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Memorandum of Agreement
for Intermediary Agencies
Memorandum of Agreement

Memorandum of Agreement for a loan made this __________ day of __________ two thousand and ____________
BETWEEN ____________________________ CBO/Group of PO Box ______________, _______________ (Herein after called the "BORROWER") on the first part and
The Wealth Generation Scheme of the Department of Community Development, Ministry of _______________________ , PO Box ____________, _____________ (herein after called "LENDER") on the second part.


LENDER lends ________ shillings (in words) ________________________________________________________________
to: _____________________ CBO/group, repayable within ____________ months.

The loan will attract interest as follows:
(i) Shillings: ___________ at the rate of ________ % p.a. for short term loan.
(ii) Shillings: ___________ at the rate of _______ % p.a. for medium term loan.

All calculated on the declining balance.

The grace period will be __________ months after loan disbursement.

Interest will be accrued during the grace period.

The principal will be repaid in ___________ equal monthly/quarterly instalments of _____________ shillings and interest will be paid on declining basis.

The date of the first instalment will be _____ ___________ 20_____ , and the date of the last instalment will be _____ ___________ 20 _____.

Interest accrues immediately from the loan disbursement date.

The loan will be used for on-lending to the group/CBO members for the purpose stated in their loan applications to the group/CBO.

Security or collateral for the loan will be:
(i) All members will be jointly and severally liable for repaying the loan in full.
(ii) The group/CBO savings, totalling _____________ shillings with _____________________________ Bank will be pledged to secure the loan.
(iii) Assets financed by the loan will be jointly owned until the loan in question is repaid in full.

If BORROWER fails to repay the loan, the Lender will have the right to institute legal action to recover the debt in full and costs including the application of savings pledged to the lender. This will only be done on approval of the agency- loans committee.

Until the loan is repaid fully, no members/group will be allowed to withdraw savings from the group/bank.

This agreement will remain in force as long as there is outstanding balances of the loan.

The Intermediately Agency will be paid 10% commission up-front on all approved micro-projects that will be supported through them and a 2% after training beneficiaries and then another 3% commission on all loans recovered up to 95%.

The Agency shall prepare and submit micro project reports on a monthly basis, after signing of the agreement. No funds shall be disbursed to the Agency whether for loans or commissions without these returns.

All information appearing in the Agency application forms and CMP letter of offer will be part of this agreement.

The financial institution has a right to reveal borrower's accounts operations to the IG scheme on demand.

The agreement is subject to amendment for improvement of implementation.

Agreed on behalf of ______________________________________, LENDER:

Signature and Date:

for: Permanent Secretary, Ministry of _______________________________

Witnessed by:
Signature and Date:

Agreed on behalf of ________________________________, BORROWER
Signature and Date


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