1. Slide No. 1/17 MIS: Requirements for a growing MFI by Dr. Oliver Schmidt (oliver@sa-dhan.org) Sa-Dhan, Manager – Regional Office Presentation for RMEP “Technology for Microfinance Managers: Issues and solutions,” 5/6 Aug 2008, Pune

2. Slide No. 2/17  MIS: Basic Scenario  MFI: Growth Scenario  MIS: Growth Scenario  Concluding Remarks Presentation Outline

3. Slide No. 3/17 MIS: Basic Microfinance-Scenario To know at a given point. in time (stock data): 1.How many loan clients with outstanding loan (= active loan clients)? 2.How much accumulated principal outstanding (= Gross loan portfolio)? 3.How much of the active loans repaid in time (= Repayment rate)? 4.What is the difference between income and expenses (= profitability)? => Inventory; Summing up of transaction notes To know at about a given period …. of time (flow data): 1. How many loans have been disbursed (=active loan clients)? 2. How many loans have been repaid (= inactive loan clients)? 3. How many clients have taken a succeeding loan (= active loan clients)? 4.How much loan amount has been disbursed (= accumulated lending)? 5.How much loan amount + interest/fees has been (re)paid? 6.How much income and expenses have been incurred (= profitability)? => Summing up of transaction notes

4. Slide No. 4/17 MIS: Basic Microfinance-Scenario Sl.No.DescriptionCumulative 1.0 HUMAN RESOURCE 1.1 Total Number of Staff 979 1.2 Micro Finance 979 2.0 OUTREACH 2.7 Number of Members 250,688 3.0 MEMBERS 3.2 Number of Borrowers 212,048 5.0 PORTFOLIO 5.1 Number of Loan Disbursed 995,196 5.2 Amount of Loan Disbursed 4,715,550,255 5.3 Amount of Loan Repaid 3,681,167,416 5.4 Amount of Loan Outstanding 1,034,382,839 6.0 PERFORMANCE 6.1 Rate of Repayment 99.36% Grama Vidiyal Micro Finance (P) Ltd., Consolidated Monthly Project Statement as on FEBRUARY-2008 (excerpt)

5. Slide No. 5/17 MFI: Growth Scenario More Field Staff More Locations (branches, departments etc) More Clients More Transaction Notes More Back-Office Staff More Cash-flow -> More Liquidity Management

6. Slide No. 6/17 MFI: Growth Scenario More Field Staff More Locations (branches, departments etc) More Clients More Transaction Notes More Back-Office Staff More Cash-flow -> More Liquidity Management

7. Slide No. 7/17 MFI: Growth Scenario More Field Staff More Locations (branches, departments etc) More Clients More Transaction Notes More Back-Office Staff More Cash-flow -> More Liquidity Management

8. Slide No. 8/17 MIS: Growth Scenario The task: Provide timely and relevant data (= information) to manage smooth and steady growth

9. Slide No. 9/17 www.sa-dhan.org What data is relevant to managers, and also to funders? Management Information: People – Competencies needed vs. available? Effectiveness – Are we doing the right thing? Efficiency – Are we doing things right? Profitability – Are we making money? Opportunity – How can we do more of the right thing, do things better, make more money?

10. Slide No. 10/17 How timely is timely? Past Time Future Time Present Time Daily Real-Time Weekly Quarterly Annually Weekly Monthly Quarterly

11. Slide No. 11/17 How timely is timely? 1 st Rule of thumb: Cost of Risk versus Cost of Monitoring (note that monitoring includes data-management and using it) 2 nd Rule of thumb: When (point/s in time) are decisions made and by whom? 3 rd Rule of thumb: Are benchmarks available? Daily Annually Weekly Monthly Quarterly Monthly Quarterly Frequency Severity (“effect’)

12. Slide No. 12/17 MIS: Growth Scenario More Field Staff More Locations (branches, departments etc) More Clients More Transaction Notes More Back-Office Staff More Cash-flow -> More Liquidity Management Daily Annually Weekly Monthly Quarterly Monthly Quarterly Weekly Monthly Efficiency Rule: Collect only data you need; use all information you generate

13. Slide No. 13/17 MIS: Growth scenario Client PortfolioAccounts Governanc e Reports to - Funders, - board - Senior Mgt Reports to - Board - Funders, - Senior Mgt - Branch Mgt Reports to - Senior Mgt - Branch Mgt - Field Staff - Vision/Mission statement - Strategic Objectives/ Plan - Annual Business Plan Contact-, profile- livelihood-data Loan-, Savings- Data Accounting- data Reporting-, Decision Making Policies The four pillars of a comprehensive MIS

14. Slide No. 14/17 MIS: Growth scenario Sustainability and Profitability 3 Ratios* R1Operational Self-Sufficiency (OSS) R3Return on Equity (ROE)* Asset/Liability Management 5 Ratios* R4Yield on Gross Portfolio R7Debt to Equity Portfolio Quality 3 Ratios* R9Portfolio at Risk (PAR) Ratio Repayment Rate Efficiency and Productivity10 Ratios* R12Operating Expense Ratio* R14Borrowers per Loan Officer Total Expense Ratio Ratios recommended internationally (SEEP); benchmarked by Sa-Dhan *In addition adjusted version are suggested; also break up R12 by components is suggested

15. Slide No. 15/17 MIS: Growth scenario MIFOS – BRANCH REPORT

16. Slide No. 16/17 1.From your strategy, deduct SMART-targets (stock data) for 1- 3 years; from the SMART-targets, deduct growth targets (flow data) 2.Identify Decision makers (including monitoring) in charge of each (stock and flow) target 3.Define ideal report – relevant and timely data – for each decision maker 4.Define minimum report – relevant and timely data – for each decision maker 5.Choose MIS-solution based on the reporting requirements 6.Build your business processes accordingly and insistently Concluding Remarks 6 Steps to capture the MIS-requirements of a growing MFI:

17. Slide No. 17/17 I am looking forward to our discussion Thank you very much for your attention