What is a "Lending Partner"?
1. KOMIDA
2. AKR
3. KUM Syariah
4. BMT ItQan
Is my money really used for the businesses I have selected?
How is my deposit transferred to the borrower?
Who collects the loan installments from the borrower?
How is billing done?
Our Lending Partners are helpful in terms of billing and maintaining good relationships with your borrowers. They hold regular meetings with groups of borrowers. This method is proven to be effective to collect repayment from borrowers, many of whom do not have a bank account. All payments are incurred in the loan book.
We seek and select Lending Partners with a low NPL rate. Mekar’s Lending Partners do a lot of things, from lending to collecting loan payments for you. In return, they get a share of the payment of interest charges that have been billed.
What is a Lending Partner’s Risk Level?
A Lending Partner’s risk level is a ranking that Mekar gives to our Lending Partners. The risk levels range from “Very Low” to “Very High” and they reflect the risk of institutional default associated with each of Mekar’s Lending Partner. This rating system is designed to help our Funders quickly identify which loans to consider for their portfolios.
To assess a Lending Partner’s risk level, Mekar performs due diligence on the Lending Partner before working with them, and regularly thereafter. Our due diligence and monitoring process includes, but not limited to:
- A careful analysis of past and current financial performance as measured by its NPL (Non-Performing Loans) ratio, CAR (Capital Adequacy Ratio) and loan loss provision coverage ratio, as well as its profit and loss statement.
- A review of market or business growth, including membership growth and operational expansion.
- An assessment on the implementation of good corporate governance within the institution.
Risk Level
Very Low
A partner with this risk rating demonstrates an outstanding financial performance, as shown by:
- A very low NPL ratio (less than 0.5%);
- A very healthy CAR (at more than 20%); and
- A very high loan loss provision coverage ratio (more than 150%).
A partner with this risk rating also shows an exceptional business growth, as indicated by:
- A very large membership of more than 100,000 members; and
- An outstanding loan portfolio of more than IDR 100 billion with at least 80% of the loans are provided through a group lending methodology.
A partner receiving this risk rating also shows a very strong commitment to good corporate governance.
As such, partners with this rating are the most unlikely to go into institutional default.
Low
A partner with this risk rating demonstrates a very good financial performance, as shown by:
- A low NPL ratio (less than 1%);
- A healthy CAR (at more than 20%); and
- A high loan loss provision coverage ratio (more than 120%).
A partner with this risk rating also shows an exceptional business growth, as indicated by:
- A large membership of more than 10,000 members; and
- An outstanding loan portfolio of more than IDR 50 billion with at least 70% of the loans are provided through a group lending methodology.
A partner receiving this risk rating also shows a strong commitment to good corporate governance.
Medium
A partner with this risk rating demonstrates a good financial performance, as shown by:
- A low NPL ratio (between 1% and 4%);
- A healthy CAR (at more than 20%); and
- A high loan loss provision coverage ratio (more than 100%).
A partner with this risk rating also shows a strong business growth, as indicated by:
- A large membership of more than 5,000 members; and
- An outstanding loan portfolio of more than IDR 10 billion with at least 40% of the loans are provided through a group lending methodology.
A partner receiving this risk rating practices good corporate governance.
High
A partner with this risk rating demonstrates a fair financial performance, as shown by:
- A low NPL ratio (between 2% and 4%);
- A healthy CAR (at more than 20%); and
- A lower loan loss provision coverage ratio (more than 81%).
Partners with this risk rating also show a less aggressive business growth, as indicated by:
- A moderately-sized membership of more than 3,000 members; and
- An outstanding loan portfolio of more than IDR 5 billion with at least 20% of the loans are provided through a group lending methodology.
A partner receiving this risk rating does not consistently practice good corporate governance.
Very High
A partner with this risk rating demonstrates a poor financial performance, as shown by:
- A quite low NPL ratio (between 3% and 4%);
- A healthy CAR (at more than 20%); and
- A lower loan loss provision coverage ratio (more than 81%).
A partner with this risk rating does not show aggressive business growth, as indicated by:
- A small membership of less than 3,000 individuals; and
- An outstanding loan portfolio of less than IDR 5 billion with less than 20% of the loans are provided through a group lending methodology.
A partner receiving this risk rating does not consistently practice good corporate governance. As such, partners with this rating have a relatively higher risk of institutional default.
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