K A Y O D ( K abuhian A lang sa Y anong O perators ug D rivers)

1. K A Y O D (Kabuhian Alang sa Yanong Operators ug Drivers)

2. WHAT IS K A Y O D ? • KAYOD Loan product is for micro entrepreneurs engaged in regular transport (motorized trisikad) business activity. • It aims to make available affordable credit for these operators and drivers to acquire new, additional or repair motorized trisikad units. • It especially seeks to reach operators who currently depend on loans from informal money lenders and other 5-6ers. And for drivers who had long been dependent on units leased from some operators.

3. K A Y O D OBJECTIVES • Offer a loan that is based on a solidarity mode of obligation; • To grant a loan that is based on client’s Cash Flow; • Implement a loan delivery and collection system that enforces zero tolerance delinquency; • Generate Savings

4. Client Eligibility Criteria • Applicant must be an experienced operator and driver, at least 2 years, and has basic knowledge of motorized tricycle maintenance; • Must be willing to join/form a group of 5 borrowers; • Must have attended the seminar/orientations and passed training; • Must be a permanent resident, at least 2 years, in the locality or within the geographic area served by the bank; • Both applicant and co-borrower must have another stable source of income other than the income from the tricycle unit.

5. Criteria for Group composition • Composed of five (5) individuals residing within the same Barangay; • Each group must be composed of 3 operators and 2 drivers; • Group members should personally know each other and must not be relatives particularly; Father and Son, Brothers; • Each group members must be willing to guarantee each other’s loan, on solidarity terms, “obligasyon nimo/ninyo, obligasyon ko”; Each group member must be willing to guarantee each other’s loan under joint solidarity terms;

6. Operators and Drivers of motorized trisikad must be physically and mentally fit; • Age requirement is 22-50 yrs. Old, preferably male; • Applicants must have no negative records and other obligations from other formal or Informal lenders; • Must have 2 co-makers, aside from the group, who are duly approved by the CRECOM.

7. Basic Bank Policy • Loan Amount PhP21K – PhP65 • ARCR 30% from the NCIF • Term: 12 –24 mos. • Interest Rate 3%/ mo. • Saving Buildup PhP3K direct dep. to the bank • Service Charge 4%/ availment

8. Basic Bank Policy • Nature of Loan Group of solid five members • Mode of Collection Direct Remittance to the bank • Collateral Chattel Mortgage • Group Savings Fund 2% from the principal and to be augmented by P10. savings per week

9. Basic Bank Policy • Loan Protection Fund .013/annum • Penalties 2%/week on missed amortiza- tion

10. Performance of the K A Y O D, As of August 31, 2002 , Cantilan Branch • Amount of loan released Php 1,653,000.00, for 34 units motorized trisikad. • Loan account balance as of August 31,2002 Php 986,036.25, for 33 units motorized trisikad. • One unit motorized trisikad has been paid- up. • Amount collected Php 666,963.75 principal only.

11. Product Performance as of August 31,2002 – Tandag Branch • 5 units of Motorized trisikad were released. • Total amount released Php 293,000.00 • Loan account balance Php 238,598.00 • Total amount collected Php 54,402.00 Principal only. • Savings Personal Php 18,058.81 • Group Fund Php 6,739.54

12. Each group members must be willing to religiously attend their meetings and other pertinent group interaction activities at least once a month; • Each member must be willing to commit himself to abide by the provision and agreement (Kasabutan) between the group and the bank; • The loan of group members shall be released within the same day;

13. PROBLEMS ENCOUNTERED • Basically PRODUCT DELIVERY SYSTEM: • A) Clients selection; • B) Inadequate CI/BI AND CASH FLOW Analysis; • C) Poor QUALITY of Units made; • More units were being released;

14. LESSONS LEARNED • Be sure to do market research first before anything else. • Think a million times if the product, especially the policies and features, are really suitable for your target market • Pilot Testing is greatly important to see if the product will click and repayment by borrowers easy • Consistent implementation of MF Best Practices • Adherence to the product manual; • Be sure that the units you finance are of good quality;