Business Model

 
Over the years, Mitrata has blended its deep understanding of the community based ‘social processes’ along with efficient, effective, best-practiced ‘business process’ of microfinance industry and developed a successful and proven ‘Cluster Based Model’ for the delivery of its financial products. 
 
The model is based on carefully identifying and selecting geographies and communities with strong need of credit, potential of economic and income generation activities, along with openness and readiness for credit training, credit discipline and coming together in a group called cluster. It is based on the self-help principal of ‘one for all & all for one’ and provide social collateral in form of ‘Joint liability’
Apart from this Mitrata has robust and multi-level credit appraisal mechanism with following broad stages for risk mitigation-
 
1. Client selection: Based on clearly defined criterias, the clients or members are selected in a participatory manner where the members of community as well as field worker of MITRATA work together.
 
2. KYC documentation: There is strong KYC verification and selection stage to ensure that all selected clients meet the KYC norms of the loan program and RBI.
 
3. Formation of Joint liability Cluster: All the clients mandatorily has to be part of a Joint liability group where all the clients are ready to take repayment liability of each other to ensure that only clients who are sound in their repayment are selected by the groups.
 
4. Compulsory Group Training (CGT): All the clients mandatorily have to go through a 3 days continuous group training conducted by MITRATA which gives them all the information about organization, loan program, terms & conditions, importance of credit discipline, use of credit bureau, importance of joint liability etc. which ensures that all the clients are aware about the terms and conditions of the program and only those who agree to it are part of the group and move to next level.
 
5. House Verification: Each and every client’s house is visited by staff of the organization to conduct verification of assets, socio economic conditions, income generation activity as well as meeting the family members on consent for loan and feedback from neighbour and other members of the community about the client. This ensure that all the information given by client are independently verified.
 
6. Group Recognition Test (GRT): All the group who have completed CGT have to go through a group recognition test conducted by a senior Officer of the organization to check if the clients have understood and agree to the terms & condition of the program as well as independent and random verification of information given by the clients/staff by a competent authority.
 
7. Credit Bureau Check: MITRATA is member of credit bureau CRIF HIGHMARK and shares all the client credit history with the credit bureau as required by RBI. All the clients before disbursal are mandatorily checked against the credit bureau database for any multiple loans, over-indebtness, and poor repayment on past loans. Only those clients who satisfy the credit bureau check are considered for next level.
 
8. Pre-disbursal counselling: Before the final disbursal, all the clients meet the senior competent authority for final communication on loan terms & conditions, any doubts or questions by the clients, final verification on KYC documents and identity of the clients and re-enforcement of joint liability and other important aspects of the loan program.