6.

0 My Task as a Credit analyst

Work role of Credit analyst Spandana Sphoorty financial limited.
About company operation:
It gives the small ticket loans to women up to maximum cap of rupees 1,00,000. Without any
surety or collateral security. It works on the simple concept of JGT (Joint Group Liability) it
means, 8 -12 women’s came forward and form one group for loan purpose and provide the
surety for the loan amount of each other. In simple words loan is given with group guarantee
only those who are willing to give guarantee for the loan taken by other group member.

Credit analyst CA a basic and important field level job in Spandana Sphoorty financial limited
has the several responsibilities those can be explain under 2 major points those are as follows:

I)Selection Of village
As an organisation Spandana sphoorty financial limited have taken a strategic decision to focus
primarily on rural areas for our business expansion this is because organisation Spandana
sphoorty financial limited have observed that the urban areas are over penetrated with multiple
players operating there. The urban borrowers are also found that they are less discipline than
the rural borrowers. Therefore, micro finance should focus on rural areas for issue of new
groups. forming a group in a rural area generally takes longer than urban areas as they are little
slow in decision making. But in the long run the efforts will be beneficial as the ruler was are
more stable and loyal to the organisation
When a new branch is open the first thing that the CA/BM has to do is to collect the list of all
villages within the circular radius of 40 kilometres. Identification and evolution of villages can
be done by CA/BM. The CA/BM Shall visit each and every village and identify potential areas
where low income households stays. He should interact with the borrowers of other MFIs and
other local resident to try and understand the scope of business expansion.

Selection criteria for village or village identification process

 Distance from the branch

The village shall be within 40 kilometres of circular radius of branch office. This is necessary
as the CA and BM can travels a such distance to and for and come back before noon.

 Number of Household
We allow only one person from a family to joint liability group for this reason one should a
certain number of household in targeted village the village awesome shall have your potential
to get a minimum 30 hours to get 30 / village having hundred households

 Number of MFIs present:

The BM need to check how many MFIs are operating in the selected location to assess and
evaluate the competition in that village. Village those have high competition should be rejected
in order to reduce the operation cost.

 Road accessibility
CA or BM should ensure that there is proper road accessibility by bike throughout the year. If
the village or slum in within 40 Kms but has no proper accessibility, such location should be
avoided.
  OD or late recovery problem
CA or BM should ensure that there is no record of members with other MFIs with problem of
OD or late recovery

 Source of income
CA or BM should check the source of income, livelihood options of the prospective clients
and their repayment capacity to safe guard the loan instalment amount regularly

We should avoid villages having the following:

 Dominance of single community:

There is not advisable to operate in a location where there is a single community. It is risky to
operate in those locations shall be excluded.

 Presence of ringleaders:
During village visit, the CA or BM should check and ensure that there is no presence of ring
leaders. If ring leaders are present ad there are ghost loans, such village shall be excluded.

 Aggressive lending by any other MFIs in the village

 Communal riots

 Migration issues

II)New group formation

The broad steps included in new group formation processes are as follows:

1) Introductory meeting
a) eligibility and rejection criteria for members
b) description of loan product
2) house visits by CA
3) collection of KYC document from eligible and interested clients
4) upload of documents
5) credit bureau check
6) sanction verification
7) compulsory group training
8) Group recognition test test
9) loan appraisal by BM

1) Introductory meeting
Introductory meeting is conducted at every new village identified and in the existing village
where this is scope of adding more borrowers. CAs should not merely focus on adding new
villages but at the same time they should also continue to add new groups in existing villages
this will help increase the average centre size in a village and hence unable to the CAs to handle
higher caseload without any increase in time and effort. CAs should not ask the borrowers from
existing group to add, get more clients from the villages, instead they should personally meet
all the women in the vicinity and conduct an introductory meeting.
The objective of introductory meeting as follows:
a) Introduction to the company and branch
b) loan products offered by the company
c) client eligibility criteria

CAs should convey the group that if any borrower has any difficulty to pay instalment other
group members shall liable to contribute and help that members to pay her instalment it on
time so show that the track record of the borrower and the group will be intact to get further
loan from the MFIs and Banks.

a) Introduction to the company and branch:

About the branch location head office location which where presented, contact details of the
branch, address, major land marks etc. need to be given to the borrowers for have the better
communication and transactional relationship.

b) Description of loan product/ loan products offered by the company

Spandana Sphoorty services are as per the convenience of its clients. All the terms and
conditions of the loans are made known to the clients to maintain our core value of
Transparency. We have no hidden charges in the name of value-added services and compliance
with Statutory requirements.
Spandana Sphoorty services and products are:-
 Abilasha (JLG Loans)
Abhilasha stands for “Aspiration”. This unique loan is designed especially for low-income
households

 Loan Against Property (LAP)

Sometimes big ideas need small help, thus we have designed our Loan Against Property known
as LAP.

 Phinix Loan
All our products are designed for the welfare and economic upliftment of the rural population
majorly women.

 Shree Laons
Shree stands for “Good Beginning”. Offered in the state of Andhra Pradesh,
 Gold Loan(Keerthan)
Gold Loans are given against the mortgage of Jewellery. Indian housewives hold 11% of the
world's gold.
 Interim Loan
We’ve introduced Interim loans to assist our borrowers who are struggling to meet short-term
liquidity requirements.
It is very important to create a group with good clients with a clean track record. Loans are
given for the betterment of the households. 8-12 women living in a close proximity shall form
into a group and they shall fulfil the following eligibility criteria:

1. women only married women are eligible for loan if the woman is divorced widowed
or separated then also, she is eligible for a loan. This is applicable for both new and
existing borrowers.

2. own House: possession of own house is mandatory for new clients to get a loan. If the
client has own house in a different location but currently living in a rented house then
she is not eligible for loan. In case own house is under construction or renovation and
the client is temporary staying in a rented house nearby she can be considered for a
loan.To confirm that house own possession Spandana sphoorty finance limited ask for
the electricity bill and tax receipt of that house to confirm those. Credit analysts has to
ask the about the possession of the house and the necessary document.

3. Age: women in the age group of 18 to 59 years are eligible for loan. Age of her spouse
can be up to 65 years. Both the client and her spouse should be economically active
and contributing for the family income age shall be as per KYC documents (Adhar card
voter ID bank statement). Women above 55 years will be considered only if they
are healthy and active depending on their ability to attend centre meetings.

4. Group guarantee: loan is given with group guarantee only those who are willing to
give guarantee for the loan taken by other group member are eligible for loan.

5. Close proximity: Group members should be living nearby within a distance of 0.5
kilometres they should All know each other.

6. Compulsory centre meeting attendance: all group members should agree to to attend
the centre meeting.

7. Existing loan: If a client has loan outstanding from two MFIs, then she is not eligible
for loan however, if she has outstanding loan from only one MFI, then she is eligible
for loan.

8. One Loan in One Family: In a family where there is a more than one women who are
living together in a singe family then the only one women is eligible for the loan not
all the women.

Rejection criteria
1. Rented house: New clients who don't process own houses are not eligible

2. unmarried women’s: are not eligible for a loan.

3. overdue clients: if any borrower has an overdue with Spandana will not be eligible for
any loan clean she clear her overdue outstanding.
 4. Two persons from same family: loan shall be given to only one person in a family in
case a household has two female members such as daughter in law mother and daughter
mother in law and daughter in law sisters etc living together only one of them is eligible
for loan.

5. Chronic illness: in an event where one of the family member of the client is suffering
from chronic illness bedridden or hospitalized such clients are not eligible for loan even
if they are satisfied all other criteria.

6. Ring leaders: some women will be very aggressive and super active during centre
meetings these people take commissions from other borrowers and some way even take
the entire loan amount this will create installment repayment problem as a huge debt to
repay.

7. Pipeline /Ghost borrowers: If the client or family members are working in police
department Court media they should not be considered for loan political leaders and
their followers corporators was numbers add those who are active in political are not
eligible for loan because they will influence the decision of the borrowers and create
the problems while repairing the debt.

2) house visited by CA
After conducting the introductory meeting with borrowers CA assess all the eligible and
rejection criteria. Then he will collect the loan application.
After collection of loan application from clients CA has to visit the house of the clients while
doing house visits CA has to check the and take note of the following:- proximity of the house,
own house, whether the borrowers know each other, in a group economically active for the
payment purposes, one member in a one family etc.

3) collection of KYC document from eligible and interested clients.

CA gets a call and the women have informed that they have already a group then the CA should
inform the time of his visit and asked them to keep the original and copies of Aadhar, Voter
ID. own house proofs, bank statement and two join passport size photograph of clients and her
spouse need to be present at meeting. CA should only collect copies of the KYC document and
photograph and should not under any circumstances carry the original KYC documents of the
borrowers with him the CA shall visit each and every client house and collect this document
directly from the clients house while doing this he has to check whether each clients is fulfilling
the eligibility criteria such as own house proximity etc.

While collecting the KYC document from the clients CA should consider the point of ring
leaders and pipeline borrowers and avoid those all the borrowers for future risk avoidance.
The CA shell cross check the document with original fill up client and enrolment (LD1) form
and obtain client signature on LD3 and LD4 which is forming part of the client enrolment form.

All true-copies of KYC documents attached with client enrolment form should be attested by
credit assistant or branch manager that is duly signed and stamped acknowledgement of loan
application (LD-5) duly filled in and signed by CA shall be given to each individual client
immediately on collecting the KYC documents and client enrolment form.
4) upload of documents: The CA shall submit the attested document to the branch manager
for his review the branch manager shall verify each and every document and shall make sure
that all mandatory columns are duly filled in, upon satisfaction he shall sign the client
enrolment form. Post BM sign off, the document shall be scanned and uploaded on FIMO( an
ERP software of Spandana Sphoorty financial Limited). Scan and upload of all e KYC
documents on FIMO. After the documents are loaded in the software’s of the company,
backend workers who all are seated in in head office (Hyderabad) are verified the documents
and give approval for the loan if document all correctly match and satisfying the norms. If not
loan applications will be rejected and ask to re-upload the correct ones.

5) credit bureau check: All loans applications entered on FIMO will automatically have a
credit bureau check done. From the bureau report of FIMO will check indebtedness of the
borrower number of lenders and overdue status. Based on indebtedness loan applied for and
other criteria the maximum that can be disbursed to the borrower is sanctiond. BM shall check
on FIMO if the loan is approved or not on daily basis

6) Loan sanction and verification: -

The criteria to be followed for loan sanction will be as follows:

1. Number of lenders:
As per RBI regulation, Spandan sphoorty financial limited cannot be third NBFC- MFIs.
Spandan sphoorty financial limited strictly adhere to this. However, we can be IV lender if two
other lenders are non NBFC MFIs.

2. Overdue: with other lenders we will not approve loan for the first cycle borrowers if
she has overdue with other MFIs.

3. Indebtedness cap rupees 80,000 per borrower across all branches.

4. loan size
 maximum loan can give in first and second cycle is rupees 42,000
 third to fifth cycle is rupees 52,000 and
 above fifth cycle is rupees 62,000

7) compulsory group training (CGT)

CA shall conduct CGT for two days as per the agreed date and time with the group members.
The CA should conduct this training religiously in two consecutive days. There should not be
any gap in between both days of training if there is any gap then training will have to be re-
started and shall continue for two days. The same CA shall give both the day training. It is
mandatory for every CA to carry the group training manual. BM shall conduct GRT along with
loan appraisal on the second day or third day.

Schedule to be followed for CGT is given below: -

Day Training topic Duration
Day 1 Pledge, Product features, Group Guarantee, Loan sanction and 45 minutes
disbursement, Centre meeting, Loan utilisation, advance collection,
Pre-closure
 Day 2 Pledge, Revision of previous day’s training, insurance, customer 45 minutes
grievance redressal mechanism(CSS), Group recognition test

Before starting group training following guidelines should be followed: -

 CA or BM should ensure that they reached 5 minutes before the scheduled time to the
place where training of group is going to be conducted.

 100% attendance of clients is mandatory, if all the clients are not present on time the
CA should cancel the training session and re-schedule to the next day if one of the next
days also all clients do not turn up the group stands cancelled.

 the staff and clients should sit on the floor in a proper line groupwise no staff can solicit
any favour including chair for sofa or any other favour if mat is offer it can be accepted

 BM should ensure that quality of training is good and requirements with regard to the
fixed specified time and place on both these are followed for this he should track the
moment of the CA Andrew formation process.

Centre meeting: -
centre is a point borrower of 2 to 3 group come together to pay their loan instalments. Every
centre meeting will have a schedule day, time and place. If there are existing centre in the
village the new centre meeting should also be conducted on the same day, so that the CA does
not have to travel two days to the same village. Borrower will have to attend centre meetings
as per payment frequency and the meeting will last for 15 to 20 minutes unlike other MFIs
where the centre meeting last from 30 minutes to 1-hour attendance in centre meeting is very
critical for the borrower to eligible for the next cycle loan.

8) Group Recognition Test.

Group recognition test is conducted by the branch manager either at the end of the training on
second day of the CGT or on third day for .The purpose of conducting GRT is to evaluate the
understand of product and process by the group members and to ensure that the content of the
training is delivered very well by the credit assistant so that the client are completely aware of
the products, feature and the terms and condition and can take and informed decisions.

If the borrowers are not able to answer the question of the BM properly and does not have
proper knowledge of training then BM has to cancel the GRT. Again, one day complete day
CGT-1 and CGT-2 need to conduct by CA.

9)Loan appraisal
It means giving the final approval for the loan by BM for the clients which are acquired by the
ca. After conducting GRT the BMS compulsorily visit houses of all qualified clients and not
his observations the BM shall mandatorily check whether the borrower made the eligibility
criteria as mentioned about during house visit.

Loan appraisal and loan size

 maximum loan can give in first and second cycle is rupees 42,000
 third to fifth cycle is rupees 52,000 and
  above fifth cycle is rupees 62,000

By loan appraisal CAs initial work will be completed in acquiring new clients and giving with
them micro loan tickets. From here CAs are liable to collect the instalment amount from these
group members which are due once in a every 15 days. CA should attend the centre meeting
to collect the instalment amount on scheduled day.