Loan Process
01
Introduction
02
Application Submission By Potential Borrower
03
Social Appraisal By Staff
04
Business Appraisal By Staff
05
Second Appraisal By Senior Staff
06
Guarantors of loan (to be provided by borrowers)
07
Loan Approved by Loan Loan Approval Committee
08
Loan Disbursement to Borrower in Mosque
09
Recovery to be received in HNK foundation
10
Monitoring of the business
The general requirements for loan eligibility are as follows:
Following general points are compulsory for eligibility of loan:
• The applicant must have valid CNIC.
• Ages must be between 18 and 62 and capable of managing or starting a business.
• The applicant must be economically active.
• The applicant should not have been found guilty of a crime for which legal action has been filed.
• The applicant should have good ethics and social standing in his community.
• The applicant must be capable to present two guarantors who are not family members.
• The applicant must live within the branch office’s operational area, which may be within a 2-2.5 kilometer radius.
Group Lending
In group lending, loans are disbursed to groups of men and women who want to increase their family's income but are unable to do so due to a lack of resources. In the group lending methodology, groups of 3 to 6 people will be created, and everyone in the group will guarantee each other's loans and credentials. Through cooperation and decision-making, group members can use group lending to solve their social and financial issues. Before applying for a loan, the applicant must form a group of 3 to 6 people who live close by one another but are not related closely.
Individual Lending
Disbursement loans between persons are a part of individual lending. Certain people who meet the requirements for the programme are given loans in order to help them fulfil their needs through interest-free loans. For an interest-free loan in the event of individual lending, the applicant must furnish two guarantors. Application submission will initiate the lending process. The application fee varies depending on the programme. The application will next be assessed by the unit manager using the eligibility requirements. As a result, these debts will be disbursed on social security.
Application Submission
To submit a loan application, the applicant should go to the nearest HNK Foundation branch or apply online with the necessary documentation (see below). The manager will speak with the applicant to see whether they meet the program’s eligibility requirements. The potential applicant will submit a loan application using the template provided. The staff at the branch office of HNK Foundation will supply and complete the loan application. After the completion of the necessary documentation, the manager will review the submitted paperwork and process the application. The specifics of the collateral that may be used as security for loans are as follows:
1. Personal responsibility
2. Two guarantors
3. Postdated cheques
4. Any supplementary collateral in a unique circumstance.
Following documents shall be submitted along with loan application:
Copies of CNIC
- Applicant (Mandatory)
- Guarantors (Mandatory)
- Family Member (Optional)
Objective
- For Identification
- For Verification in Management Information System (MIS)
- Bank Requirement for Collecting Money
Latest Utility Bills
- Applicant (Mandatory)
Objective
- For address verification
- To assess Payment Behavior
Latest Photos
- Applicant (Mandatory)
Objective
- For identification
Copy of Nikahnama
- Applicant (Mandatory) (may be waived if not available after verification by other means)
Objective
- For identification in case CNIC of wife is not with the name of husba
Note: Additional documents may be required according to scheme’s criteria.
Social Appraisal
By visiting the applicant's home, social appraisal aims to confirm the applicant's honesty and character. Following receipt of the application, the unit manager conducts a social appraisal using the techniques listed below.
1. Details from current borrowers
2. Based on the applicant's way of life
3. Neighbours' opinions about the applicant
4. Individual or family interviews
Business Appraisal
The potential borrower's company idea will be assessed through a review of business plans to determine whether it is sustainable and whether it can produce income above and beyond everyday expenses sufficient for loan repayment. In business appraisal, business requirements are assessed. Additionally, this will help the applicant's business plan itself be improved. In order to confirm that they are aware of the loan and support the company plan, the applicant's family will also be interviewed.
Second Appraisal
The application will be sent to the branch manager for review after the unit manager has completed the initial appraisal. The branch manager will review the social and business appraisal process once more and hold a meeting with the borrower and their guarantors.
Guarantors Of Loan
Every application for an individual loan must submit two guarantors who can attest to the applicant's credentials, accept responsibility for monitoring the borrower, and provide assurance that the borrower will make loan payments on time. While in group lending, the group members would mutually guarantee each other and thereby formally create a group.
Loan Approval By HNK Foundation
There will be a Loan Approval by HNK Foundation for applicants. HNK Foundation will look into each credit case. The loan is complete and prepared to be disbursed if HNK Foundation approves the application. It takes about 3 to 4 weeks to complete the process.
Fund Requested To HNK Foundation
After HNK Foundation's confirmation, Managers submit requests to HNK Foundation for the necessary amount of funds. HNK Foundation conducts the necessary preparations for the money transfer into the appropriate bank account for payout.
Loan Disbursement
Loans will be disbursed through an event that is often hosted at a mosque or church once each month. For individual loans, the applicant must be present with at least one of the guarantors. When group lending is involved, everyone in the group needs to be present when the loan is disbursed.
The points listed below are important to the loan disbursement event:
• At the moment of the disbursement, everyone will be present. Any borrower's absence will prevent the loan from disbursing and could result in its cancellation.
• Every borrower participating in the distribution event must bring their original CNIC.
• Cheques for the approved loan amount would be given to the borrowers.
• Each borrower would be required to sign an acknowledgment of the cheque.
• The manager would keep an eye on the payout event.
Social Guidance
The capacity of borrowers will be strengthened to carry out their task more efficiently and effectively, particularly keeping in mind the Islamic or ethical standards, through the simultaneous briefing of social guidance at disbursement events.
The following social agenda elements are included:
> Serving the community at large
> Protecting and improving the environment
> The importance of plantations
> Conducting business with the greatest ethical standards
Recovery & Follow Up
After the loan has been disbursed, the manager keeps an eye on the customer by performing frequent visits to both his home and workplace. Loan payments must be made in person at the branch until the 7th of the month. The manager contacts the customer to remind them to make a payment if it is not received by the deadline of the 10th date. If the payment is still not made, the guarantors are called and advised to make the repayment.