ADILI MICROFINANCE

COMPANY LIMITED

LOAN POLICY
AND
PROCEDURE
MANUAL

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 TABLE OF CONTENTS
1.0 INTRODUCTION ........................................................................................................................................................................ 2
2.0 GENERAL POLICY STATEMENT ................................................................................................................................................ 2
3.0 LOAN PRODUCTS DEFINITION .............................................................................................................................................5
3.1 GROUP LOAN ..............................................................................................................................................................................5
3.3 SALARIED LOAN. ........................................................................................................................................................................5
3.5 INDIVIDUAL LOAN ......................................................................................................................................................................5
3.6 SACCOS LOAN ............................................................................................................................................................................5
3.7 VILLAGE COMMUNITY BANKS (VICOBA) LOANS ...................................................................................................................6
3.8 QUICK LOANS .............................................................................................................................................................................6
4.0 ELIGIBLE APPLCANTS ............................................................................................................................................................6
4.1 GROUP LOAN ..............................................................................................................................................................................6
4.2 CORPORATE GROUP LOAN .......................................................................................................................................................6
4.3 SALARIED LOAN ........................................................................................................................................................................6
4.4 BUSINESS LOAN.........................................................................................................................................................................6
4.5 INDIVIDUAL LOAN ...................................................................................................................................................................... 7
4.6 SACCOS LOAN ............................................................................................................................................................................ 7
4.8 QUICK LOAN ................................................................................................................................................................................ 7
5.0 ELIGIBLE PURPOSE................................................................................................................................................................. 7
6.0 TERMS AND CONDITIONS ....................................................................................................................................................... 7
6.1 GROUP LOAN .............................................................................................................................................................................. 7
7.0 CORPORATE GROUP LOAN ................................................................................................................................................. 15
Pricing Structure. .................................................................................................................................................................. 15
Other costs (non income) .................................................................................................................................................... 15
Collateral .................................................................................................................................................................................. 15
Method of payment ................................................................................................................................................................ 15
Duration and range of the loan .......................................................................................................................................... 15
8.0 QUICK LOAN ........................................................................................................................................................................... 19
Pricing structure. .................................................................................................................................................................. 19
Method of payment ................................................................................................................................................................ 19
Duration and range of the loan .......................................................................................................................................... 19

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 Terms of payments ................................................................................................................................................................ 19
Collateral .................................................................................................................................................................................. 19

1.0 INTRODUCTION
1.1 ADILI MICROFINANCE COMPANY LTD (AMFC)was established in 2014 with the goal of providing loans and training to both
urban and rural communities. ADILI MICROFINANCE COMPANY LTD (AMFC) has to promote grassroots economic
development by providing loans to entrepreneurs, to develop local business enterprises, accomplish social and community
activities. ADILI MICROFINANCE COMPANY LTD (AMFC) has social responsibility by elevating poverty for enhancing grass
root access to funds and business training.

ADILI MICROFINANCE COMPANY LTD (AMFC)

Finance programs supports clients with soft loans for operating small and medium scale business like food stores,
restaurant, Hotels, tailoring, barbershop, saloons, grocery, kiosk, agriculture, live stocks, and poultry. Bookshop, Stationery,
merchandise, carpentry, welding, shoeshine, clothes, and car wash services etc. ADILI MICROFINANCE COMPANY LTD
(AMFC)has to finance the prospective clients with the need to build small and medium houses, purchase furniture or
household items, pay school fees and meet medical expenses.

2.0 GENERAL POLICY STATEMENT

2.1 ADILI MICROFINANCE COMPANY LTD (AMFC) Loan Policy and Procedure Manual is the concise Guidelines and procedures by
which ADILI MICROFINANCE COMPANY LTD (AMFC)shall disburse loans. ADILI MICROFINANCE COMPANY LTD (AMFC)loan
policy and procedure Manual is a permanent document therefore any changes to be made will be under the instruction of the
Board of Directors meeting which will review this policy each calendar year to provide guidance and recommendations
and/or approve any changes to this policy.
2.2 ADILI MICROFINANCE COMPANY LTD (AMFC) Loan and Policy and Procedure Manual were developed by the Board of
Directors with the guidance and expertise from microfinance consultants. However, ADILI MICROFINANCE COMPANY LTD
(AMFC)will carefully comply with any rules, laws, or regulations provided by the local and Central government to ensure
sound financial practices and the fair extension of credit to the target beneficiaries.

NOTE: For smooth operations of ADILI MICROFINANCE COMPANY LTD (AMFC)) business activities together with loan policy and
procedure Manual, the Company has other Manuals including ADILI MICROFINANCE COMPANY LTD (AMFC)Operational and
Internal Control Manual, ADILI MICROFINANCE COMPANY LTD (AMFC)Accounting Manual, ADILI MICROFINANCE COMPANY LTD
(AMFC)Human Resources Manual, Credit Officers Training Manual and Entrepreneurs Training Manual and Management
Information System Manual. These Policies provides directions. But in order to make things happen all ADILI MICROFINANCE
COMPANY LTD (AMFC)staffs must properly read and understand the ADILI MICROFINANCE COMPANY LTD (AMFC)Policies for
easy implementation of the same.

2.3 ACTORS IN PROMOTING, TRACKING AND SUPERVISING ADILI MICROFINANCE COMPANY LTD (AMFC)’S LOANS
2.3.1 BOARD OF DIRECTORS MEETINGS
• Higher Level diplomacy and referral of all disputes.
• Develops and approve the Company policies and put in place the internal control systems
• Approves the annual budget and business plan.
• It is the senior loan committee consists of Executive Chairman, General Manager, Director of Operations, Director of
Finance; the committee should meet irregularly to approve loans.

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 • The Board Meeting should meet annually to report market research findings, evaluate current products, and discuss the
addition of additional products. Other activities are to form products and review relevant policies.
• It is highest loan referral committee for all loans disputes.

2.3.2 EXECUTIVE CHAIRMAN

• Chairman of the Board of Directors
• Spokesman of the company
• He can enter a contract with any other party on behalf of the company
• Any other duty to be assigned by Board of Directors
2.3.3 GENERAL MANAGER
• Chief Advisor to the Executive Chairman.
• Responsible for daily operation activates of the company.
• Head of Committee for business development, customer service performance control and follow up
• Ensure proper implementation of ADILI MICROFINANCE COMPANY LTD (AMFC) POLICIES
• Responsible for maintenance of all Company assets and liabilities
• Responsible for Loan Portfolio and Risk Management of the company
• Oversee the Director of Finance and Director of operations
• Deputies Executive Chairman’s duties on he’s/her absence.
2.3.4 DIRECTOR OF OPERATIONS
• Oversee the Head of Marketing, Credit, MIS, Human Resources and Training
• Deputies General Manager’s Duties on his/her absence
• Responsible for market research and product development
• Responsible for public relations and social welfare of the company
• Responsible for Human resource recruitment, retention, development and displine.
• Responsible for MIS development and reporting to the high level.
• Any other duties to be assigned by General Manager.
2.3.5 DIRECTOR OF FINANCE
• Responsible for preparation of the financial statements of the company
• Responsible for accounting of the income and expenditure of the company
• Prepare Annual Budget, Monitoring and Control (in coordination with GM, DOO, and Branch Managers)
• Responsible for preparation of long term Business plan.
• Provide Management with timely, accurate and up-to date financial reports (daily, monthly and annually).
• Interprets financial performance of the institution by submitting accomplished financial performance indicators
and ratio analysis quarterly and as required
• Responsible for logistics and procurement duties
• Perform other tasks as may be required by the General Manager.

2.3.6 HEAD OF MIS

• The MIS Officer provides ADILI MICROFINANCE COMPANY LTD (AMFC)with accurate and timely reports on
Institutional loan portfolio quality on daily basis.
• Provides daily, weekly, and monthly quantitative status reports on ADILI MICROFINANCE COMPANY LTD (AMFC)’S
loan portfolio
• Maintains routine and periodical maintenance of computer hardware and software
• Train ADILI MICROFINANCE COMPANY LTD (AMFC) staffs on loan tracking software
• Perform any other duties assigned by the Director of Operations.
2.3.7 THE BRANCH MANAGER
• In change of all branch activities
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 • Oversee the Branch operations manager, Branch Accountant and Credit Manager
• Prepares and submits an end Branch credit operation report
• Monitor flow of Information from all departments
• Perform any other duties as may be assigned by Director of operations.

2.3.8 BRANCH CREDIT MANAGER

• Conduct spontaneous (Impromptu) and area surveys in the field
• Spot-check records Groups and MIS to ensure accuracy
• Make loan follow – ups and hold credit officers accountable for arrears.
• Approve group loan applications
• Provide Training and performance reviews for loan officers
• Perform other tasks as may be assigned by Branch Manager.

2.3.9 BRANCH ACCOUNTANT

• Responsible for posting and maintaining accurate records of accounts
• Provide daily updates to the Branch manager on financial status of the Branch
• Oversee the Accounts Assistant, Cash officer and Tellers
• Provide the senior staff of ADILI MICROFINANCE COMPANY LTD (AMFC) with daily, weekly, quarterly and yearly
quantitative data
• Prepare the Annual Budget (in collaboration with Branch manager and Branch operations manager)
• Ensure all books of accounts are balanced on daily basis that is, subsidiary records are reconciled with General
ledger control figures
• Perform any other duties as assigned by the Branch manager.
2.3.10 BRANCH OPERATIONS MANAGER
• Deputies Branch Manager’s duties on his/her absence
• Head of the Administration and marketing Deportment
• Head of business development, customer service, performance control and follow up at the Branch
• Oversee MIS officer, operations officer, Performance control officer
• Ensure all clients accounts and cash from the Teller are balancing on daily basis
• Ensure all clients loan ledger book are properly posted and balanced with the LPF on daily basis
• Monthly perfection of security documents.
• Any other duties to be assigned by Branch manager.
2.3.1 BRANCH CREDIT OFFICER
• The main role of credit officer is to monitor and guide his/her client’s loan portfolio through exerting group
pressure
• To facilitates formation of cohesive groups
• To facilitates groups’ conflict resolutions amongst group members to ensure harmony within groups.
• To train clients on ADILI MICROFINANCE COMPANY LTD (AMFC) credit methodologies policies and procedures.
• To facilitates development of electing group leaders.
• Review daily collections of loan repayments, Interest, and savings guarantee fund (SGF).
• Review weekly collection updates in order to detect delinquencies promptly
• Ensure consistency between ADILI MICROFINANCE COMPANY LTD (AMFC) and ADILI MICROFINANCE COMPANY LTD
(AMFC) Group records
• Conduct individual clients prospect and interviews
• Prepare credit memorandum to the credit committee
• Disburse loan to clients
• Work towards a 100% repayment rate and be responsible to follow-up

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 • Any other duties to be assigned by Credit Manager.
2.3.12 CASH OFFICER
• Transmits cash from the ADILI MICROFINANCE COMPANY LTD (AMFC) OFFICE to the Bank
• Receives cash from the Teller on daily basis with daily spot checks for accuracy
• Deposit client repayments (principle, interest, registration fees, loan administration fees and savings guarantee
fund) to the Vault
• Maintain Vault register and record of cash issued and received from the Teller.
• Custodian of valuable instruments and maintains instrument register.
• Perform any other duties assigned by the Branch Accountant.
2.3.12 TELLER
• Receive repayments (principle, interest, registration fee, loan administration fee, stationary fee and savings
guarantee funds) directly from clients.
• Verify client’s repayments with daily repayment schedule
• Maintain records of cash transferred to and from Cash Officer
• Submit a daily till sheet of cash collection and submit to the Branch Accountant/Operations Manager.
• Perform the duties as receiving and paying cashier
• Perform any other duties to be assigned by cash officer.
NOTE: For a more detailed Job descriptions for the employee listed above or for staff members not listed above
please refer to Human Resources Manual.

3.0 LOAN PRODUCTS DEFINITION

3.1 GROUP LOAN

ADILI MICROFINANCE COMPANY LTD (AMFC)Group loan is the loan issued to the clients who form the group of twenty five (25) clients
known as CLASS for easy management the class shall be sub-dined into five (5) groups of five (5) persons each.

3.2 CORPORATE GROUP LOAN

Corporate group loan is the loan issued to a group of fount (4) clients who graduated from 5 th loan cycle or after successfully
completed the loan repayment of Tshs 2,000,000/= each.

3.3 SALARIED LOAN.

ADILI MICROFINANCE COMPANY LTD (AMFC)salaried loan in the loan issued to the clients who have been employed with any
organization on personable farms or on contract lasting for 12 months or more.

3.4 BUSINESS LOAN

ADILI MICROFINANCE COMPANY LTD (AMFC)Business loan is the loan issued to the enterprises who conduct small and medium
formalized business. These could be registered companies or individuals.

3.5 INDIVIDUAL LOAN

ADILI MICROFINANCE COMPANY LTD (AMFC)Individual loan is the issued to the individual client who have no formalized business.

3.6 SACCOS LOAN

ADILI MICROFINANCE COMPANY LTD (AMFC)SACCOS Loan is the loan issued to the registered Savings and Credit Co-operative
Societies in both rural and urban areas.

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 3.7 VILLAGE COMMUNITY BANKS (VICOBA) LOANS
The ADILI MICROFINANCE COMPANY LTD (AMFC)Village community Banks loan is issued to the solidarity groups of 25 clients and has
their own model of operations. These solidarity groups have to be found in rural settings.

3.8 QUICK LOANS

ADILI MICROFINANCE COMPANY LTD (AMFC)QUICK Loan is the loan issued to the clients who wants to meet their business obligations
on less than thirty (30) days.

4.0 ELIGIBLE APPLCANTS

4.1 GROUP LOAN

✓ All applicants must be 18 years of age and above.
✓ The clients will be placed by ADILI MICROFINANCE COMPANY LTD (AMFC)into ‘CLASS’ (5 groups, 25 members), which will function
as a further check and balance on a class.
✓ The applicants must not have any other outstanding loans with ADILI MICROFINANCE COMPANY LTD (AMFC.
✓ Unless otherwise stated the applicant who borrowed from other lending institution in the past, he/she must have repaid his/she
prior lion (s) on time.
✓ All applicants are required to provide a viable plan or business ideas, which will be assessed by credit officer and credit
manager.
✓ Clients make a mandatory 25% of the loan size as savings guarantee fund at disbursement. Management may choose to
encourage savings with each weekly repayment if clients cannot afford to mobilize for the 25% mandatory savings at per.
✓ All clients must have business or other source of income which enable to repay the loan.
✓ Loan applicant must form group with five other loan applicants then into ‘class’ act as guarantor for the loan.

4.2 CORPORATE GROUP LOAN

✓ All applicants must be 18 years of age and above.
✓ The applicants must form a group of four (4) clients who graduated from the 5th loan cycle to guarantee each other.
✓ Clients make a mandatory 25% of the loan size as savings guarantee fund at disbursement. Management may choose to
encourage savings with each weekly repayment if clients cannot afford to mobilize for the 25% mandatory savings at per.
✓ The applicants must not have any other outstanding loans with ADILI MICROFINANCE COMPANY LTD (AMFC

4.3 SALARIED LOAN

✓ All applicants must be 18 years of age and above.
✓ All applicants must be employed on pension able terms or must be employed on contract term of twelve (12) months or
more.
✓ All applicants must produce a current salary slip.

4.4 BUSINESS LOAN

✓ All applicants must be registered with BRELA and have legal business license and tax payer’s identification number.
✓ All applicants required to provide a viable plan or business ideas, which will be assessed by credit officer and credit
manager.
✓ Unless otherwise stated the applicant who borrowed from a lending institution in the past, he/she must have repaid
his/her prior loan (s) on time.

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4.5 INDIVIDUAL LOAN
✓ All applicants must be 18yrs of age and above.
✓ All applicants of required to provide a viable plan or business ideas, which will be assessed by credit officer and credit
manager.
✓ Unless otherwise stated the applicant who borrowed from a lending institution in the past, he/she must have repaid
his/she prior lion (s) on time.

4.6 SACCOS LOAN

✓ All applicants have to be registered with Registrar of Co-operative union.
✓ Must have stable and legitimate leadership according to their constitution.
✓ If they have outstanding loan with any other financial institution does not affect their ability to facilitate the repayment of
both loans.

4.7 VILLAGE COMMUNITY BANKS (VICOBA) LOANS

✓ Must have a group of twenty five members in the rural settings.
✓ Must have stable and legitimate leadership according to their constitution.
✓ If they have any outstanding loan with other financial institution does not affect their ability to facilitate the repayment of
both loans.

4.8 QUICK LOAN

✓ As per all above as it depends on nature of the applicant.

5.0 ELIGIBLE PURPOSE

ADILI MICROFINANCE COMPANY LTD (AMFC)shall give loans to its clients who wants to increase their working capital, purchase
capital goods, purchase household items, construction of small and medium houses; meets its maturing obligations, pay for school
fees, meet medical expenses etc.
ADILI MICROFINANCE COMPANY LTD (AMFC)will not give to entrepreneurs who engage in illegal trade or practices such as illegal
drugs, illegal fire arms, smuggling, gambling, gaming etc.

6.0 TERMS AND CONDITIONS

6.1 GROUP LOAN

Pricing Structure
✓ All clients have to pay Tshs.1, 000/= as a registration fee direct to the teller
✓ The client has to pay a 25% interest p.a (flat rate) of the loan disbursed.
✓ The clients have to pay loan application fee of Tshs 2% of the loan size during disbursement direct to the teller
✓ The client shall pay Penalty for 10% of the Installment due for late payment direct to the Teller.
Other Costs (non income)

✓ The client have to pay loan Insurance cover (LIC) direct to Teller so as to cover their loan against the losses arises from
death of client, fire, burglary and other natural disasters. The Insurance will also cover for funnel costs of the client and/or
with his/her spouse i.e. father, Mother, and children. The rate of insurance cover will be determined by the Insurance
Company from time to time
✓ The client shall pay penalty of 10% for late payment direct to teller and fines direct to the class leaders for late coming,
absenteeism, unauthorized class vacations. The rate of fines will be determined by the class during training and money

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 collected will be kept on the class special Account and not to be as ADILI MICROFINANCE COMPANY LTD (AMFC)source of
revenue.
✓ All Costs including legal mortgage, Land rents, Search fee, Valuation fee, Legal fee, property insurance cover and Auction
fee will be born by a client.
Collateral
✓ Group guarantee.
✓ Lien over Savings Guarantee Fund.
✓ Pledge items, both household items, office furniture or inventory
✓ Sales receipt (stakabadhi Ghalani).
✓ Government leader’s guarantee.
✓ Share certificates from Dar Es Salaam Stock of Exchange.

Method of payment
✓ Weekly repayment by cash at the class meeting.
Duration and Range of the loan
✓ There are Five (5) ordinary Group and two (2) Corporate Group loan Cycle

LOAN MAXIMUM INTEREST DURATION

CYCLE AMOUNT TSHS RATE

1 200,000 25% 25 Weeks

2 500,000 25% 50 Weeks

3 700,000 25% 50 Weeks

4 1,000,000 25% 50 Weeks

5 1,500,000 25% 50 Weeks

6 2,000,000 25% 50 Weeks

7 3,000,000 25% 100 Weeks

Loan process

Group formation

The Credit Manager has to organize a large meeting (symposium) by advertising, going door to door and/or liaise with the local
government leaders to organize the meeting. During the meeting the prospective clients shall be taught on the Historical background
of ADILI MICROFINANCE COMPANY LTD (AMFC’s, business activities, Membership rules and regulations; Products offered, Loan terms
and conditions.

Pre-registration meeting with prospective clients will be held at ADILI MICROFINANCE COMPANY LTD (AMFC)branch. A more detailed
description of the initial information meeting can be found in ADILI MICROFINANCE COMPANY LTD (AMFC)’s Client Training Manual.
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The group is comprised of 5 clients involved in income generating activities operating at one business center and near to ADILI
MICROFINANCE COMPANY LTD (AMFC)branch. The group is selected by persons who enjoy mutual trust and confidence. The close
relatives i.e. parents, children and spouse are not required to be members of the group. Each member has to provide two passport
size pictures, one to be affixed at registration form and another to the identification card.

Each group shall select Chairman, Secretary/Treasury who will be members of Class executive committee (Comprises of two
members from each group) and will serve for maximum term of twelve months. However committee member can be re-elected.

Class formation (first week)

A class is made up of 5 groups of 5 clients each.

Class members will elect the chairperson, secretary/treasury who will lead the class management committee and the committee
shall be assisted by Credit Officer. The class management committee will serve for maximum term of twelve months. However
committee member can be re-elected.

If Credit Officer has satisfied that the classes have eligible members and each group has pledged to strictly adhere to ADILI
MICROFINANCE COMPANY LTD (AMFC)credit rules and procedures.

Credit officer can start clients’ registration process after class formation.

Each potential client will complete individual application form and pay registration fee.

Group leaders will receive individuals’ membership application forms and receive registration fee from each member and submit the
same to the class management.

Class management committee has to receive group application forms and individuals’ registration from group leaders. Complete
Class membership application with ADILI MICROFINANCE COMPANY LTD (AMFC)by getting all group officials to fill out and sign an
application form. Class leaders to submit registration fee direct to teller after confirmed balanced. The class has to arrange the day
of weekly meetings.

The Credit officer receives Class application supported by group membership application forms and get class registration approval
from the Manager. After approval the credit officer issues individual loan ledger book and an ID card.
Upon client registration with ADILI MICROFINANCE COMPANY LTD (AMFC) all client have to undergo 4 weeks training on loan products,
loan conditions and procedures. Once per month each class has to undergo training on entrepreneurship and development.

All group members has to pay minimum of Tshs. 1,500/= as a weekly savings guarantee fund together with the repayment for the
whole loan life cycle with ADILI MICROFINANCE COMPANY LTD (AMFC).
Weekly meetings are held for all class members for the purpose of making weekly loan repayment and savings guarantee fund
deposit.
Lamp sum payment of savings guarantee fund are acceptable for clients who have had their SGF reduced for any reason, or for
clients need to meet required SGF balances for loan requested.

Duties and responsibilities of class members

✓ All members must properly register with ADILI MICROFINANCE COMPANY LTD (AMFC) and pay registration fee.
✓ All members must attend weekly meetings on time. Failure of that the fine will be levied and enforced by the class Management
committee.
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✓ Each member must ensure that his/her money paid or deposited are properly recorded, issued with a receipt dully signed by
the teller and the client against the amount posted. The teller must append the date stamp on each receipt issued or received in
duplicate.
✓ Each member will maintain individual loan and savings guarantee fund records, of which Loan Ledger Book (LLB) is issued upon
registration with ADILI MICROFINANCE COMPANY LTD (AMFC)who will be the custodian of the ledger in question after weekly
updates.
✓ Every member must maintain discipline with the group and observe the rules and regulations as provided by Class and ADILI
MICROFINANCE COMPANY LTD (AMFC). All members of the class shall always be watchful over each other regarding the proper
use of ADILI MICROFINANCE COMPANY LTD (AMFC) credit facilities, attend weekly meeting regularly and pay loan installments
promptly.
✓ All class members shall guarantee loans to an individual of the group. They will be jointly and severally responsible for all the
weekly SGF, loan and interest installments payments for their respective group and class.
✓ All class members shall sit as a loan appraisal committee during loan appraisal process.

Duties and responsibilities of class executive committee

✓ A link between group members, ADILI MICROFINANCE COMPANY LTD (AMFC)and local government officials.
✓ Recommend credit requirement for individual group members.
✓ Maintain discipline and verify group attendance.
✓ Responsible for weekly group collection of loan repayment and savings guarantee fund.
✓ Inspect loan utilization and make necessary recommendation to class.
✓ Acknowledge weekly group deposit receipt by signing against the posted amount.

Duties and responsibilities of class management committee

✓ The class management committee will be elected from the executive committee by all members of the class.
✓ Responsible for determine and custodian of fines but minimum amount of the fine to be dictated by ADILI MICROFINANCE
COMPANY LTD (AMFC)
✓ Responsible for weekly class collection of loan repayment and savings guarantee fund.
✓ Maintain attendance register and verify group attendance.
✓ All fines to be collected immediately and if not, prior to customer’s next loan application being considered. The customer can
also be recommended for an expulsion if this behavior persists.
✓ Acknowledge weekly entries on individual members’ loan ledger book.
Loan Application (second week)
✓ The credit officer should emphasize that ADILI MICROFINANCE COMPANY LTD (AMFC)to start by approving small loans in order
the client to understand loan conditions and procedures; and also the clients to know about each other.
✓ All clients have to fill loan application and approval form and pay loan application fee direct to teller.
✓ Provide all clients with the local government official guarantee form.
✓ The groups have to visit each other at client business and access if it can repay the loan applied.
✓ The groups have to visit the clients’ residents to access the value of additional collaterals such as household items if it can
secure the loan applied.
✓ The groups have to visit local government official to obtain third party guarantee.

This week the following groups (first set) shall be visited

Group 1 to visit Group 5
Group 5 to visit Group 3
Group 2 to visit Group 4
On the third week the following groups (second set) will be visited.
Group 3 to visit group 2
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 Group 4 to visit group 1

NB: For the second and other loans cycle the ADILI MICROFINANCE COMPANY LTD (AMFC)Credit Manager have also required
visiting the client prior to appraisal of the loan.

Loan appraisal (third week)

Class loan committee includes the credit officer and all members of the class will conduct loan appraisal exercise to the first set
group

The second set group clients will be apprised on forth week.

The group members will provide their guarantee by signing the borrower application form if they individually approve of the member
getting the loan.
The chairperson of the group shall present the loan request of each member to the loan committee for consideration.

During the process of loan appraisal each client’s application is discussed one at a time while client in question stays outside waiting
for decision.
The class chairperson has to ask the group members how familiar are with each other and re-affirm their guarantee to the applicant
and the group members has to leave the class and stay outside waiting for decision. This provides the credit committee the
opportunity to freely discuss each client and their business, after each individual assessment one is given immediate feedback on
decision and reasons there on.

The class chairperson shall ask the group members visited the group being discussed to furnish the loan committee with the
following client information:
▪ Location of the business
▪ Type of business to be financed.
▪ Income of the business before receiving the loan.
▪ General expenses of business.
▪ Ability of client to repay the loan weekly.
▪ The expected result after the loan.
▪ Other source of income if any.
▪ Character of the borrower.
▪ Credit worthiness of the borrower.
▪ Attendance to class meetings (90%).
▪ Previous loan repayment records.
▪ The value of additional collateral (to be mentioned as pleaded in the local government leader’s form).
The minimum total number of the loan applaud committee presented must not be less than 17 members, with at least 3
representative from each group Member and the group of the loan applicant must all be physically present during loan appraisal.

It is very important that client clients understand the importance of the exercise and of being involved in the actual approval of the
loan to the members. Due emphasis should be made to further stress the significance of them being co-guarantors to the loans as
they are severally and individually liable for the repayment of the loan and SGF to ADILI MICROFINANCE COMPANY LTD (AMFC).

The chairperson has to ask the loan committee if they are agreeable to guarantee the applicant loan as requested. Once the loans
are approved by the class the chairperson has to sign the loan application form on behalf of the class loan committee and shall be
handed over to the credit officer.

The Credit Officer shall verify the loan application by ensuring compliance on the following:

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 ▪ There is full group of 5 members during appraisal.
▪ The client has paid SGF at least four weeks (for the first loan) and 25% of the loan amount
requested for subsequent loans.
▪ The client has paid all fines and the penalty monies.
▪ Loan amount falls within relevant loan cycle.
▪ Correct client identification data.
▪ Class attendance has been accepted.

The Credit Officer can verify the loan and handle it to the Branch Manager for approval. The credit officer can disapprove loan
application giving adequate reason(s) to class loan committee. The BM or CM will be responsible for all such decision taken.

Loan Disbursement
After loan approved the following should be done:-
i. The identity Card is issued to the client after having received two colored passport size picture. All cost to be borne by
the client.
ii. The credit officer must read the contents of the loan agreement and client have agree and sign, there after the class
chairperson/secretary have to sign on behalf of the class. The credit officer collects the loan contract to the BM for
signing attached with the following:
a)Individual loan application form
b) Group visit or credit officer visit report.

iii. The client has to pay 2% of the loan applied as loan administration fee drivel to the teller.
iv. The client has to pay 3% of the loan as insurance premium direct to teller.
v. The weekly disbursement report is prepared by the Operations Manager to the Branch accountant where he/she can
prepare a cheque in favor of a client.
vi. Each client has to sign the loan disbursement voucher and dispatch to acknowledge the receipt of the chaeque at the
class meetings.

Loan repayment
(i) ADILI MICROFINANCE COMPANY LTD (AMFC)loan repayment must be done at the clients’ centers or any designated
place.

(ii) The daily repayment report is prepared by the Operations Manager to the credit officer and teller before class hours.
(iii) All Group members must attend the repayment meeting. In case of partial payment, members of group must cover
the difference. All payment must be deposited to the Teller by the class management committee leaders.
(iv) The loan repayment meeting shall end only if all loan principle, loan interest and loan Guarantee Fund id fully paid
as per loan contract. Each individual client must sign the receipt valued to the money deposited and printed to the
clients before the end of the meeting.
(i) For the pre-payment loans and SGF, the client has to pay it separately from the contractual weekly repayments.
The client has to be accompanied by class management committee leader and deposit the same direct to the teller.
Loan follow – up
All loans MUST be paid as per the repayment schedules, late payment is not accepted.

(i) Loan delinquency

A loan that has not been paid any times is called a delinquent loan, or a delinquent loan is the situation that occurs when loan
payments are past due. A delinquent loan is recognized when the client misses one installment or repayment as per the terms of the
contract.
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 A delinquent loan is Contagious and spreads like bush fire. Delinquency can eat away the portfolio without any one realizing it, and
the suddenly explore out like a hidden beast. Failure to control loan delinquency is very dangerous to an institution that provides
credit to micro enterprise entrepreneurs and small holder farmers. The quicker that the delinquent is recognized the more the
possibility of recovering the past due loan amount.

The risk of delinquency and default therefore is controlled by front staff (Credit officers) while managing and monitoring their loan
portfolio. The organization on the other hand ensures timely report so as enable them to arrest the situation without delay. If a client
does not pay on time the following happens to the organization.

▪ Postponement of interest income yet costs remains, so lower profitability.

▪ Slower portfolio rotation lowers productivity and reduces fee income.
▪ Contagious – hidden beast (infectious- hidden monster)
▪ High costs of fighting delinquency, cheaper to prevent.
▪ Cost of loan provision
▪ Delay in repeat loans and therefore discourage others from repaying
▪ Arrears in repeat loans and therefore discourage others from repaying
▪ Arrears lower staff morale.

(ii) Causes of loan default

To manage default effectively, one must understand the factors causing it, the following are the factors that causes default;

a. External – Natural calamities e.g. Draught, floods, fire, theft and burglary.
b. Internal
▪ Over/under funding, short term funds for long term and
▪ Misuse/diversion of funds to non income generating activities
▪ Misunderstanding in groups
▪ Inaccuracy or inadequate appraisal
▪ Delayed action on defaulters
▪ Poor orientation process from one loan officer to another
▪ Delayed loan processing
▪ Ineffective monitoring of clients activities
▪ Deliberate refusal to pay
▪ Fraud by loan officers

(iii) Managing loan default

The most effective way to manage defaults it to prevent it. Loan follow – up is a responsibility of a credit officer which should
be done after every repayment meeting. The following are therefore some of the approaches/strategies that a credit officer
could use to prevent the occurrence of default and when it does occur, manage/minimize it as quickly as possible.

▪ Ensure that you select and screen the clients very well
▪ Proper group orientation and training on the lending requirement from onset.
▪ Conduct a thought appraisal of loans and provide appropriate loan sizes to all clients. Always base your loan decision the
current business cash flow not on the projections presented by the client
▪ Ensure quality service at all times. For instance, process loans within shortest time possible
▪ Proper loan sequencing
▪ Frequent visits (both planned and impromptu) to monitor client
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 ▪ Attend all group meetings- preferably weekly.
▪ Ensure that group maintain correct and up to date records at all times
▪ Both you and the group should take immediate action on any missed loan repayment
▪ All group must have competent, respectable and trustworthily leaders
All these measures enhance the co-guarantee mechanism which constitutes the main security for small loans.
(IV) Loan follow-up procedures
ADILI MICROFINANCE COMPANY LTD (AMFC) loans are followed immediately after they fall due. Client should perform the
repayment enforcement duties by visiting their member’s immediately. On the other hand loan follow up is the responsibility of
the credit officer, and in case clients have failed he/she will assist by doing the following;

The CO assist the group members in following the default and feedback on the following should be given to the branch manager

▪ If is the whole group defaults the CO should summon the group for discussion in the office (ADILI MICROFINANCE COMPANY
LTD (AMFC)) with the view of determining the problem areas and discuss on the probable solutions. Branch manager should
facilitate this process and ensure the group commits specified date of payment

▪ In the vent of failure to comply with the above agreement, the CO will send the group to the Local government leader for
further actions.

▪ When this stage does not give results the group will do recovery exercise by seizing collateral pledges after official
correspondence with local government leaders, it should be remembered here that all official channels to do the exercise
must be followed.

▪ The group will have to surrender the 25% savings guarantee fund in accordance with the loan agreement.

▪ If all the above sources fail, ADILI MICROFINANCE COMPANY LTD (AMFC)will have to take legal recourses to individual or
group as the case may be.

• Client exit and re-admitted.

The client will be exited due to the following reasons:

i Expelled by the ADILI MICROFINANCE COMPANY LTD (AMFC) or Group (To be Black listed)

ii Death ( To be black list)

iii Voluntarily

An existed client must have been cleared by class members.

The exit form to be filled and signed by class leader and the credit officer and then forwarded to the Branch manager for
authorization of the loan savings guarantee refund.

Upon approval a withdrawal vouchers to be completed and signed by the credit officer and the Manager. The exited client
(accompanied by class leader) will identify himself to the teller with his/her ADILI MICROFINANCE COMPANY LTD (AMFC)identity card
and withdrawal voucher after which the payment is effected. The client required to sign withdrawal voucher on the space provided
on the voucher over the counter to acknowledge the receipt of the SGF.

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The Identity card of the exited client is then retained by the teller and perforated accordingly and handed over to the Branch
Operations Manager thereafter.

In case of death the loan outstanding amount will be covered by loan Insurance cover their fore all SGF will be paid in favor of
his/her next of keen or as be directed by an Administrator to be appointed by count of low.

The client will be re- admitted by consent of the group and class members; and Branch managers’ authority. The level of the loan that
client can enjoy will be determined by ADILI MICROFINANCE COMPANY LTD (AMFC)and Guarantors but final decision will be on the hand
of the Branch manager.

7.0 CORPORATE GROUP LOAN

Pricing Structure.
• The client has to pay a 25% interest p.a (flat rate) of the loan disbursed
• The clients have to pay loan application fee of Tshs 2% of the loan size during application direct to the teller.
• The client shall pay Penalty for 10% of the Installment due for late payment direct to the Teller.

Other costs (non income)

The client have to pay loan Insurance cover (LIC) direct to Teller so as to cover their loan against the losses arises from death of
client, five, burglary and other natural disasters. The Insurance will also cover for funnel costs of the client and/or with his/her
close dependants i.e. father, Mother, and children. The rate of insurance cover will be determined by the Insurance Company from
time to time.
All Costs including legal mortgage, Land rents, Search fee, Valuation fee, Legal fee and Auction fee will be born by a client.

Collateral
• Legal Mortgage over landed property.
• Chartless Mortgage over movable property.
• Group guarantee.
• Lien over Savings Guarantee Fund.
• Pledge items, household items, office furniture or an inventory (business goods).
• Sales receipt (stakabadhi ghalani).
• Fixed deposit receipt.
• Government Securities/bonds.
• Valuables shares certificates.
• Personal guarantee mainly from a friend or family member.
• Government leader’s guarantee.
• Employer’s guarantee.

Method of payment
Flexible.

Duration and range of the loan

There are two (2) Corporate Group loan Cycle i.e. 6&7

LOAN CYCLE MAXIMUM AMOUNT TSHS INTEREST RATE DURATION

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 1 100,000 25% 25 Weeks
2 300,000 25% 50 Weeks
3 500,000 25% 50 Weeks
4 1,000,000 25% 50 Weeks
5 2,000,000 25% 50 Weeks
6 4,000,000 25% 75 Weeks
7 6,000,000 25% 100 Weeks

Loan process
• Group formation

The group is comprised of 4 clients involved in income generating activities operating at one business center and near to ADILI
MICROFINANCE COMPANY LTD (AMFC)branch. The group is selected by persons who enjoy mutual trust and confidence and have
graduated from group loan cycle. The close relatives i.e. parents, children and spouse are not required to be members of the group.

Each group shall select Chairman, Secretary/Treasury and will serve for maximum term of twelve months. However committee
member can be re-elected.

If Credit Officer has satisfied that a group has eligible members and each member has pledged to strictly adhere to ADILI
MICROFINANCE COMPANY LTD (AMFC)credit rules and procedures.

Loan Application
All clients have to fill loan application and approval form and pay loan application fee direct to teller.
Provide all clients with the local government official guarantee form.
The group has to visit each other at client business and access if it can repay the loan applied.
The groups have to visit the clients’ residents to access the value of additional collaterals such as household items if it can secure
the loan applied.

The group has to visit local government official to obtain third party guarantee.
During first week two members (first set) shall be visited.

On the second week the rest of the two members (second set) shall be visited.

ADILI MICROFINANCE COMPANY LTD (AMFC)Credit Manager has also required visiting the client prior to appraisal of the loan.

Loan appraisal (third week)

(i) The group members and credit manager will conduct loan appraisal exercise to all group members.

(ii) The group members will provide their guarantee by signing the borrower application form if they individually approve
of the member getting the loan.

(iii) The chairperson of the group shall present the loan request of each member to the loan committee for consideration.

(iv) During the process of loan appraisal each client’s application is discussed one at a time while client in question stays
outside waiting for decision.

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 (v) The class chairperson has to ask the group members how familiar are with each other and re-affirm their guarantee
to the applicant. After each individual assessment one is given immediate feedback on decision and reasons there on.

(vi) The class chairperson shall ask the group members visited the member being discussed to furnish the loan committee
with the following client information:
• Location of the business.
• Type of business to be financed.
• Income of the business before receiving the loan.
• General expenses of business.
• Ability of client to repay the loan weekly.
• The expected result after the loan.
• Other source of income if any.
• Character of the borrower.
• Credit worthiness of the borrower.
• Previous loan repayment records.
• The value of additional collateral (to be mentioned as pleaded in the local government leader’s form).

(ii) The minimum total number of the loan applaud committee presented must not be less than 3 members.
(iii) It is very important that client clients understand the importance of the exercise and of being involved in the actual
approval of the loan to the members. Due emphasis should be made to further stress the significance of them being
co-guarantors to the loans as they are severally and individually liable for the repayment of the loan and SGF to ADILI
MICROFINANCE COMPANY LTD (AMFC).

(iv) The chairperson has to ask the group members if they are agreeable to guarantee the applicant loan as requested.
Once the loans are approved by the class the chairperson has to sign the loan application form on behalf of the class
loan committee and shall be handed over to the credit Manager.

(v) The Credit Manager shall verify the loan application by ensuring compliance on the following:

1. There is full group of 3 members during appraisal.

2. The client has paid SGF 25% of the loan amount requested for subsequent loans.
3. The client has paid all fines and the penalty monies.
4. Loan amount falls within relevant loan cycle.
5. Correct client identification data.
6. Group attendance has been accepted.
7. The Credit Manager can verify the loan and handle it to the Branch Manager for approval. The credit Manager can
disapprove loan application giving adequate reason(s) to class loan committee. The BM will be responsible for all such
decision taken.

Loan Disbursement
After loan approved the following should be done:-

The credit manager must read the contents of the loan agreement and client have agree and sign, there after the class
chairperson/secretary have to sign on behalf of the group. The credit officer collects the loan contract to the BM for signing
attached with the following:

▪ Individual loan application form

▪ Group visit or credit officer visit report.
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 ▪ The client has to pay 2% of the loan applied as loan application fee direct to the teller.
▪ The client has to pay 3% of the loan as insurance premium direct to teller.
▪ The weekly disbursement report is prepared by the Operations Manager to the Branch accountant where he/she can
prepare a cheque in favor of each client.
▪ Each client has to sign the loan disbursement voucher and dispatch to acknowledge the receipt of the chaeque at the class
meetings.

Loan repayment
• ADILI MICROFINANCE COMPANY LTD (AMFC) loan repayment must be done at the clients’ centers or any designated place.
• The daily repayment report is prepared by the Operations Manager to the credit officer and teller on due date.
• All loan principle, loan interest and loan Guarantee Fund is fully paid as per loan contract.
• Each individual client must sign the receipt valued to the money deposited and printed to the clients before leaving the
counter by him/her self or an agent.
Loan follow – up
All loans MUST be paid as per the repayment schedules, late payment is not accepted.

Client exit and re-admitted.

As per group loan.

Pricing structure

▪ The client has to pay a 25% interest p.a (flat rate) of the loan disbursed.
▪ The clients have to pay loan application fee of Tshs 2% of the loan size during disbursement direct to the teller.
▪ The client shall pay Penalty for 10% of the Installment due for late payment direct to the Teller.

Other costs (non income)

The client have to pay loan Insurance cover (LIC) direct to Teller so as to cover their loan against the losses arises from death of
client, five, burglary and other natural disasters. The Insurance will also cover for funnel costs of the client and/or with his/her
close dependants i.e. father, Mother, and children. The rate of insurance cover will be determined by the Insurance Company from
time to time.

All Costs including legal mortgage, Land rents, Search fee, Valuation fee, Legal fee and Auction fee will be born by a client.

Method of payment

• Flexible

Duration and range of the loan

. As per group loan’s 6 and 7 loan cycles

Terms of payments
• Repayment direct to Teller individually or by representatives
• Quarterly group meeting at ADILI MICROFINANCE COMPANY LTD (AMFC) Branch or ADILI MICROFINANCE COMPANY LTD (AMFC)
centre.
• Post payment of the loan also accepted.

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NB: It is better to be understood that, “ADILI MICROFINANCE COMPANY LTD (AMFC) is neither a real estate agent nor a court
Broker”. Therefore it is the duty and obligation of the employee to take all. Precautions and measures before issuing the loan to the
client. Hower the Collateral will be the last resort to recover the client’s loan if fall deliguent.

8.0 QUICK LOAN

Pricing structure.
▪ The client has to pay registration fee of Tshs. 20,000/=
▪ The client has to pay a 10% interest p.m (flat rate) of the loan disbursed.
▪ The clients have to pay loan application fee of Tshs 2% of the loan size during application direct to the teller.
▪ The client shall pay Penalty for 10% of the Installment due for late payment direct to the Teller.
▪ Fee and Auction fee will be born by a client.

Method of payment

• Flexible

Duration and range of the loan

- 0ne month to three months.

Terms of payments
. Repayment direct to Teller individually or by representatives.

Collateral

▪ Lien over Savings Guarantee Fund.

▪ Pledge items, both household items, office furniture or inventory
▪ Sales receipt (stakabadhi Ghalani).
▪ Government leader’s guarantee.
▪ Share certificates from Dar Es Salaam Stock of Exchange
▪ Legal Mortgage.

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