Lone Security & Risk Fund
The frequent untimely death of borrowers is a major hindrance in microfinance activities where MFIs are facing many problems in achieving sustainability as well as improving productivity to reach their desired targets. In recent years, the average life expectancy of people in our country has increased significantly.
Despite these improvements, large numbers of people in lower income segments still die in middle age. In particular, women constitute the most vulnerable group to death due to health complications and many of them die before entering old age. This has a negative impact on achieving sustainable poverty alleviation as the heirs are forced to bear the financial burden of the deceased.
The obligation to repay the outstanding loan falls on the heirs of the deceased which becomes a complex situation for both the heirs of the late borrowers and the servicing institutions. On the other hand, after the death of the husband, female borrowers are subjected to precarious financial situations as his wife is the main user/investor of the borrowed money.
Karnafully Foundation has designed an innovative Debt Protection and Risk Fund (MWF) which effectively solves the above problem by relieving the heirs of deceased borrowers from the obligation to repay outstanding loans up to TK.20,000.
| Category | Payment Mode | Term | Subscription Mode | Management of MWF |
|---|---|---|---|---|
| All loan clients must contribute and participate in this product by paying a fixed subscription in each loan cycle. | Non-refundable but in case of death of borrower or borrower's spouse, out of total outstanding loan 20000 Tk is cancelled. | Continue throughout loancycle of borrower | Borrower will pay LRF before receiving loan amount. | Karnafully Foundation |