1. Overview

This guide explains the different loan statuses available in the system and the rules governing status changes. The status of a loan determines its lifecycle stage and the actions that can be performed on it.

2. Loan Statuses and Workflow

The following are the available loan statuses and the permitted transitions from each status.

• Application

  • This is the initial status for a new loan application.
  • Can be changed to: Not Approved, Active, or Cancelled.

• Active

  • The loan has been approved and disbursed to the client.
  • Can be changed to: Written Off, Cancelled, Non-Performing, or Paid.

• Paid

  • The loan has been fully settled by the client. This is a final status.

• Written Off

  • The outstanding debt is deemed irrecoverable. This is a final status. (See section 5 for details).

• Cancelled

  • The loan agreement has been cancelled. This is a final status. (See section 3 for rules).

• Non-Performing

  • The client has defaulted on payments, and the loan has been handed over for collections, but not yet written off.
  • Can be changed to: Written Off or Active.

• Not Approved

  • The loan application was declined. This is a final status.

3.Pending Disbursement Flag (Zambia)

Feature	Description	Documentation
Pending Disbursement status flag	The Pending Disbursement status is an intermediate stage in the loan lifecycle. It bridges the gap between the initial Application status and the Active status.	Pending Disbursement Status

4. Loan Cancellation Limit

To ensure data accuracy for credit bureaus, the system enforces a time limit for cancelling loans.

• Rule: Users are only permitted to change a loan status to "Cancelled" within a set number of days from the loan agreement date.
• Timeframes:
  • South Africa: 5 days (classified as a "cooling-off" period).
  • Namibia: 3 days.
• Closing a Loan After the Limit: To close a loan outside this cancellation window, you must post a receipt to settle the loan. The status will then reflect as "Paid" or "Account Closed" on credit bureau reports.

5. Non-Performing Status

Change a loan's status to Non-Performing when a client has defaulted on payments and the account has been handed over for collections, but you do not yet want to write off the debt.

• Condition: The loan must have at least one instalment that is more than 30 days in arrears.

6. Written-Off Status

Change a loan's status to Written Off when you determine that the outstanding debt is irrecoverable.

• Condition: The loan must have at least one instalment that is more than 30 days in arrears.

6.1. The Prescription of Debt

Writing off a debt is a legal process that must be managed in accordance with the National Credit Act (NCA) and the legal principle of Prescription.

• What is Prescription? A debt "prescribes" if no payments or acknowledgement of the debt have been made by the debtor for a continuous period of three years. A prescribed debt is legally extinguished, meaning the microlender can no longer collect payment, and it must be removed from the debtor's credit report.

• Prescription vs. Write-Off: A "written-off" debt is an internal accounting decision, and the legal right to collect the debt is retained. A "prescribed" debt is legally cancelled, and the right to collect is lost.

• When does Prescription Start? The three-year prescription period begins as soon as the debt becomes due.

• What Interrupts Prescription? The three-year clock is reset and starts over if the debtor:

  1. Makes any payment towards the debt.
  2. Acknowledges the debt in writing.
  3. Is served with a legal summons for the debt.