This note documents the progress made under the Action Research programme of MicroSave during 2006. It gives lessons which are derived from the applications of MicroSave’s toolkits on strategic planning, branding, risk management, process mapping, credit control and administration, customer service and pilot testing within ARPs. It stresses that market led growth is client responsive and highlights importance of good governance, strong communications, sound growth management, managing mission drift and regular inputs for building capacities.
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Institutionalising Risk Management for MFIs – Framework and Challenges
This note is based on MicroSave’s experience in developing risk management policies within its Action Research Partners (ARPs). It underlines a number of aspects that institutions seeking to adopt effective, proactive and integrated risk management must address—oversight shifts, formalising policies of risk management, enhancing scope of risks, proactive anticipation, monitoring and prevention of risks. Strategy, structures, processes and infrastructure are the essential components of risk management process of an MFI, mentions the note. It also suggests integrating process mapping and risk analysis and highlights the role of internal audit in management of risks.
The Credit-Deposit Ratio – Time for a Re-Think?
The Reserve Bank of India (RBI) issued an advisory note to Pubic Sector Banks (PSBs) for maintaining a Credit to Deposit ratio (CDR) of 60% in rural and semi urban branches continuously to reduce inter-regional imbalances in credit delivery. This note provides a critique of CDR as a yardstick of measuring bank commitments for serving the poor, instead it suggests to develop an alternative measure that calculates credit as per utilisation, which gives a far better picture of credit usage. It also proposes to build enabling environment for utilising the vast banking network in India, which provide unique opportunity to achieve the MDGs.
Microfinance – Meeting The Challenges to Realise the Potential
India has a vast banking network in the world. This note discusses about recent trends in the microfinance sector in India, which places a focus on efficiency, sustainability and need based product diversification. It provides evidence of existing gaps in Indian financial sector in meeting the financial needs of poor people through various studies. This note also gives learning from Indian experience in order to create an inclusive, competitive and vibrant financial system that offers high quality, client-responsive products and services to all sectors of society on a commercial basis.
The MicroSave-India Market-led Financial Services Programme
This note introduces the MicroSave-India programme. It provides an overview of governance, programme focus and about administration and budget of MicroSave’s intervention in India.
A Market-led Revolution – Equity Bank’s Continuing Story
Today Equity Bank is a remarkable institution. But in 1993, the Central Bank of Kenya confirmed that, as Equity Building Society, it was technically insolvent and had poor board supervision and inadequate management. Non-performing loans were 54% of the portfolio, and accumulated losses totalled KSh.33 million against a paid-up capital of KSh.3 million. Equity’s liquidity ratio stood at 5.8%, far below the required 20%.
This paper documents the history of this remarkable institution and assesses some of the lessons that can be learned by others seeking to follow its path.Equity’s progression from what was effectively a small family firm to a high potential organisation on to a high performing and now listed institution was not without challenges and struggles. While the paper provides the details of Equity Bank’s Strategic and Operational History, it mainly focuses on key lessons for those aspiring to follow Equity’s extraordinary trajectory
