Corporate Financial Resourcing

MM II Write-up – Group 3

Corporate Financial Resourcing

Through Corporate Financial Resourcing(CFR), we aim to extend very small loans in areas where there is lack of easy access to banking facilities, such as small and remote villages. People in small and remote villages often need loans for minimal amounts inorder to fulfil some of the basic needs, for example- an amount of 200 for their child’s education, or for hospital fees for the elders in the family etc. CFR has four basic features/functions.

Central Information Database

The first step to CFR is to gather the data regarding the locations and areas where banks do not have complete reach or where getting small amounts of loan is a cumbersome task for the villagers. We, therefore, create a centralized database with all the information of locations where we want to implement CFR. Central data would enable us to coordinate with various villages to effectively distribute loans and to ensure timely interest payments and principal repayments. We would like to start CFR first in a single region which has maximum no of places without banking facilitiesand then later on expand, incorporating the changes needed. The Central Information Database also has the details of amount available for lending across the region. This amount is given to the various Village level correspondents for lending in their villages.

Village Correspondent

How we differ from the typical micro lending systems is through delegation of responsibility. In the typical micro credit, the individual or firm distributes the loans to the villagers and is responsible for the collection of interest and repayments. However, as part of CFR, we train one person from the village to act as a bridge between the loan takers and us. We extend a cumulative amount to the village correspondent, who is responsible for distribution of loans to the villagers. Similarly, the responsibility to collect interests and principal amount lies with the correspondent....