Microcredit and Rural Development a Case Study of Khushhali Bank

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MICROCREDIT AND RURAL DEVELOPMENT
A case study of Khushhali Bank

List of Contents
Abbreviations....................................................................................................2

Key Terminologies............................................................................................4

Motivation to Write on This Topic.....................................................................5

Problem Statement...........................................................................................5

Methodology.....................................................................................................5

1) Introduction of Microcredit and Rural Development5
1.1) Background of Microcredit7
1.2) Microcredit and Poverty Alleviation9
1.3) Some Examples of Microcredit10
2) Introduction of Khushhali Bank and its Silent Features12 3) Khushhali Bank Operations16
3.1) Loan Process16
3.2) Collateral and Rural Development17
3.3) Types of Products19
3.3.1) Asset Purchase Loan (APL)19
3.3.2) Live Stock Loan (LSL)20
3.3.3) Working Capital Loan (WCL)20
3.3.4) Agriculture Loan (AGL)21
3.3.5) New Business Loan (NBL)21
3.4) Assessment of Borrower and Rural Development21
3.4.1) Cash Flow Assessment21
3.4.2) Loan Application Form22
3.4.3) Credit Scoring23
3.5) Repayments of Khushhali Bank23
4) Role in Reduction of Poverty24
5) Issues About Khushhali Bank25
5.1) Accessibility and timely supply of credit25
5.2) Role of Collateral in Lending25
5.3) Supervision of Borrower26
5.4) Continuity of Contact and Cost of Lending26
6) Criticism on Microcredit/KB27
7) Recommendations30
9) References33
Appendix…………………………………………………………………………...34

ABBREVIATIONS

AGLAgriculture Loan
AMS Area Manager Sales
APLAsset Purchase Loan
B.CBefore Christ
CBRCentral Board of Revenue
CPUCentral Processing Unit
CS1 Credit Specialist 1
CSOCustomer Sales Officer
CSS Customer Sales Supervisor
CVCredit Van
e.gExampli gratia
EMIEqual Monthly Installments
EtcEtcetera
FATAFederal Administrated Tribal Areas
FINCAFoundation for International Community Assistance
ILA Individual Loan Application
KBKhushhali Bank
LSLLive Stock Loan
Ltd.Limited
MCSMobile Credit Scheme
MDGMillennium Development Goals
MFIMicrofinance Institution
NADRANational Database Registration Authority
NBLNew Business Loan
NGONon Government Organization
NWFPNorth West Frontier Province
PARPortfolio at Risk
PGPersonal Guarantee
PKRPakistani Rupee
RCCRural Credit Cooperative
RPAPPRural Poverty Alleviation Pilot Project
Rs.Rupees
WCLWorking Capital Loan
USAIDUnited States’ Agency for International Development UNUnited Nations
US$United States Dollar

Key Terminologies

Following are the key terminologies, used in the paper;
Active Client: Until the collection is due the borrower is considered as an active client. Branch: Consist of normally 10 employees in a branch office. Bullet: Loan paid at once
Community Group: Is the formation of borrowing people in a community. Loan Tenure: The period for which the loan is advanced/received Overdue/Delinquency/Default: When the date of recovery expired is called overdue. PAR (portfolio at risk): State Bank of Pakistan has accompanied the rule of PAR that is sum of overdue loan with respect to its duration. Personal Guarantee: The group members give the guarantee of each other in that group so it is collateral guarantee. Product Program: As the KB has five products for which suitable product customer applying for. Service Center: Normally 3-4 service centers work under the branch. Motivation to Write on This Topic:

The purpose behind the selection of the topic...
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