Credit limit can no longer increase with bulk loan repayments

Discussion in 'Announcements' started by Julia Kurnia, Feb 14, 2014.

Thread Status:
Not open for further replies.
  1. Julia Kurnia

    Julia Kurnia Director, Zidisha Zidisha Staff

    Dear all,

    Our website no longer allows credit limit increases when loans are fully repaid in a single large installment.

    "Large installment" is currently defined as any repayment of over 30% of the loan and over $100. We may adjust this definition as we gain experience, in order to achieve the intended result of entrusting large amounts only to members who have established a track record of consistent on-time repayments over time.

    Members may still repay loans early, and it may make sense to do so after rescheduling in order to reduce interest costs. However credit limit increases will only be awarded when loans are repaid steadily over many installments.

    Now, in order to qualify for a loan size increase, a member must:
    • Maintain a 95% on-time repayment rate for all monthly installments since joining Zidisha.
    • Make the final repayment installment of the current loan on time.
    • Hold the current loan for at least 1 month for loans up to $200, 3 months for loans of $200 - $1000, 6 months for loans of $1000 - $3000, and 12 months for loans over $3000.
    • Distribute loan repayments over a series of regular installments, rather than repaying the entire amount in a single large payment.
    Best regards,

    Julia
     
    Last edited: Feb 28, 2014
    KirstenShute, Levi, eric and 2 others like this.
  2. Sverre

    Sverre Forum Member

    Great improvement in needed direction !., still lacks to hold all loans from at least 3 months, also for loans under $ 200.
    There seems to be a lot of loans nonperforming, right after taking out the second loan.

    I also awondering if the borrower had to pay loan transactions themselves , instead of having loan transaction deducted from the paid out loan, that would also prevent some fraud.
     
    Last edited: Feb 14, 2014
  3. ginah

    ginah Gold Member

    reading through your topic it makes alot of sense...if one someone wants a loan and repays it in one installment.i think it would be okey to assume that the person didnt have a genuine problem at first...it would make you question how serious the borrower was at first or its someone looking to borrow large amounts and later disappear with the money.its good for zidisha to vigilant when it comes to such borrowers
     
    mewesten and Shehi like this.
  4. Shehi

    Shehi Gold Member Volunteer Mentor

    @Julia Kurnia @ginah IMO Repaying a whole loan in a single repayment amounts to abuse of zidisha's mission. How about suspending such accounts for a while? Just to send a clear message that zidisha is here only for those who need it & not some kind of an online game!
     
    John Macharia, AHTS and mewesten like this.
  5. rovingmentor

    rovingmentor Forum Member Volunteer Mentor

    Today I was at my local Barbershop and was talking to my Barber who equally owns the place where he has employed one extra hand...though he is the only one who touches my head for the last three years. In our conversation he started complaining to me of how it is becoming hard for him to manage his family after they got a kid who is now almost an year old now. This is so because in the recent past our neighborhood has been hit by extended power outages, clearly this means during those dark moments he cannot be able to do much as his business depends entirely on electricity. As we were chatting I told him...hey look here my friend why don't you let your wife who is currently a housewife do some business to supplement your income for the household. He was taken aback and asked me whether I read minds. In essence he has been considering on this idea only that he wasn't sure which business to involve her in. His Barbershop is strategically located on a busy road. So I went ahead and told him the space outside he can have his wife put up second hand clothes to serve the people who pass around there. Since Stanley loves his family so much, I told him this would also be a good idea for you to be around your family most part of the day.

    This evening he calls me and informs me that the wife has accepted the idea. During our talk I of course told him about Zidisha...there is an internet cafe adjacent to his Barbershop, we went there and I showed him how the process works and all...Stanley asked me one question. Ronnie, this Zidisha p2p Microfinance seems like a very good outfit, but then if you say it works, doesn't the organization experience a situation whereby people default on their loan repayment? I told him yes there are some individuals who do that. Stan went ahead and asked me...what measures has the organization put in place for this? I explained to him how their profile is linked with their facebook accounts and the people they put up as their family, neighbors and the Community Leaders. I tend to think their is still room for exploring more options on the best way Zidisha can try and curb the vice of loan defaulters. I for one get disheartened by some of my countrymen who take up loans and then choose not to repay the same at all. It reflects negatively on us and subsequently makes Lenders have biased opinion on a certain borrowing bloc...say Kenya. Reason why as a Volunteer Mentor, I feel am under the obligation to develop a close relationship with my Mentees to also keep tab on their loan repayments.
     
    CMK71 likes this.
  6. Shehi

    Shehi Gold Member Volunteer Mentor

    @rovingmentor The need for affordable finance has & will always be there. Therefore our efforts to spread the good of zidisha should never push us into attracting dishonest or unthankful individuals. The sincere application of the invite program holds the key to sustainability of zidisha. Why should a borrower spend a zidisha loan on school fees (a very long term investiment) or to finance a job searching trip abroad( his phone number stops working, he finds a 2yr contract job abroad, he's denied permission to go online by employer, a dedicated VM then starts inquiring from family and friends about him & such a 2yr trip was never indicated on the loan application)? Invite cautiously, each invite you make attracts equal weight!
     
    John Macharia and rovingmentor like this.
  7. rovingmentor

    rovingmentor Forum Member Volunteer Mentor

    You are so right Samuel Shehi and that's why it gladdens my heart to share with your likes on this forum everyday.
     
  8. Jean Wendpanga

    Jean Wendpanga Gold Member Volunteer Mentor

    Dishonest people are those who do not want progress in their lives.


    KABORE
     
    mewesten and Shehi like this.
  9. rovingmentor

    rovingmentor Forum Member Volunteer Mentor

    In future it would also be a good idea to have template of sorts that shows all the Volunteer Mentors so that it shall be easy for us to know each other and thus assimilate a more robust process of sharing information amongst ourselves. John Makongo a Volunteer Mentor from Nakuru, Kenya is having probably the first meeting ever for Zidisha members in Nakuru, Kenya on 28th February, 2014. This is a good start, based on his post I went through my Mentees and posted messages on their Zidisha profiles to attend this meeting as I may not be able to be in Nakuru then due to other commitments. This is the sharing of information I am talking about. All these is in the effort of restoring confidence in our Lenders. I am glad that this little act of duty goes a long way in restoring your hope. Rest assured that we shall go out of our way to make Zidisha the success it is.
     
  10. rovingmentor

    rovingmentor Forum Member Volunteer Mentor

    This morning I spent four hours pouring through loans page by page, examining "0% Repaid" looking for similarities, hoping to spot clues for improving the process. It included only a fraction of outstanding loans of the examined period, and I hope to look at more soon. There are about 60 of them so far, mostly from last Aug-Nov, totaling over $6,000. (I contributed to 13 of them, which is reasonably consistent with my overall loss experience of 30%.) I did not include those who answered lender queries or posted acknowledgements of lateness and plans to pay. My point: Almost all were new borrowers with some similarities, nearly all Kenyans, and it appears nearly all would have been prevented by screening by someone like yourself on the ground ... before the applications went in and the funds disbursed.[/quote]

    @Jean Wendpanga My spirits and zeal are buoyed by my experienced colleagues like you. When we forge such alliances it is for the safeguarding of the Bloc...Kenya Borrowers so that we may restore confidence in the Lenders who like I have said before and still insist form an integral part of the entity that is Zidisha. As the old adage admonishes...charity begins at home...let us be an example to the other countries in our success on solving these 'little' problems that can surely be addressed by us while working as a Team. I look forward to meeting you too one of these fine days. I equally checked some of the afore mentioned profiles with the same trend and I totally agree with mewesten's observation.
     
    Last edited: Feb 22, 2014
  11. rovingmentor

    rovingmentor Forum Member Volunteer Mentor

    Your idea is well meaning, however it may not go well if the loan transaction is left for the Borrower to pay out for themselves for the simple fact that once the money is disbursed they may not be able to do so thus creating more chaos. As it is, it might mean an overhaul of the already existing system. From past experience, I have come to realize that when the wheels of a process are churning, it may rock the boat if we try and change details there-in. Best thing would be to exhaust other ways of going around the problem before effecting changes. A fraud will still be a fraud either way, however the approach of smelling one from afar is best suited in this case. That is why the Kenyan Bloc of VMs is coming up with innovative ways of minimizing this vice. As we anticipate meeting one another in future these issues shall be brainstormed and thus we shall try and come up with other ways of curbing the same. However, I understand perfectly where you are coming from #Sverre.
     
  12. Shehi

    Shehi Gold Member Volunteer Mentor

    i wish to understand your above comment. Could you please repeat it in simple language for me? I got lost on your first sentence!
     
  13. rovingmentor

    rovingmentor Forum Member Volunteer Mentor

    @Samuel Shehi you have been here long enough so you pretty well understand what a LOAN TRANSACTION is who a BORROWER is. In short the money Zidisha deducts as LOAN TRANSACTION, #Sverre was of the opinion that Zidisha should not deduct those monies from the loan before disbursing to the Borrower. Instead it should be left for the Borrower to do so after the loan has been disbursed to them. This according to my point of view shall cause more chaos since Zidisha will now be tagging at Borrowers to pay Transaction Fees for their loans. Maybe if Sverre expounded more on how this could possibly curb fraud I will change my point of view.
     
  14. ginah

    ginah Gold Member

    @james shehi..i totally agree that its a high time such memebers are banned from applying for loan for some time
     
    Shehi likes this.
  15. Shehi

    Shehi Gold Member Volunteer Mentor

    @rovingmentor Thanks for the clarity. I was only once (first loan) deducted the registration fee about $11 ( i believe @Sverre meant this). I am unaware of any other upfront deductions. Both lenders' interest & transaction cost 5% are integrated in the repayments.
     
  16. Sverre

    Sverre Forum Member

    I was thinking that the fee for applying first time cold be paid when applying , and not get deducted from the loan when disbursed. But I am unsure if its practical.
     
    rovingmentor likes this.
  17. rovingmentor

    rovingmentor Forum Member Volunteer Mentor

    I am pretty sure with time this can be workable. I do laud your thoughts based on the fact that it will show some commitment on the part of the Borrower.
     
  18. Shehi

    Shehi Gold Member Volunteer Mentor

    Maybe @Julia Kurnia will consider the same. I believe zidisha does not want to limit the applicants to those that can afford the registration fee only but to include the most struggling entreprenuers.
     
  19. rovingmentor

    rovingmentor Forum Member Volunteer Mentor

    @Samuel Shemi you are equally right on that. It is only that a few individuals make it a norm rather than an exception to resort to such measures. All in all, it is prudent to weigh all the options maybe by coming up with a pilot project based on the sentiments @Sverre is articulating. If it turns out workable, well and good we adopt it if the opposite is true then we maintain the present structure. As @Julia Kurnia once put it across in another forum...we are still in the trial stages in some aspects.
     
  20. Paul Gitau Kamande

    Paul Gitau Kamande Gold Member Volunteer Mentor

    Hi Julia,
    What if a borrower reschedules his or her loan to make repayments to a higher amount than the one he/she had proposed to be paying, thereby reducing the repayment period, is this okay without having to seem "suspicious" in the eyes of either lenders or Zidisha staff?
    Is it acceptable?
     
    Joyce Njeru likes this.
Thread Status:
Not open for further replies.

Share This Page