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Benefits of Loan Portfolio Audit for MFIs
This note highlights the key benefits which Loan Portfolio Audit (LPA) has produced and has been prepared with the objective of further promoting its adoption amongst Indian MFIs. The note mentions the points which helped the MFIs which opted for LPA in India. Some of the benefits are—pin-pointing gaps in policy and procedure and solutions for these, identifying internal audit and control system risks and ways of reducing these, solving gaps related to MIS, supplementing rating reports, establishing transparency and enabling fund raising. However, the note reminds of the fact that LPA is primarily a diagnostic tool used to help MFIs target capacity building/institutional strengthening efforts and it does not use the findings to judge the quality of an MFI.