This document summarizes trends in group liability and individual liability for group loans. It discusses approaches like group liability, center meetings, and individual liability with regular collection meetings. It notes signs that group lending may be facing challenges like tensions caused by the "Tapal" system. To address potential product decay or loss of client interest, the document recommends regularly listening to client feedback through focus groups or surveys to understand client needs and consider new financial products or services. It suggests transitioning clients to individual loans or transition products as options, and provides tips for a smooth transition like not transitioning all clients at once and following steps like market research, product design, pilot testing and staged rollout.

1. Trends on Group Liability and
Individual Liability
Jennifer Sabianan
MABS
2010 RBAP‐MABS Na.onal Roundtable Conference
Hya= Hotel and Casino, Manila
June 2‐3, 2010

2. Approaches in Group Lending
• Group liability
• Center meetings
Group Loans: • Typically, auto-step up of amounts
Grameen-like • Project-based with loan amount
based on future income stream
• Individual liability
• Regular meetings as point of
Group Loans: collection only
ASA-like • Contractual savings as Personal
deposits

3. When do you know group lending is facing
challenges?
“Tapal” System
resulting in:
* Group tensions/conflicts
*May lead to inefficient collection
methods and non-friendly
consumer protection practices
*Strategic default (domino effect)
Product
Decay
Lost of Interest/
Enthusiasm of clients
that leads to:
*Client drop out
*Loss of good clients
*Getting new clients becomes
harder

4. What can be done?
Be sensitive to the signs of product decay or clients’ loss of interest in the product
Regularly listen to client feedback using
At least once a year
FGDs or survey tools
Find out what other financial services clients need
New/Additional features of existing
New/Other Loan Products
product
Study what your competitors are doing
Products Services

5. Is transitioning an option for
you?
Graduate to individual
loan product
Graduate to transition
product under individual
liability
Remain in group ( same
or improved product
feature)

6. Important practices to keep in mind in
transitioning
* Don’t do transitioning all at once for all group clients
- Classify clients according to criteria of repayment performance,
number of loan cycles
* Observe steps to follow for smooth -Market
transitioning Research
-Design new/ - Develop - Pilot Test
enhance existing transition/ - Evaluate
loan product graduation plan - Roll out in stages

7. Thank you!