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Self-Funded Group Models (VSLAs, Savings Groups, ROSCAs, Self-Help Groups)

Self-Funded Group Models (VSLAs, Savings Groups, ROSCAs, Self-Help Groups)

Self-Funded Groups vs Joint Liability Groups (JLGs)

  • In JLGs, the loans are given by a Micro-Finance Institutions (MFI) to members or groups and any earnings or expenses on the these loans and savings belongs to the MFI. The groups do not have their own Balance Sheet and Profit and Loss Account.

  • In Self-Funded Groups:

    • The Group is separate from the facilitating entity

    • The facilitating entity can be a Non-profit Organization, Non-Government Organization etc. that assists in the running of groups and helps get external funding etc. However, the Groups themselves are responsible for internal organization, group meetings, managing their own loans and manage their own income (mainly from interest on loans to members) and their own expenses (paying interest on loans taken from Banks or MFIs or Government departments etc) and re-distributing accumulated profits to its members at certain milestones.

    • The groups could have their own Balance Sheet and Profit and Loss Account (it could be in somewhat basic form and need not be in an elaborate form as required by companies). The profits generated by the Group belongs to the Group and not to the facilitating entity.

    • The key highlights of Self-Funded Groups are as follows:

      • Savings is usually mandatory. Members must purchase shares of the group. Members may have additional savings accounts.

      • Initially loans are given to members from the group’s pooled savings

      • Based on track record groups (and in some cases, group members) will become eligible from loans from Banks and MFIs

      • In some cases, on meeting specific milestones (like six-months of consistent savings, lending within the group, regular repayments on loans, regular book-keeping etc.), groups may become eligible for loans or grants from external entities like Higher-Level VSLA entities or government departments etc.

Enhancements needed for supporting Self-Funded Groups in Mifos X / Fineract

Note: Each of the points in the enhancements / features list below need more detailing as Epics / JIRAs. This will be done once there is an overall agreement from the key stakeholders for the VSLA module.

Phase 1.1 - Enhancements needed to help Self-Funded Groups to start using Mifos X

  1. Mobile App Payments integration for YAPE (to be detailed once Victor is able to get more details from the Bank / Sinergia)

  2. Mobile App Payments integration for PLIN (to be detailed once Victor is able to get more details from the Bank / Sinergia)

  3. Custom Dashboards Dashboards for Self-Funded Groups

    1. Organization-Level Dashboard

    2. Group-Level Dashboards

    3. Member-Level Dashboard

  4. Financial Products

    1. Loan Related Enhancements Loans Product / Account Related Enhancements for Self-Funded Groups

    2. Savings Related Enhancements Savings Product / Account Related Enhancements for Self-Funded Groups

  5. Mobile app for Self-Funded Groups - with offline feature VSLA Mobile App Considerations and Requirements

  6. Allowing Groups to define their own operational parameters - Differentiating between Joint-Liability Groups and Self-Funded Groups. Both need not be supported in a single-deployment of Mifos (i.e. only one of them will be active). For Self-Funded Groups, the following Group-Level parameters are applicable:

    1. Group-Linked Savings-related Parameters (Examples: Value of One Share, Minimum and Maximum number of shares that should be purchased by a in a Meeting, Price of each Share, No. of votes per Share, Eligibility rule for Withdrawals etc.)

    2. Loan Parameters - Select Loan Products that are applicable for this group and For each product, specify the group-level parameters like : Min Interest, Max Interest, Eligibility Rule - A configurable rule to be invoked prior getting the loan application template for a member and when submitting the loan application, Loan Approval Rules - A configurable rule to be invoked prior getting the loan approval template for a loan and when approving the loan etc.)

    3. Penalties:

      1. for being Absent in a meeting

      2. for being Late to a meeting

      3. for not purchasing minimum no. of shares

    4. Meeting dates - allow the following patterns to be supported for Groups

      1. Meeting occurs Monthly on every “specific-date” of a month (example: 15th or 23rd etc.)

      2. Meeting occurs Monthly on a specific weekday (first Monday, second Tuesday, Third Wednesday, Fourth Thursday, Last Friday)

      3. Sinergia to confirm if other patterns are relevant - for example: Twice monthly, on 10th and 25th of the month or every second and fourth Fridays, etc.)

The above parameter definitions may be found at: Self-Funded Group Parameters

  1. Keeping track of the corpus available to a Group - which includes:

    1. All savings balances - detailed at Funds / Corpus with VSLA

    2. A portion of each type of earnings - detailed at Computing profits for a group and the portion available to each member

Phase 1.2 - Enhancements needed to improve Self-Funded Groups' usage of Mifos X

  1. Earnings allocation - for example: if a group charges 25% interest - then of this 15% of any interest repayment is retained by the group as earnings and 10% is earnings of the co-operative for operational support.

    1. A set of configurations needed at the Organisation-Level

    2. It could be a batch process that does this calculation periodically (daily, weekly or monthly)

    3. The calculation rules should not be hardcoded

  2. Accounting is to be done at a group Level

    1. Trial-Balance, P&L and Balance Sheet at Group Level

    2. Each Accounting transaction is to be linked to a group

    3. General Ledger entries to be posted at the Group-Level

    4. The Chart-of-Accounts can still be common - so that each group’s financial statements will have similar set of Accounting Heads

  3. Investments - any excess money with a Group (over and above defined limits) are to be invested in high-income earning investments (like Certificate of Deposits)

  4. Bonus deposits to savings accounts - For example - if you have 90% attendance and 90% participation in savings we will give 10S/. to each of your group members on the 9th month. This isn't interest, it is just a bonus that will be paid out by us to help motivate people. this would be the equivalent of 12% interest

  5. Allowing Groups to define their own additional operational parameters

    1. Cycle Start Date and End Dates

    2. Periodicity for posting Earnings to Member savings account (monthly, quarterly, half-cycle, end of cycle, never)

    3. Savings product to which earnings are posted

  6. Grading/Rating/Stars/Loyalty Points given to members

  7. Group-Level computations:

    1. Member Share-out Computation / Calculator and Estimated Share-out at any given point in time

    2. Cycle Progress

    3. Goals Progress

    4.  

  8. Voting for approval of Loans

 

Technical Enhancements

  1. Users to Group mapping - so that these users can manage or do data-entry for these groups only

  2. Server-side events vs building business logic into the mobile app:

    • If all business logic is on the server - then approach for ensuring that mobile app will still work in an offline mode, but still is able to use the server side business logic, Examples:

      • Partial or excess payment allocation logic / re-computation of interest

      • keeping balances (cash / bank balances, fund balances up to date during the meeting

    • Option 1 - built some of the critical business logic into the mobile app

    • Option 2 - mobile app will “mostly” work offiline - but will be online for “certain” critical actions (like partial / excess loan repayments) and mobile app will always call server side methods for such events and if there is no internet - then

      • cash-in transactions are accepted and saved, to be processed later

      • cash-out transactions are not allowed

  3. Mobile payments integration and notifying the mobile app of such events and refreshing such data:

    1. While the user is working offline and either before or during the meeting - a payment is received on the server. How to ensure that the mobile app is notified of such events and allows user to “pull” the new transactions from the server

    2. It could be a push (server sends the events to ONLY the mobile app which is handling that relevant group) or pull (mobile app periodically checks if there are new events on the server)

    3. Updating offline data (meeting data) on mobile - without any loss of manually entered data.

  4. Framework to ensure that the same data does not get updated via multiple-channels. For example: Savings withdrawal or Loan disbursal does not happen via offline mobile app and the via the web interface concurrently

  5. Global configuration to specify if Groups are either “Self-Funded Groups” or “Joint Liability Groups”. It is a trapdoor setting and once transactions are done in the system - it cannot be changed.

 

Future Enhancements

These enhancements may not to be taken up immediately, but only when there is a specific need for these raised by one of the Partner Institutions or Co-Operatives.

  1. Managing Institutions, Partner Financial Institutions and NGOs:

    1. Define, Update and Enable / Disable Institutions, Partner Financial Institutions and NGOs

    2. Map Groups to one or more institutions

  2. Group Goals - for example: Group Savings Goal, Group Corpus Goal etc.

  3. Funding Sources - different funds which are given by either the Co-operative or Government to groups (for example: Startup funds, Revolving Fund given by Government to groups to promote Self-Funded Groups)

  4. Initial Data Migration (Cut-off data entry) for a Group

    • Screen which will allow an existing Group to be onboarded on to Mifos X. The following data for the Group must be captured:

      • Latest Cycle-Start and End Dates

      • Total Interest Collected on Loans (till date)

      • Total Fines Collected (till date)

      • Total Balances in various Savings Accounts and Bank Accounts and Cash Balances (till date)

      • Borrowing Balances of the Group and corresponding interest rate, remaining installments etc. (till date)

    • For each member in the group - enter the following data

      • Member Name

      • Sequence No., Joining Date

      • Balances of Shares help by member

      • Balances for each Savings Account held by member

      • Balances for each Loan Account held by member

  5. Partner / Co-Operative Messages / Broadcast

Mobile App

3.1 Offline App along with Data Sync features and avoiding data updates from multiple channels

3.2 Overall Dashboard

3.3 Group Dashboard

3.4 Sequential screen-flow needed

  • Opening meetings after optional multi-member authentication/authorisation

  • Summary of Previous meeting including Cash and Bank Balances

  • Attendance

  • Cash In-flows

    • Savings

    • Loan Repayments

    • Fines / Penalties

  • Cash Out-flows

    • Loan Disbursements

    • Fund / Grant Payouts (future)

    • External Loans (future)

  • New Loans

  • Next Meeting plan (date, moderator etc.)

  • Closing Summary

  • Closing meetings after optional multi-member authentication/authorisation

  • Data Syncing options