Loan
Group Loan
Group loan allow the poor to access a loan without material collateral. The system requires potential clients to exercise a peer group self-selection and to organize small groups (3-7 members). Based on specific characteristics, Tsedey Bank group loans can be classified into three major categories.
- Installment Loan
- End-Term Loan
- Household Asset Building Program (HABP) Loan
End term loans are agricultural loans with only one bullet payments. The repayment scheme was designed to coincide with the harvest and other agricultural production cycles. This loan product finances IGAs (Income Generating Activities) including production and other main farming activities such as crop production and purchase of farm oxen in rural areas. The larger share of Tsedey’s portfolio is this loan product. The repayment capacity of the borrowers is not easily predictable until the term ends. The repayment system is not suitable for enhancing Tsedey’s financial and/or liquidity management.
Household Asset Building Program (HABP) loans are disbursed in food insecure wored as of region. Beneficiaries are identified jointly by officers from Tsedey Bank and the government line officers like Bureau of Agriculture (BoA). HABP resembles End Term Loans (described above) in many respects. Like regular term loans they are disbursed to poor clients involved in income generating activities. It is mainly designed for the chronically food-insecure (CFI) people, with the aim of delivering micro-credit along with packages of agricultural extension services and business development service supports such as business plan and other trainings.
