M&R Edgier Development Funds Guideline for DMI’s Fields and Local Board on
New Group Loan Approach
General Observation
The DAZ guidelines are well structured and detailed and present important aspects of group
loans comprehensively. However, there are some observations while comparing the guidelines
with MREDF policy and financial terms as presented below:
Points included in MREDF policy and
S. No
financial terms
1. Under the loan type in MREDF policy, it is
mentioned that the money will lend to
beneficiaries so that they can start a small
business however, the borrowed money
cannot be used for other purposes such as
to purchase food items, pay rents, or to bear
any other cost of living.
2. Under group formation, it is mentioned that
all group members applying for group loans
must be residing in the same city or district.
3. Another important point to be considered in
group formation is that a member of a loan
group cannot be part of more than one
group. Members may also make sure to
have no relatives in the group.
4. Group meetings are one of the essential
elements of group loans and a
session/meeting should be held at least
once a month.
5. In terms of repayment, the MREDF policy
suggests the concept of collective
responsibility approach where if a group
member is unable to make the repayment,
other members will hold responsible for
Observations from DAZ
Under part-III of the guidelines, it is
mentioned in the last point that a loan
will not be approved if the business is
related to the selling of unhealthy
products including alcohol. However, it
is not clearly mentioned that a loan
cannot be used for any other purpose
than business.
All members do not need to reside in
the same city or district as per DAZ
guidelines however, it is mentioned
that the loan recipient must live closer
to the area where he/she shall
implement his/her business project.
No such condition is mentioned in
DAZ guidelines.
Group meetings are not included as
an essential element in DAZ
guidelines however, it is mentioned
that if the local board wants to take an
update on the development of a
project, it can invite the group leaders
to attend Local Board meetings and
provide such updates.
The terms for repayment as DAZ is
different from MREDF in that it does
not base on collective responsibility
rather it has different terms in case of
inability to make repayments such as
 repayment. If other members are also
unable to repay, then the amount will be
recovered from the guarantor.
6. Under the heading conflict, it is mentioned
that Local board members can join the
group loan; however, they cannot be a
group leader and shall not be involved in the
local board's application approval process.
Moreover, in case of conflict, the local board
can formulate and implement its policies.
7. A strong code of conduct to be followed by
the group members is mentioned in the
MREDF policy. Mainly, each group member
needs to be a strong follower of Christ.
8. In the repayment structure section of
MREDF financial terms, it is mentioned that
each group can decide if they want to repay
every week or every month.
extending the date, payment through
an exchange of goods, or cancellation
of debt, etc.
No such condition is mentioned for
board members in DAZ and no
guideline for conflict resolution is
mentioned in DAZ.
Code of conduct is missing in DAZ
guidelines.
A specific repayment period is of 1 to
3 years is mentioned in DAZ
guidelines which will depend on the
range of the loan amount applied.