Social Impact Assessment of Microfinance Programmes - weman

• Loan for Livestock: OCT also supports livestock farming and diary business
especially through its partner NGOs. A total loan of Rs. 14,381,603 has been
disbursed to 1,709 units.
Loan Types as % of Total Portfolio
Thalla, 0.53
Clinic, 0.88
Services , 11
livestock, 3.2
School, 4.8
Manufacturing ,
17.5
Trading, 34.7
Farming &
Fisherfolk, 27.4
Manufacturing Farming & Fisherfolk Trading Services School livestock Clinic Thalla
Figure 4.2
4.1.5 Lending Methodology and Selection Criteria
As mentioned in previous sections, OCT only provides loan to individuals primarily
because of the culture of Orangi town and also because group repayments have higher
rates of defaulting. Reaching this procedure and clarity, however, was no mean feat. It
took almost 16 years of experience and lessons-learnt by implementing its microcredit
programme, that OCT finally settled on its current strategy. In the beginning, loans were
given to individual entrepreneurs selected and supervised by OCT managers. This was
effective only till the number of borrowers were limited. Supervision and tracking
became a logistic and financial nightmare as OCT’s clients grew in number and spread
geographically. A simplistic solution was applied and numbers of supervisors were
increased. This however posed a challenge of judicious use of discretionary powers.
During 1991-94, OCT was faced with a difficult scenario where its managers were giving
out loans in great numbers across Karachi city. In 1996, the system nearly collapsed with
sky-rocketing defaulters and umpteen cases of misuse of discretion. For saving the
programme, the number of borrowers and staff was curtailed extensively. The evolution
of loan management system went through four distinct faces that are outlined below:
4.1.5.1 Phase 1: Loans through Social Organizers/Supervisors
Supervisors recommended loan application upon a quick visit to the borrower’ enterprise
whereas the final decision was made by the Director and Joint Director when two to three
applications were received. In reality, loans were approved solely on supervisor’s
recommendation. Account keeping was also manual.
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