1. COO Workshop Introduction and Overview July 13, 2012

2. Agenda Saturday – LO Performance Management (Diego & Bijan) Review of Village Banking 2.0 procedures and planning of subsequent pilots Agricultural-Small Group Lending (Anthony) Sunday – Review of Regional Credit Manual Template and implementation planning Monday – Career Path and Training Curriculum (Sergio) Second semester work plan for Training Managers (Sergio)

3. Village Banking 2.0 Quick Overview

4. Fundamentals Relies on the formalization of existing social relationships. Designed to provide the lowest-income entrepreneurs with working capital loans, without requiring collateral or credit history. Based on solidarity – the camaraderie, shared interests, needs, and responsibilities – which serves as “collateral” for these loans. Minimum eligibility requirements. Targets the poorest working entrepreneurs. LOs trained to actively create and encourage group solidarity and accountability. LOs use illustrated stories and new Meeting Manuals to ensure consistent product presentation.

5. Product Matrix Loan amount/clientUS$ 50-US$ 1,000 1st Cycle loan amountUS$ 50-US$ 300 Loan Term3-12 months 1st Cycle Loan TermUp to 6 months Group size9-25 Payment frequencies28 days Loan purposeWorking/fixed capital or mixed investment Interest rate (declining), per month3%-5% Disbursement fee3%-5% Late Payment Fee50% of interest rate Time living in community12 months Home visit before CC by LO requiredYes, for all new clients. Business EvidencesNo Frequency of LO visits to clientsRegular group meetings CM/CTL must be present in credit analysis?CTL must be present in all Approval Meetings. Premature repayment accepted[Country Specific] Fee for premature repayment[Country Specific] Premature Recapitalization accepted[Country Specific]

6. Interest Rate Levels Incentives for strong repayment and large groups! Purpose: to promote good payment behavior and growing group sizes while encouraging the Directiva to fulfill its additional responsibilities. Requirements: All new groups receive first loan at Interest Level III For Level II, a VB must: have repaid previous loan with ≤ 2 late installments, none being > 7 days late and have ≥ 14 members. For Level I, a VB must: have repaid previous loan with not ≤ 2 late installments, none being > 7 days late and have ≥ 20 members. Interest Rate Level# of Group Members Group Interest Rate Directiva Interest Rate I20-253.5%2 % II14-194.5%3 % III9-135%4 %

7. Client Ratings Establishing maximum loan sizes Function: Ratings provide a ceiling for personal loan increases per cycle. How they are calculated: Ratings are based on clients’ personal repayment quality/behavior as tracked in the FINCA MIS. Note: Clients can only improve their rate by one level per cycle. Moreover, VB Members reserve the right to approve lower – but not higher – loan amounts. Client RatingNr of Late Installments*Max. Loan Increase AA≤ 130% A≤ 210% B≤ 3Same or lower amount C> 4No refinancing *If one quota is late for >7 days, then next lower level applies and no improvement of client rating in that cycle is possible

8. Current Pilots Haiti and Nicaragua forging the way! Haiti Hired 9 new Loan Officers. Conducting Pilot in the Jacmel Branch. Training began Monday, July 9 th ! Nicaragua Retrained 4 experienced Loan Officers and hired 4 new ones! Retrained 2 experienced Supervisors! Conducting Pilot in the Bello Horizonte and the Chinandega Branches. Already formed 18 groups!

9. Upcoming VB 2.0 Pilots Planned Implementation for Q4 2012 and Q1 2013 Q4 2012 October – begin pilot in Guatemala and Honduras November – begin pilot in Ecuador Q1 2013 El Salvador

10. The Credit Department Manual Template

11. Background Based on Azerbaijan Lending Manual and other documents from Eurasia Reviewed and edited by team made up of regional COOs, Internal Control, and HUB staff Includes all relevant credit department policies and procedures Serves as a regional template, to be adjusted to fit each countries needs – adjustments will be approved by HUB before implementation

12. Implementation Plan 3 Step Process to Full Implementation Level 3: Training, Implementation and compliance Region-wide training of all Credit Department employees on CDM Written tests on knowledge and understanding of CDM Internal Control compliance review and report Level 2: Region-wide implementation of all remaining Policies and Procedures Subsidiary review and proposal of adjustments due for HUB approval by 30 November 2012 Adjusted Manual submitted for BOD approval by 15 December 2012 Training and Implementation in Q1 2013 Level 1 - Region-wide implementation of Key Lending Policies Subsidiary review and proposal of adjustments due for HUB approval by 30 September 2012 Adjusted Manual submitted for BOD approval by 30 October 2012 Training and Implementation in Q4 2012

13. Agricultural Group Lending Update

14. AG-SGL Update Current Situation & 6 month plan As of May 2012: Current Portfolio: $305,057 Clients: 745 clients Average Loan: $381 13 LOs; 2 Product Managers Evaluation of FINCA Pilots Nicaragua Field Visit Honduras Field Visit Review and Report Consolidate Methodology Regional Credit Documents Regional Training Materials Review and Report Guatemala Pilot Market Study Branch Selection Hiring and Training Product Adjustments and Roll Out Review and Training Follow-up Training Adjustments and Rollout First Level Review

15. AG-SGL Timeline Evaluation of FINCA Pilots July 2012 Consolidate Methodology August 2012 Guatemala Pilot September – November 2012 Review of Results and Additional Training December 2012