loans to individual borrowers upto RS 25,00,000/- (Twenty five lakhs only) subject to strict compliance with quality as well as rate per gram criteria (LTV). In such cases RMs should reconfirm that KYC norms have been fully complied with .

Loans to individuals above the value of Rs 25 lakhs should bear Regional Head’s prior approval.

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Loans above value of Rs. 50 Lakhs will be approved by the operations Head at the Corporate office of the Company with recommendation of the Regional Head.

While approving loans compliance with ceiling linked to our net owned funds, fixed by RBI, will have to be ensured.

9. Repledger Loans

The Company has decided to stop giving gold loan to repledgers. Branches are prohibited from extending loans to repledgers.

10. Margin

Maximum loan amount is restricted to 75% of market value on the date of advance. Rate per gram in all cases will be as per CO guidelines issued from time to time. Branches do not have the discretion to offer different per gram rates than the one circulated. Company has decided to adhere to the maximum rate per gram LTV computed on the basis of monthly average rate of 22 carat gold published by India Bullion and Jewellers Association( IBJA).

11. Verification of Ownership of Gold

Where the gold jewellery pledged by a borrower at any one time or cumulatively on loan outstanding is more than 20 grams, branch shall keep a record of the verification of the ownership of the jewellery. The ownership verification need not necessarily be through original receipts for the jewellery pledged but a suitable document shall be prepared to explain how the ownership of the jewellery has been determined, particularly in each and every case where the gold jewellery pledged by a borrower at any one time or cumulatively on loan outstanding is more than 20 grams.

12. Standardisation of Value of Gold

The gold jewellery accepted as collateral by the company shall be valued by the following method:

a) The gold jewellery accepted as collateral by the Company shall be valued by taking into account the preceding 30 days’ average of the closing price of 22 carat gold as per the rate as quoted by the India Bullion and Jewellers Association( IBJA).

b) If the purity of the gold is less than 22 carats, the Corporate Office shall translate the collateral into 22 carat and state the exact grams of the collateral. In other words, jewellery of lower purity of gold shall be valued proportionately subject to the condition that the purity of the ornaments is not below 19 carats.

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7

c) Company, while accepting gold as collateral, should certify that they have assayed the gold and state the purity (in terms of carats) and the weight (gross and net weights) of the gold pledged with suitable caveats to protect themselves against disputes during redemption. The certified purity shall be applied both for determining the maximum permissible loan and the reserve price for auction

13. General Conditions

1. Muthoottu Mini Financiers Ltd refrains from interference in the affairs of the borrower except for the purpose of loan provided in the terms and conditions of the agreement unless a new information not earlier disclosed by the borrower has come to the notice of the company.

2. All gold loans will be sanctioned on the basis of a preliminary assaying of the purity of the pledged ornaments. These will be verified later on by qualified/ experienced gold assayers appointed by the company and in case the purity of the pledged ornaments are below the minimum accepted level of purity approved by the company, the company reserves the right to recall such loans without delay or notice.

3. Since gold loans are sanctioned instantaneously, no acknowledgment of loan application will

be given.

4. The company does not resort to use muscle power or unlawful coercion methods for recovery of loans granted by the company.

5. All loans are sanctioned at the sole discretion of the company

6. The pledged ornaments will be stored in pucca strong rooms and will be duly insured against

theft, dacoity, etc. 14. Way forward

We realize the need to constantly review and upgrade lending policy to review the products profile as well as terms to be able to be competitive in the market. With our vision to become a preferred service provider in the financial services segment and to migrate to become a financial supermarket, product innovation, customization, addition and modification will remain a continuing process.

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Page 8: Loan Policy - Muthoottu.M.Mathew Group

Credit Policy IGL

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Page 9: Loan Policy - Muthoottu.M.Mathew Group

Credit Policy IGL

CONTENTS

1. overview 3

2. Product Features 4

3. Target group 6

4. Underwriting criteria 9

5. Documentation 17

6. Comprehensive Group Training (CGT) and Group Recognition 20

Test (GRT)

7. Second cycle and loans in subsequent cycles – loans to retention 33

customers

8. Loan disbursement procedure 34

9. Seating Pattern 35

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Credit Policy IGL

1. PRODUCT OVERVIEW

Microfinance loans are loans given to Female clients for Income Generating

Activities on the basis of joint liability. Loans are repayable in equated

instalments over a period of time.

Loans are given for declared legal end use, like business expansion, working

capital needs, purchasing raw material, purchasing animals, Marriage,

education, debt consolidation etc. Clients are organized in center consist of 5-

25 females divided in to sub groups and each woman takes joint liability for

the other members of the group. The clients have weekly/fortnightly

/monthly meetings where they pay back the loans to the field officers called

Relationship officers of the company. All process and procedures are

formulated based on RBIs NBFC – MFI guidelines issued from time to time.

2. PRODUCT FEATURES

Parameter Features of IGL

Unsecured Loan backed by group guarantee Type of loan

in a joint liability group (JLG).

Differs from cycle to cycle as given in the Loan Amount

table below.

CYCLE KERALA

1st 10000/20000

/30000/40000

2nd Same

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Page 11: Loan Policy - Muthoottu.M.Mathew Group

Credit Policy IGL

Parameter Features of IGL

Tenor 52 Weeks - up to Rs.20000/- loan amount

104 weeks – Rest

Rate of

Interest 26% P.A (Diminishing Rate)

Processing 1 % of the Loan amount + GST (as applicable)

Fee

Tenure Premium for Premium for Total

Applicant Co-applicant Premium

Insurance

52 Rs. 6 per Rs. 6 per Rs. 12 per weeks

Rs.1000 loan

Rs.1000 loan

Rs.1000

Premium

amount amount loan amount

104 Rs. 12 per Rs. 12 per Rs. 24 per

weeks Rs.1000 loan Rs.1000 loan Rs.1000

amount amount loan amount

Foreclosure Nil

Charges

Penalty for Nil

late payment

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Credit Policy IGL

3. Target Segment

5 - 25 economically active married women having regular cash flow from

Income generating activities like:

• Self -managed businesses

• Small shop keepers

• Vegetable Vendors

• Animal husbandry business

• Tailoring business

• And profiles with regular and sustainable cash flows

4. End use of loan:

End use of loan could be:

• To meet working capital requirements

• To expand businesses (vertically and horizontally)

• To purchase animals ( buffalo, cow etc)

• Purchase of stock

• To repay costly debt raised from other sources (money lenders/other

finance companies)

• Loan to be used for business purposes viz. expansion, acquisition of

assets, business etc.

Loan cannot be used for illegal, speculative or anti-social activities

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Credit Policy IGL

5. Non Target Segments

The following are not eligible for a loan

• Political Leaders

• Big Land lords.

• People who have lots of Debts from Banks and Finance Institutions.

• Wine/Liquor shop owners

• Police & lawyers and their immediate family members

• People running finance & chit funds business

• People involved in real estate business.

• People with bad credit history.

• Migrants

• Government employees

• Temporarily rehabilitated people

• Families with members in gulf/abroad. (Spouse and Children)

• Staffs / mothers, sisters or wives of the staffs working in Muthoottu

Mini /Microfinance.

6. Locations and Area:

• All locations to be opened post market survey of the area and with

approval of CEO.

• New Location: The locations will have to be proposed by RM along

with Market survey report in the prescribed format Approved by

Business Head with concurrence of CEO.

• Geographical Limits for Lending:

o upto 25 Km Radius from the Microfinance hub branch which

means sourcing gold loan branch should be upto to 25 Km of the

hub branch AND

o The area which would be covered from gold loan branch should

be within 5 kms radius of sourcing gold loan branch AND

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Credit Policy IGL

o Client house is within 600 meters of the center meeting place.

7. Repayment Mode

Weekly installments to be paid in cash at center meetings by the center

members to the Relationship Officer.

8. Repayment schedule / First Installment date

A specific day in a week to be to be fixed at the time of GRT (group

recognition test) for collecting the installments and the same day is to be set

followed as the collection day throughout the cycle. 1st installment is to be

paid in the immediate next week after 7 days of cooling period from the date

of disbursal.

9. CREDIT NORMS – MICROFINANCE

The credit decision will be taken based on following criteria.

Financial Criteria

• Annual Income

• Repayment Capacity

• Multiple Borrowing

Non Financial Criteria

Non-financial criteria further categorized as follows

Quantitative

• Age

• Employment/Economic Activity

• Residence Stability

• Standard of living

o Housing and

o House asset verification

• Group Composition

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Credit Policy IGL

Qualitative

• Group guarantee

• Health Condition

• Group dynamics

10. Financial Criteria

ParameterFeatures

The total family income should not cross Rs. 100000/- per

annum in rural areas and Rs.160000/- per annum in sub

urban and urban areas. For the calculation of family

Annual income the contribution of all the earning family

Income members should be considered. Total house hold income

should be sufficient to cover all monthly household

expenditures and other fixed obligations including

Microfinance installment.

Repayment capacity is measured by surplus income Surplus = House hold Income – House hold expenditure

Repayment Surplus should be 1 times the instalment offered e.g., if

Capacity monthly surplus is 1200 then weekly surplus would be

calculated by 1200/4 = 300 and maximum affordable

instalment for the client would be 300/1 that is Rs 300

Multiple To avoid overleveraging a client and to reduce multiple

borrowing borrowing an applicant should not be given a loan

• If she has already taken loan from more than 2 MFI

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Page 16: Loan Policy - Muthoottu.M.Mathew Group

Credit Policy IGL

under group loans scheme

• If the total outside borrowing of the applicant exceed

Rs.60000 at the time of giving the loan

Loan eligibility calculation would be based on the

affordable instalment.

Eligibility e.g., if the affordable instalment comes out to be Rs 270 a

Calculations client can be given a loan up to Rs 15,000/- as the

instalment for Rs 15,000/- loan is Rs.260/- ( indicative

figures )

11. Non-Financial Criteria

Quantitative Parameters

Parameter Features

Customer Age:

First cycle

Minimum Age – 18years

Maximum Age –55 years (at the time of loan entry)

Divorced and widowed females with 40 years and

above age can be given a loan with proper approval.

Age Subsequent cycles

Maximum Age: From second cycle onwards the max age

can be up to 60 years at the time of loan maturity

Divorced and widowed females with 40 years or more

age can be given a loan with proper approvals.

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Credit Policy IGL

Points to be considered while approving the above 50

years age customers

Health

Income Stability/Economic activity

Support of other family member

Co-Applicant Age:

Minimum age: 18

Maximum Age: entry of age of co-applicant is restricted

to 63 and he/she will have coverage up to 65 years.

Employment / The clients should be economically active married

Economic woman having regular source of income. The business

activity should be verifiable at the time of house verification.

3 years minimum residence stability is required.

In case of newly wedded clients, the applicant should be

Residence staying for at least 6 months and spouse should be

stability staying in the same house for at least 3 years.

This means customer should have married at least 6

months back

Standard of living of the borrower to be assessed by 1)

the type of house they are living in 2) The kind of assets

owned by them

Standard of

living and

Housing

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Credit Policy IGL

Criteria

Urban Semi

Rural Urban

Thatched

houses with

1 room Reject Reject Reject

Thatched

houses with

2 or more

rooms Reject Accept Accept

Sheet/ Tiled

/ RCC roof

1-2 rooms Accept Accept Accept

Sheet/ Tiled

roof with 3

rooms Accept Accept Accept

RCC roof 3

or more

rooms Reject Reject Reject

If the customer owns either washing machine, car or

double door fridge such clients should be avoided

Care should be taken to avoid high income borrowers

who may take this loan for consumption purposes

rather than using for income generating activities.

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Credit Policy IGL

Group

Composition

Members should be economically active married

women

Group size should be from minimum 3 ( 2 in case of

second cycle )

Centre size should be from minimum 5 to maximum

25 members

Centre meeting place should not be more than 600 mts

from each customers’ residence.

At least 75 % of the members in centre should have

their owned house, others can be rented out.

Only one member from one house hold allowed.

No blood relations in the same centers Blood relation: Mother – Daughter , Sister –

Sister KIN Relation: More than Two kin relations are not allowed in the

same center, maximum can be two.

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Credit Policy IGL

We are considering following relations as kin relations:

Mother-in-law – Daughter-in-law, Sister-in-law, Co-

Sisters

Single / Unmarried females should not be given a

loan.

Divorced and widowed females with 40 years and

more up to 55 years at the time of loan maturity(first

cycle) of age can be given a loan.

Qualitative Criteria

Parameter Features

• Group has been made by the clients themselves and

not by the staff.

• Members should know each other.

• All of them belong to same locality

Group • All the clients at a center are willing to take each other

responsibility and give mutual guarantee. Guarantee/JLG

• Members are willing to attend periodic Center

Meetings. .

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Credit Policy IGL

• Group members should confirm that the loan is taken

for Income generating Purpose only and not for any

consumption /illegal activities.

Health Clients suffering for incurable disease like cancer , Stroke

Condition , AIDS or any other disease which will affect their ability

to earn should not be funded

• Women should form these groups on their own

without any interferences of Muthoottu or any third

party (agents)

• Group must ensure that they only select members Group

who are not likely to move in the next one year Dynamics

• The members should not pay any commission to

staff, leaders or any third party for the purpose of

getting the loan. In case if it is found out, the groups

will be rejected immediately

12. DOCUMENTATION

ADHAAR Card is now mandatory along with Identification proof and

residence proof. All client should ensure either the ID proof or Residence

proof is as per below mentioned documents.

Pre Approval documentation Duly filled and signed application form in vernacular

Application required .The application form can be filled by RO. If the

form form is filled by the Client , it should be in the presence of

Relationship Officer.

2 Colored passport size photograph of applicant along Photograph

with spouse signed across on the front of the photograph.

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Credit Policy IGL

Both Primary and secondary document should be in file.

Mandatory Primary Document

• UID ( ADHAAR)

Secondary Document

• Voter ID first choice

• Ration card (can be used as ID proof only if the

ration card is in respective customer’s name with

photo)

• Pan card

• Passport

Proof of • Driving license

identity/ • Scheduled Bank passbook with applicant’s

existence photograph on the same which is duly attested by

bank officials. The respective account should be

active.

• Letter issued by /Revenue Officer/ Village

Administrative Officer.

• Letter from a recognized public authority or public

servant.

KYC documents’ photo copies only need to be taken.

(Originals not required)

KYC documents must be self attested.

Primary Document

• UID Address proof

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Credit Policy IGL

Secondary Document

• Voter ID

• Driving License

• Ration Card

• Passport

• Electricity , Telephone , Water bills –not older than 90 days

• Other Utility Bills - not older than 90 days

• Life Insurance Policy or latest Premium receipt

• Rent agreement

• Consumer Gas Connection Card/Book

• House Allotment letter from Govt. organizations

• Bank statements / Passbook cover page with address being mentioned

• Letter from a recognized public authority or public servant.

Photocopies of the documents should be self attested by

the respective person.

If customer is living in a rented house then ensure the

proof of their permanent address.

Following documents to be obtained

• Contact Point Verification form (CPV)

• CPV should be filled and signed by Credit Officer.

Credit Branch Manager should also sign in CPV after the

documents signature of Credit Officer.

• KYC documents should be verified with originals

and need to mark as OSV (Original Seen &

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Credit Policy IGL

Verified) and duly signed by Credit Officer.

13. Pre-Disbursement & Post approval Documentation:

Loan The following to be obtained-

Documentation • Loan Application Form with duly signed

photograph

• KYC documents

• CPV

• Loan Sanction Letter

• Loan Agreement

• If any deviation is taken then it should be attached

with the respective application

14. Comprehensive Group Training (CGT) and Group Recognition Test

(GRT)

Each applicant should undergo 3 days (3 different days)

of comprehensive group training (CGT) irrespective of

loan cycle within a period of 14 days from the date of

disbursement of loan.

CGT must be happen in 3 different days.

Relationship Officer is primarily responsible for CGT.

Same staff should handle CGT1 to CGT 3. Comprehensive

group training

The focus of the training should be on :

• Developing Group responsibility and joint liability

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Credit Policy IGL

among the members

• Informing clients about terms and condition of the

loan like interest rate, processing fee, insurance

premium, loan documents.

• To inform the importance of Discipline in meetings.

• To check that group has been made by the

clients themselves.

• To check that all the members know each other.

• To check that all of the members belong to same

locality.

• To check that all the clients in groups and at the center

are willing to take each other responsibility

• To check whether the house of the client is not located

more than 600 meters from the center meeting place.

• To check and ensure that there no blood relatives in

the group and there is not more than permitted kin

relation at the center.

• To check and ensure there are sufficient number of

members with owned house in a group as prescribed

by the policy.

Group

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Credit Policy IGL

recognition test All customers who have attended 3 days CGT should

(GRT) appear for the test called GRT conducted by the

Credit Officer.

Purpose of GRT is: � To evaluate the eligibility of the client

� To understand that all client are familiar with

each other

� To ensure there are no agents involved in sourcing and all applicants are willing to take each other’s responsibility for repayment.

� To check that all members are meeting the credit criteria.

� To evaluate the eligibility calculated based on

the cash flow analysis.

� To check that all documentation norms with respect to KYC are met or not.

During the GRT, credit officer need to verify the given

ID and Address proofs with originals.

And Credit Officers need to sign with date on KYC and

need to give an impression as OSV (Original Seen and

Verified).

���������������� ������������ ��� ������� ��������

� ��������� ���� ���������

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Day 1 ! �� �����#���� ����������������� � ��� �����

����������

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���� ���� ����"���&�&��������

����

- 19 -

Page 27: Loan Policy - Muthoottu.M.Mathew Group

Credit Policy IGL

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o �������� ������������� ����0�� �����&������������

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- 20 -

Page 28: Loan Policy - Muthoottu.M.Mathew Group

Credit Policy IGL

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CGT 8��� �

- 21 -

Page 29: Loan Policy - Muthoottu.M.Mathew Group

Credit Policy IGL

Day 2 Training

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- 22 -

Page 30: Loan Policy - Muthoottu.M.Mathew Group

Credit Policy IGL

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- 23 -

Page 31: Loan Policy - Muthoottu.M.Mathew Group

Credit Policy IGL

B������� �� ����&��� �� &���

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- 24 -

Page 32: Loan Policy - Muthoottu.M.Mathew Group

Credit Policy IGL

�� 6�%���� ���� ����������

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Day 3 Training ������&�����

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- 25 -

Page 33: Loan Policy - Muthoottu.M.Mathew Group

Credit Policy IGL

• ( ���< ��� �������&����� �������&������ ���� ����

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- 26 -

Page 34: Loan Policy - Muthoottu.M.Mathew Group

Credit Policy IGL

� ! ��������� �� ������ ����� 62 � �� ��������� ���������������%������ ����%���� �� %���'

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• ! ��% ��������� ��������� ������������&��

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- 27 -

Page 35: Loan Policy - Muthoottu.M.Mathew Group

Credit Policy IGL

��������������������������������6*'> ������������� �� �������

� � � ������ �������� � ���� ������ ��� &��� ������� &������

�%�������� ��������2���������� ����%�� ��� ��; ��������

����������������������� � ���� ���&��� ����%�� ���

��� � ������� � �����

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$�� ; ���� ��� ��� ����������

)�� 8��� ��:� �����

+�� 6��������� &���� ����� ������� �&� ��� ���������

,�� (���� �� �������� ��

Group .�� ��� ������� ��

Recognition /�� 6�� �� ���� � �����

Test (GRT) �0����*���������������������� ��������������

�6*�� ����&��� ������������%����������� ��������

6; �� �&�������������������6*� ��������������; �������

��� ��� ���� %���� ��� ������� &�� ���� &�� ���� ������

������� �� �DF� ������� &�� ������ ���������� D����� ����

��� �������%���� ������������������DF������ ����

2� ���! ��������������������DF� ��� ������ ����%��

������ � ����������� � �� ��������������������

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- 28 -

Page 36: Loan Policy - Muthoottu.M.Mathew Group

Credit Policy IGL

15. Second cycle and loan in subsequent cycle

ParameterFeatures

All clients who have paid at least 50% installments of 1st

cycle loan without any delay or due and also have more

Eligibility than 65% attendance record in the entire center meeting are eligible for 2nd cycle loan.

16. Loan Disbursement Procedure

Disbursement procedure can be done only after the successful completion of

all the previous processes. Disbursement should be done keeping following

points in mind.

� Disbursement should only happen through direct bank credit. ( net of loan outstanding if second cycle )

��

� Loan can be disbursed only to customers those have passed Credit Bureau check & GRT.

��

� The date & time for disbursement should be intimated to the customers by the RO according to the instructions of Branch Manager & Credit Officer.�

� It should be ensured that there is loan sanction letter .All post approval documentations need to be completed by the end of disbursement. Nothing (signature or documents) should be kept pending.

- 29 -

Page 37: Loan Policy - Muthoottu.M.Mathew Group

Credit Policy IGL

� Ensure the clients have relevant contact numbers of branch, Branch Manager, Relationship Officer, Head Office.

� Relationship Officer must hand over updated (member details) loan pass book to members immediately after loan disbursement.

��

� Even though loan pass book is meant for each customer, for convenience Centre Leader can receive loan pass book in front of other members.�

Center Meeting Seating Pattern

- 30 -