Methodology SONATA has adopted a group lending approach and few other best practices with some minor adjustments to suit local conditions. SONATA lends money to groups of 10 to 20 women members and designates the group as the ultimate guarantor of each of its members. If one member does not repay the loan, no individual in the group is eligible to receive another loan. The operating philosophy of SONATA is to solely focus on providing financial services; it believes that its clients are best qualified to decide what enterprises to establish and how to use the funds.
Operational Details
The key factors of this approach include:
-
Social Collateral: The poorest do not have physical assets that can be used as security or collateral. Instead, borrowers are organized into groups and take collective responsibility for the repayment of the loan of each member of the group.
-
Cash less Operation: SONATA disburses the loans through bearer cheques, and most of the collection is deposited in SONATA's bank accounts in the Commercial Banks or at the Branch offices of SONATA. This reduces risk while very little cash is floating around.
-
Customized Products: SONATA has designed loans with small weekly repayments that correspond to wage structures, consumption and income generating activities to prevent emergency distress sales. The first loan granted is always relatively small and is used to inculcate credit discipline and collective responsibility.
-
Focus on Women: SONATA works exclusively with women because they are the most marginalized among the poor and because they tend to invest the majority of their income into the household and for their children.
