Loan Disbursement Stage

1
Loan Disbursement Stage

• Disbursement
• Gross loan amount (principal) disbursed to a
  client
• If service fees are collected up-front, the net
  loan amount disbursed will be smaller than the
  gross loan amount
• On-time Due
• Loan installment (principal) due in a given
  period, in accordance with the original loan
  sanction conditions
• Cumulative Due
• Total Loan amount (principal) due at the end of a
  given period, in accordance with the original
  loan sanction conditions
• Sum of all scheduled periodic installments till
  the end of a given period
• Loan Outstanding Scheduled
• Loan amount (principal) that should be
  outstanding the end of a given period, if all
  payments are made on time, in accordance with
  the original loan sanction conditions

2
Loan Recovery Stage

• Recovery
• The loan principal actually paid in a given
  period
• Recovery includes on-time payments, arrears and
  prepayments
• Cumulative Recovery
• The cumulative loan principal actually paid till
  the end of a given period
• On-time Paid
• The installment due amount (principal) paid, when
  it becomes due for the first time

3
Loan Recovery Stage (Continued)

• Total Outstanding Loan Balance
• The balance of loan amount (principal)
  outstanding at the end of a specified period
• Outstanding Balance of Loans with Overdue
  Payments0 days
• The outstanding balance of loans (principal) with
  one or more installments overdue
• Outstanding loan balance with overdue payments
  30 days
• The outstanding balance of loans (principal) with
  one or more installments overdue by more than 30
  days

4
Delinquency Measures

• On-time Collection Rate
• On-time Paid /On-time Due
• Tracks success in collecting payments when
  installments first become due
• Current Collection Rate
• Recovery /On-time Due
• Considers arrears, prepayments or amounts overdue
  from previous periods
• Portfolio-at-Risk30 PAR30
• Outstanding Balance of Loans with Overdue
  Payments 30 days/ Total Outstanding Loan Balance
• Similarly PAR 0, PAR60 and so on

5
An Example

• An MFI has a set of 11 clients.
• The Disbursed amount and number of installments
  are given.
• The loan amount is expected to be repaid every
  month in equal installments (Details).
• The actual recovery is lower as against the
  Scheduled Loan Outstanding
• Not all the clients have paid the amount due, in
  time
• The payments extended up to two months of the
  scheduled time
• The on-time paid amounts are nil in case of nil
  payments and also in case of any arrears until
  the arrears are cleared.

6

• The Total Outstanding Balance of the clients
  paying regularly and recovering immediately are
  zero at the end of six months while it is not so
  for the ones with arrears remaining to be made up
  for.
• This would be the same for the Outstanding
  Balance With Overdue Payments for greater than 0
  days.
• The overdue payments30 days would be counted
  after a months due and would come to zero once
  it is made up for.
• The overdue payments60 days has been for one
  client who has been defaulting from the third
  month and could not make it up later. This
  remains even after the 6 month due is over.

7
References

• CGAP Occasional Paper No.3