Microfinance software manages group-based lending — JLG and SHG models — where the loan sits under a group, the group sits under a centre, and repayment is collected at a meeting rather than a counter. That hierarchy is not a reporting preference. It is the product.
Why a normal loan system does not work
Most lending software is built around one borrower and one loan. Groups are added later as a tag or a category. It looks fine in a demo and breaks in month three, when you need the centre position, the group position and the member position to reconcile — and they do not, because the software only ever really tracked the member.
The test to apply during any demo: ask to see a group where one member has defaulted, and check whether the group ageing, the centre report and the field officer app all show the same number without anyone recalculating it.
What it should handle
- Centre, group and member hierarchy as first-class records, not labels.
- Meeting schedules and attendance, because collection happens at the meeting.
- Field officer routing — which centres today, in what order.
- Ageing and NPA classification derived continuously, not assembled at month end.
- OTP or biometric verification at disbursement and collection.
- Offline capture on the officer app. Centres are rural. Coverage fails.
The questions worth asking a vendor
Ask how many microfinance customers they have, not how many customers. Ask to speak to one. Ask what happens when a member leaves a group mid-cycle — the answer reveals whether the hierarchy is real. And ask who migrates your existing loan book, because that is where implementations actually fail.
What it costs you to get wrong
The visible cost is licence fees. The real cost is a field team spending its day on accounts that would have paid anyway, while genuinely at-risk members go unvisited. Software that cannot rank the overdue book is software that makes your officers busy rather than effective.
Our microfinance platform is built around the centre-group-member hierarchy, with a field officer app that works offline. You can open the live demo without talking to anyone first.