Transcript A Presentation on Risk Management - Sa-Dhan

BASIX
Equity for Equity
Monitoring & Risk Management
Practices in BSFL
Presentation by:
Balgovind Sahu
Manager-MRM
The BASIX Mission…..
BASIX
Equity for Equity
To promote a large number of sustainable
livelihoods, including for the rural poor and
women, through the provision of financial
services and technical assistance in an
integrated manner
BASIX will strive to yield a competitive rate
of return to its investors so as to be able to
access mainstream capital and human
resources on a continuous basis.
TRIAD Strategy
BASIX
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IDS
(Institutional Development Services)
(To become sustainable)
Livelihood
Triad
LFS
(Livelihood Financial Service)
(To manage income)
Ag/BDS
(Agriculture & Business Development Services)
(To increase income)
The BASIX Livelihood Triad
BASIX
LIVELIHOOD FINANCIAL SERVICES:
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Credit, Insurance & Savings for lives and livelihoods
AGRICULTURAL/BUSINESS DEVELOPMENT
SERVICES (AG/BDS)
Productivity enhancement, Risk mitigation, Local value addition and
alternative market linkages for input supply and output sales
INSTITUIONAL DEVELOPMENT SERVICES (IDS)
Formation of producers’ groups, federations, cooperatives, Capacity
Building, including entrepreneurship development, Human Resource
Development and Accounting and management information systems
BSFL- Risk Management
Guiding Principal
BASIX
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“BSFL Risk Management function is guided
by the Enterprise Risk Management
developed in the COSO Enterprise Risk
Management – Integrated Framework”
BASIX
Equity for Equity
Monitoring Risk Management
Key function area
Frauds
1. Forecasting
2. Investigating
3. Recommending for actions
Special Audits Covered
1. Business impact study
2. MD task
3. Dropout study
4. Need base special audit
Field Audit & Customer Visits:
· Assessment of operations
· Risk Assessment of Triad services
· Service Delivery
· Policy compliances
· Customer relation
· End use monitoring of loan
Back Office:
· Agreements
· Approvals
· FTOD and FTNS
· Write-offs
· Audit Sampling
· Fraud investigation
External
Internal
Operations
Credit
Services
Market
Regulatory
BASIX
Classification of Risk
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Services
Policies
Procedures
Data Mgt
Geographical
Products
Services
Policies
Regulations
Qualifications
Delivery
Quality
Customer
Satisfaction
HR
Financial
Technology
Liquidity
Fund Management
Cash Management
Bank Management
Unauthorized/
Outdated Tech
Systems Security
Users Capacity
Software problems
Borrowing Rates
Lending Rates
Competition
Product reach
Delivery Channel
Government Rules
RBI Guidelines
KYC Norms
Local Acts
Political
Induction
Take & Hand Over
Attrition
Political influence
Caste/Community
Social &
Environment
Reputation
Gender
Economic Status
Child Labor
Natural Disastrous
Water Pollution
Image
Mission Compliance
Service Standards
Customer relations
Statutory
Compliances
Frauds
Poor Internal
Controls
Lack of Monitoring
System Lapses
State/Regional
issues
Operational risk” is the risk of loss resulting from inadequate or
failed internal processes, people, and systems or from external
events.
Risk Aspect
BASIX
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Mitigation Strategies
Geographical & Scattered Portfolio
Feasibility Study/ Village Survey
Concentration Risk
Diversifying portfolio, Product wise, Caste wise,
Gender wise & Geographical.
Poor handling of Cash at Field
Avoid keeping the cash more than 24 Hrs at field
and No cash day system
Unfulfilled promise & poor
Communication
Uniformity in communication at all the level and
visual communications
Data Security & Management / Failure of
information technologies
Daily data back-up at all branch and disaster
data security management
Back
“Credit risk” is the risk to earnings or capital due to borrowers’ late
and non-payment of loan obligations.
BASIX
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Risk Aspect
Mitigation Strategies
Analysis of payment capacity
Analysis of family cash-flow
Analysis of willingness to pay
Analysis of overall behaviour
What do “neighbours” know about the client?
Decision on loan extension
By credit committee
Product characteristics
Step by step increase of loan amounts and maturities
Repayment schedule is based on clients expected
cash flow.
Enforcement mechanism
“non typical” guaranties – Mutual Guaranties of
loan
End use of loan
Pre & End use monitoring
Overdue monitoring
FTOD monitoring concept, Different way of follow-up by
FX/UH and Field Manager
“Service risk” is the risk of inadequate service delivery to
customers/clients as promise at the time of enrolment.
Risk Aspect
BASIX
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Mitigation Strategies
Lack of knowledge of service delivery
mechanism.
3 month induction & orientation on Product,
service, policy & procedure.
Lack of technical skills
Recruitment of technical qualified person
Building the technical ability by class room &
field training
Improper induction to LSA/P about
Services
Handling of portfolio after completion of
orientation & training
Poor delivery of Service
FTNS concept, Service delivery monitoring by
FX, UH & MRM team.
Poor monitoring of service delivered
Lack of improvement in service delivery
mechanism / Monitoring of service risk converted
into credit/ operation risk
Back
“Fraud risk” is the risk of loss of earnings or capital as a result
of intentional deception by an employee or client.
Risk Aspect
BASIX
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Mitigation Strategies
Ghost or Benami loan
Loan origination & appraisal by the
different person/ JLG
Processing of fake claims and
unauthorized expenses.
High degree of Organisation value &
ethics. Claiming of expenses on the
self judgment.
Tempering of financial data or report
System will not permit alternation,
Cross check system at HO & Unit
Bribe/Kickback/Collusion
Pre disbursement visit, Appraisal
technique & disbursement check
Collection of money without issuing of
receipt/Prepayment rotation
Customer awareness and mechanism
to identify within 24 Hrs.
Dummy robbery
Investigation by the Risk team
Back
“External risk” refers to the inherent risks of the company business
activity and the external business environment.
BASIX
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Risk Aspect
Village level influence persons (Political Risk)
Mitigation strategies
Avoid meeting at local influence person ‘s
house, using public place for meeting & other
livelihood service deliver.
Middlemen interference
Effective communication to customer about
the direct approach & deliver channel.
Robbery/ Theft
Risk assessment of routes & area before
starting any village and categories as
Low/Moderate/High
Competitions
Focus on customers satisfactions
Customer satisfaction survey and dropout
study
Back
Internal Control System in BSFL
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Prevention
Correction
Detection
BSFL managing the risk
through effective internal
control system
BSFL internal control
system provides the 95%
prevention, 3% detection &
2% correction.
BASIX
Equity for Equity
Contact:
[email protected]
09393909064