Transcript Document

 RMEP
2008
Technology for Microfinance Managers
Issues and Solutions
BASIX
August 2008
Micro-Finance reach in India
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Microfinance in India through its two major channels –
SHG Linkage and MFIs – served over 33 million Indians,
up by 9 million over FY 2006-07
4 out of 5 microfinance clients in India are women.
Micro-credit portfolio of India Microfinance was
Rs. 22,000 crore
75% are accounted for by SHG Linkage, 20% by large
MFIs and 5% by medium and small MFIs
SHG Linkage reports over Rs. 3,500 crore savings, only
MFI Bank, KBS Bank reports about Rs. 40 crore savings
portfolio
MFIs operate in 209 out of 331 districts of the country,
28% of the new clients are from Urban areas.
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Source : Sa-dhan, Bharat Micro-finance Report,2008
Demand of Micro-Finance services in India
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Through all channels, reach is only 30 million
250 million people live below poverty line
Rupee One lakh per individual needed for
livelihood promotion, hence trillion of Rs needed
Penetration of life insurance services in rural India
is <10%. Asset, health, weather and other general
insurance services are still nascent
Micro savings and remittance products have huge
potential under BC model
Challenges in Micro Finance
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High Volume of Financial Transaction but value
wise very low
Majority of the financial transactions are off-site
in nature
Geographic spread of operations and density of
customers
Lack of infrastructure facilities like power,
broadband etc
Unsecured lending and no documented financial
history is available
Combination of above, lead to high operating
cost
Growing interest in Microfinance
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Private Investors and equity funds are now financing
fast growing and nascent MFIs
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Some state governments are funding SHGprogrammes
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Govt. of India has appointed NABARD to manage the
Microfinance Development & Equity Fund (MFDEF)
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Microfinance Bill pending in Parliament
Role of Technology in MFI
Transaction automation enables data
capturing of business operations
 Single set of data, multiple information to
different stake holders
 Standardization of product offering
 Increases efficiency, reduces transaction
cost
 Reliability of information from branches
Technology is an enabler for scaling up
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Role of Technology in MFI
Micro-Finance involves large scale micro
transactions, technology enables
-Reconciliation of customer, banker and other
funders balances
-Tracking of fund movements from/to branches
-Detection of frauds and misappropriations
- Audit trail of financial transactions
Technology is a tool for risk monitoring
WHY MIS?
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Good information system aids in better
management of resources
Analyze target Vs achievements, critical
operational parameters
Motivate field staff and to create healthy
competition, increase the efficiency of Human
Resources
To strengthen financial performance
Plays vital role in strategic decisions, enabling
course correction
Right information at right time is key to success
What MIS do we need?
Loan Tracking
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Ability to define loan products
Suitable for different model of lending
Loan Disbursement and Repayments
Portfolio monitoring
Write Off & Re-scheduling
Social Performance Indicator Tracking
Automatic calculation of incentives loan officers
Information requirements
of MFIs
Critical Information requirements
of various stake holders
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Field staff operations information
Management Reporting
Statutory requirements
Funding agencies reporting
Customer MIS
Field staff requirements
 Loans
appraised/sanctioned
Vs disbursement particulars
 Day wise collection statements
 Loans overdue reports
 Portfolio Performance Reports
Management Reporting
 Operating Summaries
Weekly (Inflows & Outflows at branch level)
Monthly (Demand, Collection and Balances)
 Employee Performance Reports
 Key Portfolio Indicators (Financial Health)
Loan Outstanding & No. of A/C’s
Repayment %
Principal At Risk (PAR)
Non Performing Assets (NPA)
Aging Analysis of Overdue
Financial Ratios
First Time Overdue (FTOD)
Drop out customer reports
Statutory Requirements
 RBI (Central Bank) Compliance Reports
Delinquent loan provisioning/Bad debts Writtenoff details
Savings/Cash Security Particulars
 Financial Accounting Statements
Borrower/Member Sub-ledgers and balances
Secured/Unsecured loan portfolio details
Income (Interest earned on loans) particulars
Funding Agencies Reporting
 MIS reports as agreed at the time of
Grant/Debt/Equity appraisal, as per the MOU
 Key Indicators of the operating period
Portfolio Indicators
Growth Indicators
Outreach Indicators
 Stock Statements
 Any other information that they may ask from time
to time..
Portfolio Diversification
 Loan
Products
 Loan Activities
Lending Methodologies
 Joint
Liability Groups
 Self Help Groups
 On-lending
 Direct Lending
Key elements of MIS
 Geographic
Distribution
 Responsibility Center Concept
 Portfolio diversification
 Lending Methodologies
 Efficient portfolio monitoring Reports
 FTOD, Drop out customer reports
Benefits of Technology
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100% Automation of all Business/ functional
areas
Integrity between operations modules to
Financial accounting
High Data security and inter-operable
Flexible Loan/Savings/Insurance product
definitions and its revisions
Automated Loan Documentations
Tools for controlling and effective monitoring
Various MIS reports for analysis from field level
to top Management.
How BASIX used Technology
for MF services
Harnessing IT for MF services
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Adopted IT as a strategy and set up a IT division (BASIX
Information Technology Solutions for Livelihoods)
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Appointed a IT partner for development support
Recruited IT and Domain specialists
Conducted detailed system study and followed SDLC
process systematically
System audit conducted at different levels of
development and implementation.
Ensured constant year to year operations productivity
improvements
Revised business strategies are aligned with MIS
Devices Used for Automation of
Field Transactions
Samruddhi Collection card
BASIXiStation
BASIXPM
BASIXCollect
Proposed Blue Print of
BC Model & CSC @ MEGHALAYA
CSC
BC MODEL
(Customer Service Centre)
Powered by :
Powered by :
SBI*
Central
server
The data entered in both the
systems will be uploaded to
respective remote servers and
customer can access all
services under one roof
BASIX IT Architecture
Central Server
V SAT / Internet
GSM / CDMA
Decentralized
Server
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2
HHT
Mobile
Integrated with biometric device
3
4
Desktop PC or
Laptop
Key Learning's
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Recruitment of cross domain (IT and Functional)
specialists for managing software is always
useful
Content with having the MIS meet 80-90% of
information needs
More complex MIS less likely to work
Be practical in your thinking
An MIS will not meet all the flexibility hoped for
Run parallel manual accounting/MIS for the first
six months
Our suggestions
Assess your MIS needs
 Initiate the process
 Acquire good MIS
 Adopt IT in your business
 Make your work simple ..
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Thank You
Visit us www.basixindia.com