MSME (Micro, Small & Medium Enterprises)
Methodology
Methodologies generally adopted by MSME to enable deliverance of services are as under:
Machinery Loan - MSME
This loan enables the Small machine buyers to fund their Machinery purchase. Typically the machine buyer gets around 40 to 50 percent of the machinery value. In addition to this, the machine buyer also initiates to form a group of three members who are of similar profile. The group ensures that the repayment of loan is timely and without default. The installments are paid on monthly basis.
Group Lending Model
This is a model where 4 to 6 members of similar profiles, often living or conducting business close to each other, qualifying for such loans. The group is formed by the group members and they undertake to guarantee each other’s repayment in a classic group lending situation. The basic assumptions behind this model are as under:-
a. Members in a group have some economic activity that would enable them to repay the loan,
b. Members of the group live or conduct business close by and support group members in the event of any difficulty in repayment. They also have a vested interest in making sure the group lending scheme is a success.
Individual Model
This is by far the toughest model to execute. The credit worthiness of a borrower depends on his own capacity to repay which in turn would depend upon his business and cash flow. This model requires high degree of credit underwriting skills before a loan is disbursed. |
