About Micro-finance

Micro-finance activities in question revolve around issuance of small loans or micro-credits to individuals and groups of individuals with small income. Micro-finance is primarily practised in developing countries where the majority of people who need the loans to run small businesses do not have the necessary collaterals to qualify for bank loans.  Therefore, such people in need of loans organise themselves into groups and collectively as a group they get a loan that they promise to pay back.  The money received by the group as a loan ends up either being taken by one group member, or it may be divided among some or all group members. Everyone who receives any amount of money from the group is responsible to repay it. However, if a group member fails to repay the advanced loan, the entire group is responsible to repay the money. Collaterals are therefore not a major security that guarantee a loan repayment, it is peer pressure that a group member must bear upon failure to repay a loan. Close relatives of a group member and assets such as home furniture, radio, bicycles and livestock are often involved in securing a loan.

Securing a loan and its repayment is normally only a part of the micro-finance exercise. Groups are normally organised in some form of community or society. This community has activities which are governed by rules and regulations. Such activities may include meeting regularly, say on a weekly basis and making compulsory deposits into one's own account. The collected amount is normally revolved within the community as loans to a groups.

Micro-finance is normally managed by non-governmental organisations. Such organisations may secure funds from donors to setup this whole venture of micro-finance. Banks are slowly getting unto the scene but they regard microfinance as a subsidiary product due to relatively low profitability, high risks and high transaction costs

Credit Society Overview

 Credit Society is a computer system that is designed to manage micro-finance activities as briefly described above. To help relate Credit Society's functionality, let us consider the following scenario: 

An organisation called Micro-credit Sisters decides to setup micro-finance activities as related above. The sisters secure funds from donors and decide to setup several branches many kilometres apart within the city. They also decide to use Credit Society to manage their micro-finance activities. Within Credit society, each branch is known as an Agency. An agency will have as many Micro-finance centres (sometimes simply referred to as Centres) as it can handle. A micro-finance centre is a group of individuals that will be regarded as an entity, the way a bank would consider a client who has an account with it. Business revolves around centres. A centre would have its rules and regulations, it would ask for a loan for one of its members, it would be held accountable by the Sisters should there be defaults in loan repayment, etc. The centre is in turn divided into core groups. A core group may comprise 3 to 10 individuals. However, there are no rigid rules imposed on the size of a core group. Likewise a micro-finance centre. A micro-finance centre may have as many as sixty (60) people.

Each micro-finance centre may have its own chairman, secretary as well as a treasurer. A core group likewise . These are elected members within the respective group. However, each centre is supervised by a Micro-finance officer. A micro-finance officer  is an employee of Micro-credit Sisters. He/she will be there to oversee the micro-finance centre, to ensure that rules and regulations are observed and to safeguard Micro-credit Sisters' interests.

Credit society is organised the way  just related. It will manage Accounting, the Loan Portfolio, Savings and Deposits, and Client performance and Information. Credit Society also produces many reports that may be used by all the concerned parties. i.e. donors to the last core group member.

Credit Society System Requirements

 Credit Society is a client-sever application that can run in any Microsoft windows environment. It can run on a stand alone personal computer (PC) or in a network environment with the server running on one machine while clients access it from across the network. Credit Society will happily run on any Microsoft Windows operating system from Windows 98.

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