Field Partners

Selection Process

In order to reach a broad range of borrowers as well as serve the interest of all the stakeholders (borrowers and lenders), Milaap engages in a rigorous five step process to identify and select field partners.

Screening
Quantitative Analysis
Qualitative Analysis
& Field Visits
Approval & Monthly
Credit Limits.
On-boarding

Step 1: Screening

Milaap has broadly classified field partners into two categories based on their core business and type of relationship with their clients.

Microfinance institutions, i.e. organizations focused on lending to the poor
Non-MFI partners, i.e. organizations without a primary focus on lending that could benefit from integrating financing into their models:

Microfinance institutions must meet Milaap's minimum requirements in order to fundraise for local borrowers:

Serve at least 5,000 active borrowers with microfinance services.
Be registered as a legal entity (Trust, Society, Section 25 Company or Non-banking Finance Company) and in operation for atleast 3 years.
Have ‘bonafide microcredit activities’ stated as a main objective in the by-laws/articles of association of the organization and a proven track record of lending to poor, excluded, and marginalized sections of the society.
Have performed at least 3 years of financial audits.
Have a clearly-defined use for Milaap financing.

For organizations whose core business is not microfinance, these requirements are as follows:

Served atleast 5000 clients at the bottom of pyramid through life-changing goods or services
Be registered as a legal entity (Trust, Society, Section 25 Company or Private Limited Company) and in operation for atleast 3 years.
Have an annual budget/turnover of Rs 1 Crore (~ USD 200,000)
Have a strong social mission and a clearly-defined use for Milaap’s finance for their end-clients’ needs and requirements.

Apply to Become a Field Partner

Step 2: Quantitative Analysis

If an institution meets Milaap’s minimum criteria, we proceed to the application process. At this point, the institution submits documentation detailing its operations.

These documents include: by-laws/articles of the organization, organizational structure, audited financial statements of the last 3 years, portfolio reports, resumes of board and management members, organizational manuals, credit rating reports, no objection certificates/ recommendation letter from other lenders (e.g. banks) and projections for the upcoming financial year, proposed use of Milaap’s funds.

For non-MFIs, in addition to the above, the information should also include their business plan and proposed structure/method for lending Milaap’s funds.

This information is reviewed by Milaap’s Field Partnerships Manager and a screening memo is prepared for the Head of Lending Strategy to determine if the organization is a promising candidate to become a Milaap Field Partner.

Step 3: Qualitative Analysis & Field Visits

If the organization makes the cut, the Field Partnerships Manager will visit the organization for on-site due diligence.

During the visit, the analyst evaluates the organization in more detail in a number of different dimensions.

Governance
Staff
Planning
Audit
Earnings
Liquidity
Capital
Management Information System & Internal Controls
Transparency
Resources for Milaap’s programs.

To get an understanding of the quality of the organization around these dimensions, the on-site visit includes interviews with members of the management team, middle management, entry level staff (loan officers) and clients, as well as other funders (banks, grant funders etc). In addition, the manager reviews documentation, reports and the information system of the organization.

For non-MFIs, in addition to the areas listed above, special attention is paid to operational risks, past lending history, sales history, client selection and reputational risks.

Appraisal of Field Partner's Financial Reports and Ratings

Field Visits to understand operational processes

Surveys of past borrowers to understand client satisfaction.

Audit of impact assessment reporting mechanisms.

Step 4: Approval & Monthly Credit Limits

From the visit, the Manager prepares and submits a report to the Milaap’s management team to review. This report will also include level of risk associated and proposed monthly credit limit from Milaap.

The risk model and credit limit is prepared by benchmarking the organization with Milaap’s existing field partners on the same parameters.

The report is then reviewed by the management team and the social profile of the organization is also carefully studied. If the team approves an organization as a Milaap Field Partner, it will set a fundraising limit for the Field Partner and begin the on-boarding process.

Step 5: On-Boarding

Training the field partner on our operational requirements and policies constitute a significant part of our on-boarding process. Because our partners vary in size and resources, we’ve developed a tiered funding structure to accommodate their needs.

The amount a Field Partner can raise each month for local borrowers on Milaap depends on its credit limit based on the level of partnership and how much of its credit limit remains unused.

Pilot: Partners who’ve been on-boarded begin with an one-time loan of upto Rs 10 Lakh ($20,000). The pilot is designed for the partner to get familiar with Milaap’s operational process and requirements, before we mutually agree to scale up. Upon satisfactory progress of pilot, field partners then move to the next levels of funding, depending on their organizational maturity and ability to manage loan programs.
Level 1: Level 1 partners can raise upto Rs 10 Lakh each month (USD 20,000) for local borrowers on Milaap.
Level 2: More often than not, level 1 partners progress to Level 2 where partners can raise upto Rs 20 Lakh each month.
Level 3: Partners who can raise more than Rs 20 Lakh each month. These partnerships are reviewed and approved on a case-by-case basis by Milaap’s management team.