Loan Products Policy
Loan Products Policy
12.1 Purpose
The Loan Products Policy establishes the framework for designing, approving, delivering, and managing the loan products of Prothik Agrajatra Foundation (PAF). The policy aims to provide accessible, responsible, and sustainable financial services that support income generation, enterprise development, employment creation, and poverty reduction while maintaining sound portfolio quality and regulatory compliance.
12.2 Objectives
The objectives of the Loan Products Policy are to:
- Provide affordable financing to economically active low-income households.
- Support the establishment and expansion of micro, small, and medium enterprises.
- Promote women’s economic empowerment and financial inclusion.
- Encourage productive investment and employment generation.
- Ensure responsible lending and prevent over-indebtedness.
- Maintain a diversified and sustainable loan portfolio.
12.3 General Product Features
Unless otherwise approved by the Board of Trustees:
- Pricing shall comply with applicable law and regulatory requirements.
- Financing shall be provided primarily for lawful, productive and income-generating
purposes.
- Loan amounts shall be determined based on repayment capacity, business cash
flow, and credit assessment.
- Repayment schedules may be weekly or monthly, depending on the product and
business cycle.
- Early settlement may be permitted in accordance with the Early Repayment Policy.
- Eligible borrowers shall be enrolled in the Loan Security & Risk Fund (LSRF), subject
to the Foundation’s policy.
- All loans require completion of KYC, credit appraisal, documentation, and approval
before disbursement.
12.4 Loan Product Portfolio
PAF offers the following core loan products:
| Product | Target Client | Typical Loan Size* | Indicative Tenure |
|---|---|---|---|
| Primary Micro Loan | Low-income households and micro-entrepreneurs | BDT 5,000–100,000 | 6–12 months |
| Enterprise Development Loan | Growing micro and small businesses | BDT 100,001–1,000,000 | 12–36 months |
| MSME Loan | Small and medium enterprises | BDT 300,000–2,000,000 | 12–48 months |
| Agriculture Loan | Farmers and agri-based businesses | Board-approved limits | Based on production cycle |
| Livestock & Fisheries Loan | Livestock, poultry and fisheries entrepreneurs | Board-approved limits | Based on production cycle |
| Emergency Loan | Existing members facing verified emergencies | Board-approved limits | Short-term |
* Loan limits may be revised by the Board of Trustees in accordance with regulatory requirements and institutional capacity.
12.5 Primary Micro Loan
Target Clients
- Low-income households.
- Women entrepreneurs.
- Small traders.
- Cottage industry operators.
- Service providers.
- Home-based business owners.
- Individuals undertaking income-generating activities.
Product Features
- Loan amount determined through credit appraisal.
- Weekly or monthly repayment options.
- Flexible tenure based on business cash flow.
- No traditional collateral; alternative risk mitigation measures may apply.
- Eligible for repeat financing based on repayment performance.
12.6 Enterprise Development Loan
Target Clients
- Existing successful borrowers.
- Small business owners.
- Traders and wholesalers.
- Manufacturing enterprises.
- Service enterprises.
Product Features
- Larger financing limits than the Primary Micro Loan.
- Extended repayment period.
- Business-focused appraisal.
- Regular monitoring of business performance.
- Progressive financing based on repayment history and business growth.
12.7 MSME Loan
Purpose To finance viable micro, small, and medium enterprises that contribute to employment generation, value addition, and local economic development.
Eligible Sectors
- Manufacturing.
- Agro-processing.
- Trading.
- Service industries.
- Light engineering.
- Transportation.
- Food processing.
- Technology-enabled enterprises.
Product Features
- Business cash-flow based assessment.
- Monthly repayment by default, with alternative schedules where appropriate.
- Periodic business monitoring.
- Enhanced documentation and financial analysis.
12.8 Agriculture Loan
The Agriculture Loan supports crop cultivation and related agricultural activities.
Eligible uses include:
- Crop production.
- Irrigation.
- Seeds and fertilizers.
- Farm equipment.
- Seasonal cultivation expenses.
Repayment schedules should, where appropriate, reflect seasonal harvest cycles.
12.9 Livestock & Fisheries Loan
This product supports:
- Dairy farming.
- Beef fattening.
- Goat and sheep rearing.
- Poultry farming.
- Fish farming and aquaculture.
Repayment schedules may be adapted to the production cycle of the financed activity.
12.10 Emergency Loan
Emergency Loans may be provided to eligible existing members to address verified emergencies, subject to Board-approved criteria and repayment capacity.
Examples include:
- Medical emergencies.
- Natural disasters.
- Fire damage.
- Other exceptional circumstances approved by the Foundation.
12.11 Pricing
The Foundation shall determine service charges, fees, and other charges in accordance
with:
- Applicable laws and regulatory requirements.
- Board-approved pricing policy.
- Cost of funds.
- Operational sustainability.
- Client affordability.
Any change in pricing shall require approval by the Board of Trustees and shall be communicated to clients before implementation.
12.12 Repeat Financing
Borrowers with satisfactory repayment records may qualify for subsequent loans.
Approval shall depend on:
- Repayment history.
- Current repayment capacity.
- Business performance.
- Loan utilization.
- Credit assessment.
- Compliance with Foundation policies.
There shall be no automatic entitlement to higher loan amounts.
12.13 Loan Utilization
Borrowers shall use loan proceeds for the approved purpose. The Foundation may conduct post-disbursement visits to verify utilization. Misuse of funds may result in corrective action, suspension of further financing, or other measures under
the Credit Policy.
12.14 Internal Controls
The Foundation shall implement the following controls:
- Standardized credit appraisal.
- Segregation of approval and disbursement functions.
- Independent verification of applicant information.
- Periodic portfolio monitoring.
- MIS-based loan tracking.
- Internal audit and compliance reviews.
12.15 Product Review
The loan product portfolio shall be reviewed periodically considering:
- Client demand.
- Portfolio performance.
- Market conditions.
- Regulatory developments.
- Risk profile.
- Financial sustainability.
- Social impact.
New products or significant changes shall require approval by the Board of Trustees.
Standard Forms
- LP-01 Loan Application Form
- LP-02 Credit Appraisal Report
- LP-03 Cash Flow Assessment
- LP-04 Loan Approval Form
- LP-05 Loan Agreement
- LP-06 Disbursement Voucher
- LP-07 Loan Utilization Monitoring Report
- LP-08 Portfolio Review Report
End of Chapter 12 – Loan Products Policy