SONATA FINANCE PVT. LTD.

MICRO-FINANCE PLUS MODEL

HIGHLIGHTS
SONATA Finance Private Ltd (SONATA) is a

microfinance company registered as a Non Banking Finance Company (NBFC).

SONATA began its microfinance operations in January

2006, and its head office is located in Allahabad, Uttar Pradesh.

It is one of the fastest growing start-up MFIs in India,

reaching out to more than 40,000 women members by the end of 2007.

Number of Members = 1,55,416 ( current figure)

AREA
In the month of August 2007, it acquired the portfolio of

Jeevika Livelihoods Support Organisation based at Jabalpur in MP.

Uttar Pradesh and Madhya Pradesh.

Now operates in two major states of Central India

From Allahabad district it expanded to Kaushambi,

Raibareli, Pratapgarh, Sultanpur, Kanpur and Fatehpur districts.

In M.P it expanded in Jabalpur, Katni and Narsinghpur

MISSION & VISION

SONATA FINANCE has set itself a mission to

Identify and motivate poor women in a costeffective way and deliver them micro finance services in an honest, timely and efficient manner. VISION

The vision of SONATA is to help building a society

that contains an opportunity to develop the minimal socio-economic conditions needed to live a life of dignity.

APPROACH

SONATA has adopted an individual as well as group lending

approach and few other best practices with some minor adjustments to suit local conditions.

SONATA lends money to individuals or groups of 10 or 20

women members and designates them as the ultimate guarantor of each of its members.
group is eligible to receive another loan. providing financial services.

If one member does not repay the loan, no individual in the

The operating philosophy of SONATA is to solely focus on

KEY FACTORS OF APPROACH

SOCIAL COLLATERAL The poorest do not have physical assets that can be used as security or collateral. Instead, borrowers are organised 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 deposits 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 repayments that

corresponds 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.

OUR WORK
WHAT WE DO SONATA provided loans to individual as well as group members in poor regions of India for a range of incomegenerating activities. Sonata also offers emergency loans, money transfers and gold loans to its members. SONATA serves thousands of poor people across villages and urban slums in India. By providing the poor this range of economic tools, they are looking forward to eradicate poverty.

OUR PRODUCTS AND SERVICES

1.
2. 3.

4.
5.

INCOME GENERATING LOANS THE EMERGENCY LOANS INDIVIDUAL LOANS MONEY TRANSFER GOLD LOANS

INCOME GENERATING LOANS

In the initial growth periods, SONATA only offers

one basic loan product, which is restricted to income generating activities.

During the first cycle and on average, clients apply

for a loan of a maximum Rs.8,000 ( the minimum amount is Rs. 2000). During each cycle thereafter , the client has the option of applying for up to 120% of the previous loan amount.

INCOME GENERATING LOANS

The basic loan is repays in equal weekly instalments

at "centre meetings" held in the local communities. Prepayment of principal is possible but only if the client settle the entire balance of the principal outstanding.
The Centres are the heart of SONATA operations as

this is where all transactions take place: loan application, initial approval (from group members), and collection of the deposits slips.

THE EMERGENCY LOANS

This product will start being offered to clients during

the course of the next fiscal year.

The emergency loan is designed to meet events that

could put the continuity or effectiveness of the income generating activity at risk.
To be able to access an emergency loan, the client

must present a good rating in terms of credit discipline.

THE EMERGENCY LOANS

Like the basic loan, the emergency loan must be

approved by all the associates in the group.

The emergency loan will be granted for a term of 25

weeks with weekly payments and the maximum loan amount is Rs.2,000.

PROGRAMS
INSURANCE Presently, SONATA is working with three insurance companies - LIC, ICICI Prudential and Birla Sun Life in delivering the life insurance products to its clients. HEALTH CAMPS SONATA has tied up with some health care providers in delivering health care services to our clients.

PROPOSED STRUCTURE
INSURANCE FOR EDUCATION

Provide interest free education loans to poor children and scholarships to deserving students and Help Eradicate poverty through education.

EDUCATION INSURANCE

MODEL
It is a combination microfinance plus education

model.
In this model, women who receive loans are

encouraged to send their children to a partner education NGO- BHARTI FOUNDATION for "free" or at a subsidised rate.(depending on the need)
The partner institutions decide how the finances are

shared (the interest payments) for optimal sustainability of both organisations.

EDUCATION INSURANCE
As SONATA serves poor women across North India,

they should believe that education is one way out of poverty.

The mushrooming of Private schools is attracting

many poor parents to send their children to such schools.

The poor turned to private schools for quality

education. They spend around Rs. 5000/- per child annually, on fees, books and uniforms mainly by taking loans from moneylenders or by other means.

SONATA+BHARTI FOUNDATION= QULAITY EDUCATION

SONATAs collaboration with NGO BHARTI

FOUNDATION will provide its customers an Education Loan plus schooling in SATYA BHARTI SCHOOLS.
giving the poor the freedom

This loan will be provided per child at affordable rates,

70% of the education loans will be disbursed for girls. Smaller family size will be provided with better facilities. Aim to encourage family planning for young couples.

IDENTIFICATION STAGE
The two main areas to be analysed at this stage are the

potential customers and the existing financial services (formal and informal) the target group has access to.

A brief workshop with potential customers (with an equal

number of men and women with children) could be held raising the issues related to financing as well as the education system.

This will help to find out their needs and constraints in

accessing and using credit and identifying the existing sources of finance and how adapted these are to their needs.

FORMULATION STAGE
LOAN USE AND ELIGIBILITY CRITERIA

INTEREST RATE
LOAN SIZE LOAN DURATION

LOAN COLLATERAL AND CONFIDENTIALITY

APPROVAL TIME REPAYMENT TERMS

SAVINGS
FORCED SAVINGS

LOAN USE AND ELIGIBILITY CRITERIA

PHASING- THREE YEAR ( 4 PHASES)

STANDARD RATE OF INTEREST

SUBSIDIZED RATE OF INTEREST CSR ACTIVITY FOR FUNDING EITHER SONATA

OR MULTI-FUNDING AGENCY GIRL EDUCATION FLEXIBILTY

IMPLEMENTATION STAGE
GROUP FORMATION

OUTREACH
ATTITUDE OF FINANCE OFFICER CUSTOMER LITERACY LEVEL

LENDING METHODS
ADVERTISING FINANCIAL PRODUCTS

EVALUATION STAGE
STUDENTS PERFORMANCE MOTIVATION FOR HIGHER STUDIES

ENCOURAGE DONORS