Technology for Microfinance Managers Issues and Solutions RMEP 2008 BASIX August 2008.
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Transcript of Technology for Microfinance Managers Issues and Solutions RMEP 2008 BASIX August 2008.
Technology for Microfinance Managers
Issues and Solutions
RMEP 2008
BASIX
August 2008
Micro-Finance reach in India
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.
Source : Sa-dhan, Bharat Micro-finance Report,2008
Demand of Micro-Finance services in India
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 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
Private Investors and equity funds are now financing fast growing and nascent MFIs
Some state governments are funding SHG-programmes
Govt. of India has appointed NABARD to manage the Microfinance Development & Equity Fund (MFDEF)
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
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? 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 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
Critical Information requirements of various stake holders • Field staff operations information • Management Reporting • Statutory requirements• Funding agencies reporting • Customer MIS
Information requirements of MFIs
Field staff requirements
Loans appraised/sanctioned Vs disbursement particulars
Day wise collection statementsLoans overdue reportsPortfolio 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’sRepayment %Principal At Risk (PAR)Non Performing Assets (NPA)Aging Analysis of Overdue Financial RatiosFirst Time Overdue (FTOD) Drop out customer reports
Statutory Requirements
RBI (Central Bank) Compliance ReportsDelinquent loan provisioning/Bad debts Written-
off detailsSavings/Cash Security Particulars
Financial Accounting StatementsBorrower/Member Sub-ledgers and balancesSecured/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 periodPortfolio Indicators Growth IndicatorsOutreach 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 DistributionResponsibility Center ConceptPortfolio diversification Lending MethodologiesEfficient portfolio monitoring ReportsFTOD, Drop out customer reports
Benefits of Technology 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
Adopted IT as a strategy and set up a IT division (BASIX Information Technology Solutions for Livelihoods)
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
Harnessing IT for MF services
Samruddhi Collection card BASIXPM
BASIXiStation BASIXCollect
Devices Used for Automation of Field Transactions
Proposed Blue Print of BC Model & CSC @ MEGHALAYA
Central server
SBI*
BC MODELCSC(Customer Service
Centre)
Powered by :
Powered by :
The data entered in both the systems will be uploaded to
respective remote servers and customer can access all services under one roof
HHTDesktop PC orLaptop
Central Server
DecentralizedServer
4321
V SAT / InternetGSM / CDMA
BASIX IT Architecture
MobileIntegrated with biometric device
Key Learning's
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
Assess your MIS needs Initiate the process Acquire good MIS Adopt IT in your business Make your work simple ..
Our suggestions
Thank You
Visit us www.basixindia.com