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I. General Principles
II. The Operation Manner of microcredit, Requirements and Rules
III. Selection of Targeted Families
IV. Operation Procedure
V. Disciplines

I. General Principles

1. Microcredit is a kind of revolving fund with charge provided by the Association for Rural Development of YiLong to its members in poverty to improve production.

2. 　 The Association for Rural Development of YiLong is in charge of the operation and management of Microcredit. Special account will be opened for the credit and will be under the supervision and guide of the County's Project Office. But private treasury is not allowed.

3. Microcredit will be granted only to members of Association for Rural Development of YiLong who are in poverty. Those who receive the fund are not required to offer guarantee from the third party or mortgage. Microcredit will be of small amount, refund-needed and amortized by periods of ten days. In order to reach the purpose of utilization with continuous scroll, certain amount of management fee will be charged to defray the management expense, bad debts and expense providing the technical services to the members in poverty.

4. The operation and utilization of microcredit will adhere to the aim of supporting persons in poverty and strictly observe financial policies and statutes of China. With the objective to support people in poverty through continuous revolving usage of credit corpus, it won't absorb social deposit.

5. Organization form of farmers in the Association. Through propaganda, persons in poverty should be mobilized to form five-member groups voluntarily and group leaders be selected by themselves. Except for families with single parent or those with women who have lost the ability of self-management, other group members are generally required to be women and the lineal members cannot be within one group. 4 - 8 groups in nearby neighborhood shall be organized into one Activity Center for members of the Association, where mechanism of group-center related interdependence should be set up.

6. Organization & Personnel of Management. The organization of management for Microcredit is the Association for Rural Development of YiLong, which shall also take charge of its operation. The Association will employ 4-6 organizers in the community where members of the Association live and train them on operation and skills. These organizers will preside over propaganda and organization, operation of fund and technical services, and help to enhance mutual assistance among members.

II. Operation Manner of Microcredit, Requirements and Rules

1. Manner of Microcredit operation. Microcredit will be granted under the principle of small amount, with the requirement to refund and submit certain amount of management fee.

2. Quantum of loans. The loan for the first year cannot exceed CNY1000 yuan, and the second year no more than 1500 yuan. The amount for the following years will be increased by 500 yuan per year with the total increased amount within the maximum of 3000 yuan.

3. Management Fee. Management fee will be charged at 8 percent of the total amount of the loan per year.

4. Tenor of the loan and method of refund. Tenor of the loan is one year. Credit corpus and management fee shall be refunded by 36 periods of ten days with 3 percent of the total amount per period, starting from the third period after the loan is validated. When being booked in village-leveled branches, 92.593 percent of the refund will be recorded as credit corpus and 7.407 percent as management fee. If the loan is refunded in advance, management fee will be the same. Application for the second term of loan must be one year later after the first term of loan is utilized and the credit corpus together with management fee are repaid as required.

5. Fund for groups. 5 percent of each loan must be remained in the bank as demand as demand deposit. The ownership of this part of money belongs to the one the group When one or two group members cannot refund temporarily, this part of money can, according to the regulations on utilization of group fund which is set up by the group, be used to fill up the gap temporarily after being agreed by all group members and examined and approved by the Association. Group members who use it must make up for it later. When leaving the group, members may, under the precondition of having refunded the loan, take back both the capital and the interest of this part of group fund owned by them.

6. Compulsive Deposit. Every group member must deposit no less than 2.00 yuan to his group every ten days. There is no upper limit on this deposit, interest of which will be calculated by that of demand deposit. The ownership belongs to the one who deposits the money.
III. Selection of Target Families

Microcredit is a scroll fund that assists persons in poverty, who have the potential of production improvement. Thus, the rich families and those who have no potential production improvement should be excluded. Persons characterized as one of the followings won't be selected as families to be supported.

IV. Operation Procedure

1. Propagandize among members of the Association for Rural Development of YiLong the aim, meaning and purpose of Microcredit as well as the manner and regulations. Mobilize members in poverty of the Association to participate actively.

2. Propagandize and mobilize members in poverty to unite voluntarily, set up five-member groups and elect group leaders.

3. Register and investigation. Register of group members should be processed in appointed time and location after propaganda and mobilization. Organizers shall investigate these members one by one to find out the exact situation of their family, economic and living conditions. Based on the above information, organizers shall examine the qualification of these group members and complete enrollment of each group.

4. Set up Farmers' Center. Organizers shall train those qualified groups and set up Farmers' Center on the basis of the training. In this Center, a director will be elected, time and location of central meetings determined and personnel in the Center as well as all group members trained.

5. Content of Training. Study the statute of the Association, qualification, requirement and regulations of using Microcredit, disciplines of groups and Farmers' Center, group leaders' and the center director's responsibility and regulations of group fund. Study how to arrange voluntarily the order 2-2-1 of group members' loan and how to fill in the application form for loan.

V. Disciplines

1. Once a group is set up, the five members of it will automatically be born with related duty and responsibility. When one cannot refund the loan on time because of special circumstances, other members that are in the same group have the obligatory duty to help them refund the loan.

2. Every Center must convoke the Central Meeting in fixed time and location and all group members must attend the meeting on time. The loan will also be refunded in the meeting.

Group members, except under special circumstances, must ask for leave to his group leader in advance when they cannot participate in the meeting, and three absences will not be permitted. Those absent without reason, shall be warned at the first time and fined 1.00 yuan each time when absent more than twice. The money will be deducted from group fund and the loss of this deduction will be born on all members of this group until the absence stops.

3. The loan must be used for projects chosen by farmers themselves, and change or development of the project shall be reported to the Central Meeting periodically.

4. For those absent in the Central Meeting for three times continuously and those who cannot refund the loan on time, the right to apply for loan of the whole group they belong to will be terminated.

5. Treatment for those who cannot refund at the end of a year. First deduct the money from their compulsive deposit, or from group fund when the compulsive deposit is not enough. The loss of the group fund will be born on the group and all its members. The second round of loan for this group center will also be terminated.