1. GROUP LENDING ENHANCEMENT WORKSHOP The Enhancement Options Process

2. Outline Importance of Enhancement Benefits of Enhancement Designing New Loan Products/Enhancing Existing Loan Products

3. Importance of Enhancing your Group Lending Methodology Why enhance your group lending methodology? Existing product design and policies may no longer respond to changing needs and demands of the market. Center and group membership is aging or maturing, and they need something to look forward to beyond group liability lending. Members get tired of the “tapal” system and lengthy center meetings.

4. Benefits of Enhancement to Clients More flexible loan amount and term No tapal responsibility Less or no lengthy weekly center meetings Better opportunity to take advantage of business opportunities when they arise

5. Benefits of Enhancement to Account Officers Acquires improved/new skills for handling combination of products Lesser center maintenance work load Higher loan portfolio & improved productivity Better center & client management Improved efficiency More positive work disposition

6. Benefits of Enhancement for the BANK Improved/increase in Loan Portfolio Lesser monitoring expenses Lower transaction costs Improved profitability Better company image Happier employees More satisfied clients

7. Assess present state of group lending Develop an Enhancement/Graduation Plan. Conduct market research about your clients. Design a new loan or enhance the individual loan product in order to fit their needs. Steps banks need to take before enhancing centers and clients

8. Assess present state of group lending Review data from your MIS in terms of: –Growth trends in # of clients – new and repeat –Growth trends in outstanding portfolio –Drop out rates –PAR Review sample centers in terms of: –Incidence of “tapal” or internal arrears –Attendance rate in meetings WHAT TELL TALE SIGNS DO YOU SEE?

9. Developing an Enhancement/Graduation Plan Basic Premise: Clients should have an option to either stay in group lending or move on to another loan product. Bank policy statement on this will let clients know they have a choice. Enhancement/graduation product features should be better compared to the original group loan features. Bank and clients need to understand that not all group loan members may qualify for enhancement/graduation. The enhancement/graduation plan: only an option, not compulsory, to group lending members.

10. Market Research: Knowing what the transitioning clients need Conduct a market survey on what existing group loan product features your clients no longer like. Know what product features your clients would like to have in a loan product.

11. Is a graduation product an option for you? Graduate to individual loan product Graduate to group product under individual liability Remain in group ( same or improved product feature)

12. Designing the Enhancement/Graduation Product Based on the results of the market research, the Bank will design new loan products, improve the existing group loan product features, and/or enhance/improve its existing individual loan products. Depending on the Bank’s policy, clients who are qualified may graduate from group loans to an existing individual loan product.

13. Options the bank can consider Option 1: Enhancing/improving the features of the existing group loan product Option 2: Designing a New/Transition Product Option 3: Graduation of qualified group loan clients to individual loan products

14. Thank You!