Sanchetna Financial Services Pvt. Ltd. This Document is CONFIDENTIAL and its circulation and use are RESTRICTED
Management of Sanchetna is run by young professionals and yet very experienced and qualified individuals with over 31 years of combined relevant management experience. The mandate of the organization is to reach the poor unbanked clients in some of the poorer states of India. The organisation has so far reached out to over 8000 families in 5 districts of Central Uttar Pradesh. Currently, it provides micro-credit services bundled with loan cover insurance. In the very first year of its operations, it was rated by M-CRIL. A year later (in 2010), it was upgraded to + . Particulars Detail Date of formation 8 th June 2008 Areas of Operation Uttar Pradesh Portfolio outstanding INR 43.5 Million No. of Members 9454 No. of Active Borrowers 7657 Number of branches 7 No. of Loan Officers 17 Portfolio At Risk > 30 days (%) 0.8%
<ul><li>Lokesh Kumar Singh- Managing Director: </li></ul><ul><li>Around 7 years of professional experience in different fields. </li></ul><ul><li>Led operational expansion at SKS Microfinance Pvt. Ltd. (India’s largest NBFC-MFI) between 2004 and 2007 in 12 states including UP, MP, Rajasthan & Bihar </li></ul><ul><li>Built and managed a loan portfolio of over Rs. 200 crores with 100% repayment rate </li></ul><ul><li>Recruited and managed over 1200 staff from field assistants to senior management MBAs </li></ul><ul><li>Postgraduate Diploma in Rural Management from IRMA, 2004. </li></ul><ul><li>Nagendra Singh Rajawat – Manager Finance & Accounts: </li></ul><ul><li>Around 7 years of professional experience </li></ul><ul><li>At HDFC Bank, handled clients of the Microfinance division of the bank in the Eastern India, including Bandhan, Arohan, Village Financial Services, RGVN (Rashtriya Gramin Vikas Nidhi) etc. Successfully exited from many unprofitable and defaulter clients. Later, looked after the Risk Management function for the Microfinance division of the Bank </li></ul><ul><li>Started & consolidated microfinance operations for SKS Microfinance Pvt Ltd in the state of Rajasthan </li></ul><ul><li>Postgraduate Diploma in Rural Management from IRMA, 2004. </li></ul><ul><li>Senior Management : </li></ul><ul><li>All senior staff (in all departments) have Field level microfinance experience in various geographies i.e. AP, MP, Jharkhand, Maharashtra, Odisha, Rajasthan, UP etc. </li></ul><ul><li>Are professionally qualified; and are Equity-holders in the company </li></ul>
<ul><li>Biswanath Swain – Manager Operations: </li></ul><ul><li>8 years of experience in microfinance operations in various geographies </li></ul><ul><li>Worked as City Manager with Nirmaan Bharati (NB) from Nov ‘06 to June ’08. Set up NB’s Varanasi operations acquiring 11,000 members, managing a loan portfolio of Rs. 8 crores & recruiting over 40 staff </li></ul><ul><li>Worked with Adhikar Microfinance since inception in 2003 to 2006; As Area Manager at Adhikar, helped acquire over 15,000 clients with loan portfolio of Rs. 2 crores & 99.9% repayment rate </li></ul><ul><li>Niraj Pareek – Manager Human Resources: </li></ul><ul><li>Around 4 years of professional experience in different fields. </li></ul><ul><li>As HR Analyst at Accenture India in Bangalore, recruited for over 150 different IT skill sets. </li></ul><ul><li>Was Area Manager at Nirmaan Bharati and looked after Varanasi and Dehra Dun operations. </li></ul><ul><li>Post Graduate in HR from XLRI – Accenture HR Academy, 2007. </li></ul><ul><li>Deepak Kumar Nay ak– Executive Internal Audit: </li></ul><ul><li>Over 5+ years of microfinance experience </li></ul><ul><li>Worked with various MFIs such as Adhikar, Biswa and Chaitanya </li></ul><ul><li>Worked in various functions such as Internal Audit, Operations, Finance and HR </li></ul><ul><li>Was responsible for managing the operations at Chaitanya in his last assignment </li></ul><ul><li>PG in NGO Management from EDII, Ahmedabad </li></ul>
<ul><li>Prabal K Sen, Professor-Economics, XLRI : </li></ul><ul><li>Prof. Prabal Sen has served as a senior public sector banker for over two decades. He has offered consultancy services, among others, to the Ministry of Rural Development, Government of India & SIDBI Foundation for Micro Credit. Also taught at Burdwan University & IRMA (Institute of Rural Management, Anand). </li></ul><ul><li>Rajesh K Aithal, Associate Professor-Rural Marketing, IIM Lucknow: </li></ul><ul><li>Rajesh is Fellow-IRMA. Rajesh has close to a decade of professional experience, in which three years are in sales and distribution and the remaining in teaching. </li></ul><ul><li>Sachi Shenoy, Innovations Manager, Co-founder, Upaya Social Ventures: </li></ul><ul><li>Sachi holds a B.A. in Economics and an M.B.A. in Finance and Entrepreneurship from the University of Chicago. Sachi has also worked at New York-based CDVCA, JP Morgan Chase, and Price Waterhouse LLP. Also worked as Innovations Manager at Unitus for about 4 years. </li></ul>
<ul><li>UP, Uttarakhand, Rajasthan, Bihar & MP are among the most populous states in India </li></ul><ul><li>They are also some of the poorest – almost 45% of India’s poor are in these states </li></ul><ul><li>However, microfinance penetration in these states is amongst the lowest in India </li></ul><ul><li>Therefore, starting Operations in UP was a result of a compelling business logic. </li></ul>Source: Sa-Dhan Microfinance Report 2008 State Total Microfinance Clients Share of state to total clients (%) State Population % share of population Number of Poor (2004-05) % share of poor Microfinance Penetration Index Microfinance Poverty Penetration Index Uttar Pradesh 3,613,118 6.10 180,990,000 16.43 59,003,000 19.56 0.37 0.31 Uttarakhand 337,625 0.60 9,123,000 0.83 3,596,000 1.19 0.69 0.48 Rajasthan 2,335,369 3.90 61,525,000 5.59 13,489,000 4.47 0.70 0.88 Bihar 1,455,981 2.50 89,776,000 8.15 36,915,000 12.24 0.30 0.20 Madhya Pradesh 1,312,668 2.20 65,605,000 5.96 24,968,000 8.28 0.37 0.27 Total 15.30 36.96 45.74 Comparison Andhra Pradesh 13,061,436 22.00 80,147,000 7.28 12,610,000 4.18 3.03 5.27
<ul><li>Western & Central UP </li></ul><ul><li>Population: Around 4.5 Million </li></ul><ul><li>Maximum of 3 other MFIs operating in these areas </li></ul>Source: Sa-Dhan Microfinance Report 2008 Proposed Expansion Area Current Area of Operation Microfinance Outreach in Uttar Pradesh Clients outreach 533,041 Portfolio outstanding Rs. 347 crore Number of districts served 36 Number of poorest districts 15
<ul><li>The loans given by Sanchetna are used for a variety of activities, which diversifies the risk to the portfolio. </li></ul><ul><li>About 16% of the portfolio is into livestock & Sanchetna has planned some business support around dairying. </li></ul><ul><li>Similar profiling in future would help Sanchetna to shortlist an activity for such business support. </li></ul>
<ul><li>Using in-house developed software from day One of Inception, therefore can be customized to accommodate newer products / services </li></ul><ul><li>Updated branch-level / field-level transactions on a daily basis </li></ul><ul><li>Client level records could be fetched </li></ul><ul><li>Portfolio-related transactions automatically get updated in the Accounting software </li></ul><ul><li>Trials of a new software which would be run over the web would start in April-11; using this, real-time data of the branches would be available; it would be fully rolled-out in 1 st of FY 2011-12 </li></ul>
<ul><li>Sanchetna gains valuable insights and inputs through collaboration with other best-in-class institutions, association with whom helps to build advisory, capacity building funding support and insurance needs for its core needs: </li></ul><ul><li>NABARD has provided us with a subordinated loan / tier 2 capital support as well as debt funds. </li></ul><ul><li>Trust Microfin Network (TMN) is our strategic partner and has been our oldest & biggest funder. </li></ul><ul><li>Ananya’s (formely FWWB) support during our initial stages has been instrumental in our continued growth. </li></ul><ul><li>HDFC Bank , the first private sector bank to get associated with us. </li></ul><ul><li>IDBI Fortis has partnered us to insure all the clients , while Birla Sun Life Insure is taking care of the spouses of the clients. </li></ul><ul><li>We have tied up with Reliance General Insurance for covering all our employees under the Personal Accidental and Health Insurance . The company has also done Fidelity and Cash-in-Transit Insurance to mitigate any theft or disaster. </li></ul>Key Partners
<ul><li>Around Sept-Oct’2010, crisis unfolded for microfinance organizations after an Ordinance was promulgated by the AP state govt. Subsequently, RBI (Reserve Bank of India) constituted Malegam committee. The committee has come out with the following recommendations: </li></ul>Recommendations Impact / Response <ul><ul><li>RBI to be the single regulator for the microfinance NBFCs. </li></ul></ul>Positive as it opposes dual regulation. <ul><ul><li>Minimum 85% assets into microfinance loan portfolio. </li></ul></ul>As Sanchetna does only microfinance, it already complies with this. Capping gross margin at 10%, interest rates at 26% p.a. & processing fee at 1%; no other charges to be levied Sanchetna reduced interest rates in the past one year from 29.25% to 27.2%, which is lower vis-à-vis many competitors. It still generates surplus at these rates, mainly due to a tight control over the Admin costs. Proposed monthly repayments (currently, it is weekly) would further unlock staff productivity & drive down the costs.
Recommendations Impact / Response For loans higher than Rs. 15000, tenor not less than 24 months Products will be tweaked accordingly <ul><ul><li>Annual income of client not to exceed Rs 60,000 in rural and Rs. 1,20,000 in urban areas </li></ul></ul>Self declaration is required which is part of the process <ul><ul><li>Loan cannot be more than Rs 25,000 </li></ul></ul>As most of the current loans are even less than Rs 15,000 only, this would not have any material impact on Sanchetna. <ul><ul><li>All loans without collateral </li></ul></ul>Unlike many other microfinance organizations, Sanchetna does not take any collateral / security for the loans. <ul><ul><li>At least 75% loans for income-generating purpose only </li></ul></ul>All of Sanchetna’s loans are for income-generation purpose only. <ul><ul><li>Repayment frequency not to be regulated </li></ul></ul>As Sanchetna would also be experimenting with monthly repayments, it may shift all its loans to monthly repayments.
Sanchetna Financial Services Pvt. Ltd. (SFSPL) Catalyst for change 5/82, Vipul Khand, Gomtinagar Lucknow, Uttar Pradesh- 226010 Tel / Fax: + 91 522 4076 350 Website – www.sanchetnaindia.com For more information, contact: [email_address] Visit us: We welcome you to visit our field areas to witness the impact of our work. To schedule a visit, email us @ [email_address] with details of your visit. We shall be happy to host you at Sanchetna