The Sri Lanka based MFI, Arthavida Foundation (AVF), a sister concern of Arthacharya Foundation (AF), approached MicroSave seeking consulting to improve its portfolio quality. Until 30th June 2011, AF was engaged in both microfinance and non – microfinance activities. In June 2009, the PAR (>30days) of AF stood at an alarming 24%, which further rose to 40% by June 2010. The active loan clients and loan portfolio outstanding had also gone down. AF decided to transfer its microfinance operations to AvF on July 1, 2011. However, AVF faced severe challenges of improving portfolio quality. Rabobank Foundation, commissioned MicroSave to offered the technical support in 2009.
On account of the technical assistance and proactive implementation by AvF, amongst several efficiency and productivity gains, the PAR (>30 days) was systematically reduced from 40% to 5%, within a short period of two years. This case study covers the challenges of AF and how a tripartite approach of intense engagement of a donor/investor, financial service provider and MicroSave came together to successfully address the problem of delinquency.


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