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Newsletter
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 Download
the ODN newsletter
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ODN Annual Report
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 Download the ODN 2005 annual repport.
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Countries of intervention
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OCTOPUS MicroFinance Suite
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 Download the new Loan tracking Software
Octopus Microfinance Suite:
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OXUS is commited to :
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Targeting rural households with no other options for access to credit or deposit facilities, thereby easing their extremely limited liquidity .
Supporting and helping create self-managed groups of vulnerable families, which operate on the basis of collective responsibility.
Creating a basis for the setting up of small businesses by providing micro-finance and capacity building support and thereby addresses the high level of rural unemployment.
Encouraging democratic leadership in groups by providing training for group members and leaders.
Encouraging client entrepreneurialism and thereby contributing to the individual empowerment of clients, particularly women.
Achieving and insuring financial sustainability and growth of the MFP.
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We provide our clients with 2 types of loans: collective and individual.
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The group loan (Small Credit Groups, up to six people)
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Repayment process and Interest :
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This is the backbone of OXUS's microfinance services. RSCAs are credit groups composed of 6 members who are not related to each other and have all some type of business. There are 7 loan cycles for 6 months each. Starting with a loan amount of 600 USD, if the group is paying successfully the loan back, the members may get other loans of a higher amount.
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The interest paid per month is a 3% flat rate.
OXUS used to use the bullet repayment method, i.e. the groups pay interest monthly and the principal at the end of the loan. In order to secure the repayment process, OXUS decided to use the monthly repayment process. OXUS actually operates the shift between bullet to monthly repayment. |
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Loan amount : |
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Collective responsability : |
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The amount of loans for SCGs starts at USD 600 per group and the loan duration is six months. After six months, if the group is successful, and requests a subsequent loan, the loan amount can be progressively increased up to $900, $1,200, $1,500, $2,100, $2,700 and $3,600.
The interests rate varies from 3% per month of the outstanding loan, for the starting groups ($900 and $1,200), to 2.5 % for subsequent loans.
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The group loan is rotating which means that a few members (often 2) use the loan for two months and than hand it over to the next 2 etc. and at the end of the 6 months the loan is repaid. The groups are also encouraged to save among themselves and no collateral is needed.
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The individual loans
Since May 2006 OXUS offers loans to individuals. It concerns the most performing clients of the credit groups and also the clients from more urban areas, for example clients in the city bazaars.
During
the first contact with the client, the
loan officer informs the client about
the basic terms & conditions of the
individual loan product. A brochure (Annex
1) has been developed to support the loan
officer's explanation of these basic terms
& conditions. More specific terms
& conditions, for example what happens
in case of delinquency, prepayment and
rescheduling, are described in chapter
3 of this manual, and in the loan agreement.
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Interest :
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This will vary between
$1,000 and $5,000. The amount of the loan
for a certain client will depend on: (1)
the credit history; (2) the monthly cash
flow; (3) the provided guarantors and/or
collateral; and (4) the client's business
plan. Only repeat borrowers can apply for
a loan greater than or equal to $2,500.
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The interest will be calculated based on the remaining loan balance. The interest will be 3.0% per month for loans up to $2,500 and 2.5% per month for loans greater than or equal to $2,500 (paid on a monthly basis). The reason for the different interest rates is twofold: (1) more experienced clients with a good credit history, and therefore a lower risk, get loans of $2,500 and up with a 0.5% discount; and (2) it is easier to earn back the transaction costs on a larger loan.
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Maturity
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Grace
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The loan term will vary
between 6 and 18 months. The maturity of
the loan will depend on the client's credit
history and business plan.
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The grace period is the period in which no principal repayments have to be paid. Individual loans will have a grace period of 1 month. During that month, only interest on the outstanding loan balance has to be paid.
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Repayment Schedule
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Guarantors
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The first month after the disbursement, only the interest is due (grace period). The second month and every following month till the end of the loan term, the client will pay monthly installments on an annuity basis. The monthly installments are the same every month (in US Dollars) and cover both the interest and reimbursement of the principal.
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Small individual loans between $1,000 and $1,501 can be secured by guarantors alone. A client should have at least two guarantors. The number of guarantors needed, will depend on the loan amount, the credit history of the guarantors, and their cash flow/capital.
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Guarantors
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For loans of $1,501 and larger, collateral must be provided. The value of the collateral must be at least 120% of the loan amount. If the client can provide collateral valued at more than 80% of the loan amount, but less than the required 120%, a combination of guarantors and collateral might be accepted.
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