generating loans are drawn from SKS' corpus funds and must
first be approved by the group since members of the group
collectively serve as guarantors for individual loans. Once
the group has agreed to a loan proposal, it is presented to
the village Sangam, which serves as a guarantor for a
defaulting group. SKS' staff have final discretion as to
whether a loan application will be approved.
Loan disbursements within each group are staggered in a 2/2/1
schedule: two members are eligible within three weeks of group
formation, an additional two members are eligible three weeks
later, and the final member three weeks later still. Each
subsequent loan within a group is contingent upon timely
repayment of prior loans by individual members. This system
not only instills credit discipline within a group but also
fosters collective responsibility among group members.
In the first year, individual members may secure a maximum of
Rs. 10,000 ($204) in income-generating loans. Loan eligibility
increases by an additional Rs. 3,000 ($61) each subsequent
year -- Rs. 13,000 ($265) in the second year, Rs. 16,000
($327) in the third year, etc. - provided neither the member
nor the group has defaulted on any loan. Unlimited credit is
available to SKS members who demonstrate a perfect repayment
and credit history.
Members must repay their loans at a Fifteen percent flat
interest rate in 50 equal, weekly installments. These
installments are collected at weekly Sangam meetings
where attendance is mandatory. In the event that a member is
unable to make her weekly installment, the group must make the
repayment on her behalf.