It Did Not Happen Overnight: The History of Group-Based Credit Programmes in Kenya (K-REP, 1996, 54 p.): CHAPTER 7. LOAN GUARANTEE MECHANISM AND DISBURSEMENT: (introduction...)

DETACH

HIGHLIGHTING

It Did Not Happen Overnight: The History of Group-Based Credit Programmes in Kenya (K-REP, 1996, 54 p.)

CHAPTER 7. LOAN GUARANTEE MECHANISM AND DISBURSEMENT

		*(introduction...)*
		7.1 Initial form and level of guarantee
		7.2 Lessons learnt
		7.3 Innovations in mode of guarantee and disbursement

(introduction...)

Group-based lending is unique because the guarantee mechanism is introduced immediately after recruitment. Members are aware of their joint responsibility and the risks they face as co-guarantors. Unlike formal financial institutions, disbursement occurs soon after approval. Members activate the co-guarantee by simply signing the loan application. However, different programmes, as shown below, have followed different disbursement sequences. This section is concerned with:

· when and how loans were disbursed by the pioneers in group-based lending
· the lead time
· the conditions for disbursement
· changes made if any and reasons for them
· the current practice among pioneers

Important elements of disbursement, which are also discussed in the chapter, include (1) timing, (2) sequence, (3) conditions, and (4) efficiency.