Social Impact Assessment of Microfinance Programmes - weman

uy insurance, which covers the risk of death or becoming handicapped. In case of death
the loan is written off and the family is provided Rs.5,000 for funeral expenses. If the
client was the only earning member of the household then the family is provided with
Rs.1,000 a month for three months to meet basic expenditures. If the client becomes
handicapped then again the loan is written off and he is provided a wheelchair.
Akhuwat’s management contemplated partnering with State Life Insurance Company for
insuring its clients but the Board rejected the proposition as the company did not invest
its money in accordance to the Shariah 5 . Therefore, they simply kept the insurance
money in a current account though now they have moved it to MCB and Bank Alfalah
Islamic Banking.
Once the loan has been disbursed, the Unit Manager has to monitor the client with regular
visits to his residence and place of work. The loan repayment has to be submitted at the
branch by the 7 th of each month. If a payment is not in by the 10 th , the Unit Manager
visits the client a few times to remind him and if he still does not pay then the guarantors
are contacted and asked to make the payment. In case the client has a genuine reason for
not handing in the repayment he is given some leeway and a new date is set by which he
(or his guarantor) has to give in the loan instalment. The borrower, however, has to make
all payments by 30 th of the same month as the Unit Manager has to closely monitor each
individual client, they are responsible for only 250 to 300 people. This is much lower
than what Loan officers handle in group lending methodology because in that they
manage groups as opposed to individuals.
When loans are renewed, the main aspects looked at are how the loan was used and
whether it has benefited the borrower. The loan is renewed only if he was regular in
returning the instalments, if he used the loan correctly and if it benefited him and his
household in the final analysis. On average, about 40 percent of clients are given loans
again based on their need and how they used the loan and whether it benefited them or
not. Like mainstream MFI’s Akhuwat does not work on minimizing dropout clients as it
wants to reach out to a large number of people.
Akhuwat also has liberation loans, of which there have been more than 700. These people
were paying interest at 100 to 200 percent, which translates to Rs 2000 to 3000 per
month. By availing a liberation loan, they have been able to get rid of this exploitation.
They are also said to feel empowered and socially integrated. There are also loans for
health, education and a daughter's marriage, which are supposed to have had a
phenomenal impact.
5.1.4 Loan Products
5.1.4.1 Family Loan
The most common loan type is the one for setting up or expanding a business, called the
Family Loan as explained in the last section and this comprises of 91 percent of the
5 Islamic Law
6