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Technology for Microfinance Managers  Issues and Solutions <ul><li>RMEP 2008 </li></ul>BASIX August 2008
Micro-Finance reach in India <ul><li>Microfinance in India through its two major channels – SHG Linkage and MFIs – served ...
Demand of Micro-Finance services in India   <ul><li>Through all channels, reach is only 30 million </li></ul><ul><li>250 m...
Challenges in Micro Finance  <ul><li>High Volume of Financial Transaction but value wise very low </li></ul><ul><li>Majori...
Growing interest in Microfinance <ul><li>Private Investors and equity funds are now financing fast growing and nascent MFI...
Role of Technology in MFI   <ul><li>Transaction automation enables data capturing of business operations  </li></ul><ul><l...
Role of Technology in MFI   <ul><li>Micro-Finance involves large scale micro transactions, technology enables  </li></ul><...
WHY MIS? <ul><li>Good information system aids in better management of resources </li></ul><ul><li>Analyze target Vs achiev...
What MIS do we need? <ul><li>Loan Tracking </li></ul><ul><li>Ability to define loan products </li></ul><ul><li>Suitable fo...
<ul><li>Critical Information requirements of various stake holders  </li></ul><ul><ul><li>Field staff operations informati...
Field staff requirements <ul><li>Loans appraised/sanctioned Vs disbursement particulars  </li></ul><ul><li>Day wise collec...
Management Reporting <ul><li>Operating Summaries </li></ul><ul><ul><li>Weekly (Inflows & Outflows at branch level)  </li><...
Statutory Requirements <ul><li>RBI (Central Bank) Compliance Reports </li></ul><ul><ul><li>Delinquent loan provisioning/Ba...
Funding Agencies Reporting <ul><li>MIS reports as agreed at the time of Grant/Debt/Equity appraisal, as per the MOU </li><...
Portfolio Diversification <ul><li>Loan Products </li></ul><ul><li>Loan Activities  </li></ul><ul><li>Lending Methodologies...
Key elements of MIS <ul><li>Geographic Distribution </li></ul><ul><li>Responsibility Center Concept </li></ul><ul><li>Port...
Benefits of Technology <ul><li>100% Automation of all Business/ functional areas  </li></ul><ul><li>Integrity between oper...
<ul><li>How BASIX used Technology </li></ul><ul><li>  for MF services  </li></ul>
<ul><li>Adopted IT as a strategy and set up a IT division  (BASIX Information Technology Solutions for Livelihoods)   </li...
Devices Used for Automation of Field Transactions  Samruddhi Collection card BASIXPM BASIXiStation BASIXCollect
Proposed Blue Print of  BC Model & CSC @ MEGHALAYA Central  server Meghalaya Govt. SBI* BC MODEL CSC (Customer Service Cen...
HHT Desktop PC or Laptop Central Server Decentralized Server Head Office Unit / Branch Office Customer Door Step / Field O...
Key Learning's   <ul><li>Recruitment of cross domain (IT and Functional) specialists for managing software is always usefu...
<ul><li>Assess your MIS needs </li></ul><ul><li>Initiate the process  </li></ul><ul><li>Acquire good MIS </li></ul><ul><li...
Thank You Visit us www.basixindia.com
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Overview of mis mr. ramachandran

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  1. 1. Technology for Microfinance Managers Issues and Solutions <ul><li>RMEP 2008 </li></ul>BASIX August 2008
  2. 2. Micro-Finance reach in India <ul><li>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 </li></ul><ul><li>4 out of 5 microfinance clients in India are women. </li></ul><ul><li>Micro-credit portfolio of India Microfinance was </li></ul><ul><li>Rs. 22,000 crore </li></ul><ul><li>75% are accounted for by SHG Linkage, 20% by large MFIs and 5% by medium and small MFIs </li></ul><ul><li>SHG Linkage reports over Rs. 3,500 crore savings, only MFI Bank, KBS Bank reports about Rs. 40 crore savings portfolio </li></ul><ul><li>MFIs operate in 209 out of 331 districts of the country, 28% of the new clients are from Urban areas. </li></ul><ul><li>Source : Sa-dhan, Bharat Micro-finance Report,2008 </li></ul>
  3. 3. Demand of Micro-Finance services in India <ul><li>Through all channels, reach is only 30 million </li></ul><ul><li>250 million people live below poverty line </li></ul><ul><li>Rupee One lakh per individual needed for livelihood promotion, hence trillion of Rs needed </li></ul><ul><li>Penetration of life insurance services in rural India is <10%. Asset, health, weather and other general insurance services are still nascent </li></ul><ul><li>Micro savings and remittance products have huge potential under BC model </li></ul>
  4. 4. Challenges in Micro Finance <ul><li>High Volume of Financial Transaction but value wise very low </li></ul><ul><li>Majority of the financial transactions are off-site in nature </li></ul><ul><li>Geographic spread of operations and density of customers </li></ul><ul><li>Lack of infrastructure facilities like power, broadband etc </li></ul><ul><li>Unsecured lending and no documented financial history is available </li></ul><ul><li>Combination of above, lead to high operating cost </li></ul>
  5. 5. Growing interest in Microfinance <ul><li>Private Investors and equity funds are now financing fast growing and nascent MFIs </li></ul><ul><li>Some state governments are funding SHG-programmes </li></ul><ul><li>Govt. of India has appointed NABARD to manage the Microfinance Development & Equity Fund (MFDEF) </li></ul><ul><li>Microfinance Bill pending in Parliament </li></ul>
  6. 6. Role of Technology in MFI <ul><li>Transaction automation enables data capturing of business operations </li></ul><ul><li>Single set of data, multiple information to different stake holders </li></ul><ul><li>Standardization of product offering </li></ul><ul><li>Increases efficiency, reduces transaction cost </li></ul><ul><li>Reliability of information from branches </li></ul>Technology is an enabler for scaling up
  7. 7. Role of Technology in MFI <ul><li>Micro-Finance involves large scale micro transactions, technology enables </li></ul><ul><li>Reconciliation of customer, banker and other funders balances </li></ul><ul><li>Tracking of fund movements from/to branches </li></ul><ul><li>Detection of frauds and misappropriations </li></ul><ul><li>Audit trail of financial transactions </li></ul>Technology is a tool for risk monitoring
  8. 8. WHY MIS? <ul><li>Good information system aids in better management of resources </li></ul><ul><li>Analyze target Vs achievements, critical operational parameters </li></ul><ul><li>Motivate field staff and to create healthy competition, increase the efficiency of Human Resources </li></ul><ul><li>To strengthen financial performance </li></ul><ul><li>Plays vital role in strategic decisions, enabling course correction </li></ul>Right information at right time is key to success
  9. 9. What MIS do we need? <ul><li>Loan Tracking </li></ul><ul><li>Ability to define loan products </li></ul><ul><li>Suitable for different model of lending </li></ul><ul><li>Loan Disbursement and Repayments </li></ul><ul><li>Portfolio monitoring </li></ul><ul><li>Write Off & Re-scheduling </li></ul><ul><li>Social Performance Indicator Tracking </li></ul><ul><li>Automatic calculation of incentives loan officers </li></ul>
  10. 10. <ul><li>Critical Information requirements of various stake holders </li></ul><ul><ul><li>Field staff operations information </li></ul></ul><ul><ul><li>Management Reporting </li></ul></ul><ul><ul><li>Statutory requirements </li></ul></ul><ul><ul><li>Funding agencies reporting </li></ul></ul><ul><ul><li>Customer MIS </li></ul></ul>Information requirements of MFIs
  11. 11. Field staff requirements <ul><li>Loans appraised/sanctioned Vs disbursement particulars </li></ul><ul><li>Day wise collection statements </li></ul><ul><li>Loans overdue reports </li></ul><ul><li>Portfolio Performance Reports </li></ul>
  12. 12. Management Reporting <ul><li>Operating Summaries </li></ul><ul><ul><li>Weekly (Inflows & Outflows at branch level) </li></ul></ul><ul><ul><li>Monthly (Demand, Collection and Balances) </li></ul></ul><ul><li>Employee Performance Reports </li></ul><ul><li>Key Portfolio Indicators (Financial Health) </li></ul><ul><ul><li>Loan Outstanding & No. of A/C’s </li></ul></ul><ul><ul><li>Repayment % </li></ul></ul><ul><ul><li>Principal At Risk (PAR) </li></ul></ul><ul><ul><li>Non Performing Assets (NPA) </li></ul></ul><ul><ul><li>Aging Analysis of Overdue </li></ul></ul><ul><ul><li>Financial Ratios </li></ul></ul><ul><ul><li>First Time Overdue (FTOD) </li></ul></ul><ul><ul><li>Drop out customer reports </li></ul></ul>
  13. 13. Statutory Requirements <ul><li>RBI (Central Bank) Compliance Reports </li></ul><ul><ul><li>Delinquent loan provisioning/Bad debts Written-off details </li></ul></ul><ul><ul><li>Savings/Cash Security Particulars </li></ul></ul><ul><li>Financial Accounting Statements </li></ul><ul><ul><li>Borrower/Member Sub-ledgers and balances </li></ul></ul><ul><ul><li>Secured/Unsecured loan portfolio details </li></ul></ul><ul><ul><li>Income (Interest earned on loans) particulars </li></ul></ul>
  14. 14. Funding Agencies Reporting <ul><li>MIS reports as agreed at the time of Grant/Debt/Equity appraisal, as per the MOU </li></ul><ul><li>Key Indicators of the operating period </li></ul><ul><ul><li>Portfolio Indicators </li></ul></ul><ul><ul><li>Growth Indicators </li></ul></ul><ul><ul><li>Outreach Indicators </li></ul></ul><ul><li>Stock Statements </li></ul><ul><li>Any other information that they may ask from time to time.. </li></ul>
  15. 15. Portfolio Diversification <ul><li>Loan Products </li></ul><ul><li>Loan Activities </li></ul><ul><li>Lending Methodologies </li></ul><ul><li>Joint Liability Groups </li></ul><ul><li>Self Help Groups </li></ul><ul><li>On-lending </li></ul><ul><li>Direct Lending </li></ul>
  16. 16. Key elements of MIS <ul><li>Geographic Distribution </li></ul><ul><li>Responsibility Center Concept </li></ul><ul><li>Portfolio diversification </li></ul><ul><li>Lending Methodologies </li></ul><ul><li>Efficient portfolio monitoring Reports </li></ul><ul><li>FTOD, Drop out customer reports </li></ul>
  17. 17. Benefits of Technology <ul><li>100% Automation of all Business/ functional areas </li></ul><ul><li>Integrity between operations modules to Financial accounting </li></ul><ul><li>High Data security and inter-operable </li></ul><ul><li>Flexible Loan/Savings/Insurance product definitions and its revisions </li></ul><ul><li>Automated Loan Documentations </li></ul><ul><li>Tools for controlling and effective monitoring </li></ul><ul><li>Various MIS reports for analysis from field level to top Management. </li></ul>
  18. 18. <ul><li>How BASIX used Technology </li></ul><ul><li> for MF services </li></ul>
  19. 19. <ul><li>Adopted IT as a strategy and set up a IT division (BASIX Information Technology Solutions for Livelihoods) </li></ul><ul><li>Appointed a IT partner for development support </li></ul><ul><li>Recruited IT and Domain specialists </li></ul><ul><li>Conducted detailed system study and followed SDLC process systematically </li></ul><ul><li>System audit conducted at different levels of development and implementation. </li></ul><ul><li>Ensured constant year to year operations productivity improvements </li></ul><ul><li>Revised business strategies are aligned with MIS </li></ul>Harnessing IT for MF services
  20. 20. Devices Used for Automation of Field Transactions Samruddhi Collection card BASIXPM BASIXiStation BASIXCollect
  21. 21. Proposed Blue Print of BC Model & CSC @ MEGHALAYA Central server Meghalaya Govt. SBI* BC MODEL CSC (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
  22. 22. HHT Desktop PC or Laptop Central Server Decentralized Server Head Office Unit / Branch Office Customer Door Step / Field Office / POT 4 3 2 1 V SAT / Internet GSM / CDMA BASIX IT Architecture Mobile Integrated with biometric device
  23. 23. Key Learning's <ul><li>Recruitment of cross domain (IT and Functional) specialists for managing software is always useful </li></ul><ul><li>Content with having the MIS meet 80-90% of information needs </li></ul><ul><li>More complex MIS less likely to work </li></ul><ul><li>Be practical in your thinking </li></ul><ul><li>An MIS will not meet all the flexibility hoped for </li></ul><ul><li>Run parallel manual accounting/MIS for the first six months </li></ul>
  24. 24. <ul><li>Assess your MIS needs </li></ul><ul><li>Initiate the process </li></ul><ul><li>Acquire good MIS </li></ul><ul><li>Adopt IT in your business </li></ul><ul><li>Make your work simple .. </li></ul>Our suggestions
  25. 25. Thank You Visit us www.basixindia.com
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