Presentation by

Pushpraj Agrawal (07305011)Rupsha Banerjee (06808011)

Overview of why Bangladesh is a success

o Technology was socialo Built strong enforcement structureso Is now building new technologies using IT for better contacts with

borrowers and monitoring repayments

MF has an outreach of 48 million poor in Asia

2005 was declared as the year of Microcredit by the UN

Has two models of lending

o Group Lendingo Individual Lending

Has been seen as a successful interventionist strategy in rural India

Yet to take off in a big way in urban India

Data source: NCAER

18%

37% 26

%4%

16%

Formal Semi – Formal Informal 1-on-1 personal

Banks, Insurance

co.s

Microfinance Institutions

Employers, relatives,

neighbors. friends

Moneylenders, pvt

financiers

Informal mutual (Chit funds )

High growth India: $4 million lent (1995-96) to >$2.8 billion (2006-07)

High potential growth India: Market size estimated at $16-22 billion

Large outreach India: >33 million Housholds

Large number of players India: >3000 MFIs

Source: MSR India 2007

Main Areas of Intervention in Management of MF

Introduction of adequate risk management Tools

Reduce operational costs with automation

Deploy the above with low cost & wide access technology

Risk Management Tools

Streamlines the lending process and lower costs

oReduces time and manual steps in processing each application

oReduces number of applications needing manual review

o Reduces training time for new credit staff

oImprove loan officer efficiency (reduce time spent on collections, which in some markets claim up to 50% of loan officers’ time)

oIncrease lending volume

oApprove 10-30% more applications keeping loss rate unchanged

o Enables risk-based pricing

Better quantified expected losses for different risk classes of borrowers

Credit Scoring

A method by which data are used to predict a particular outcome of interest. The score represents an estimate of the probability or odds of an event occurring, such as the probability of default.

Role of ICT

Management Information Systems (MIS)

Mobile Computing

Branch Office Franchise model

Card Services, EFTPOS and ATM's

Internet Banking

Management Information Systems

For the Microfinance Providers (MFP)

To monitor the quality, sustainability and efficiency of its loan portfolio,

To monitor development impact,

To manage general administrative tasks

...Grows with the institution

Colour outside the lines

Present MIS

...Grows with the institution

Has its roots at the "Uganda Women's Finance Trust" where it was initially developed as the "Trust Information System“

Took 3 years to develop from 1995-98

Affordable entry price (free below 500 portfolios)

Best suited for small and medium MFIs (5,000 – 20,000 loan portfolios and upto 1,00,000 savings portfolios)

Windows 2000/XP compatible

Minimum Requirements: 64 MB Ram, 800x600 screen resolution, A4 printer.

General LedgerGeneral LedgerAll Financial StatementsAll Financial Statements

BudgetingBudgetingAssetsAssets

Sales & PurchasesSales & Purchases Export to Other Export to Other

Accounting PackagesAccounting Packages

Foxfire Report GeneratorFoxfire Report Generator

Client HandlingClient HandlingIndividual ClientsIndividual Clients

BusinessesBusinessesGroupsGroups

Group MembersGroup Members

Savings Savings 100 Savings Products100 Savings Products

Time-DepositsTime-Deposits

Loan Portfolio Loan Portfolio Tracking of Group Tracking of Group

AccountsAccounts

Linked to Savings Linked to Savings or Shares or Shares

Printing of Loan ContractsPrinting of Loan Contracts

o Flexibilityo User friendlyo Can be easily customizedo Affordable

Is multilingualo English, o Frencho Spanish

Strategy adopted while creation LPF

It can generate reports for both individual and group borrowers along with repayment schedules

Automatic booking of standard transactions.

Generates Reports on :o Budget Trackingo Quarterly Performanceo Profit per Period/Surpluso Cash Flowo Trial Balanceo P&L Statements o Balance Sheets

Allows for creation of your own reports which is generated through FoxPro

mifos: The Open Source Proposal

...a Grameen Foundation Initiative

A freely available world-class management information system (MIS)

Provides the core functionality required by microfinance institutions.

The flexibility and scalability of the product means that we'll be

o able to simultaneously standardize common processes

o accommodate regional variations

o scale for new innovations in the future

...cont

Total 5 deployments:

Grameen Koota - India

ENDA - Tunisia

Jitegemea - Kenya

Fundación Adelante - Honduras

IIRM - India

mifos: The Open Source Proposal

Grameen Koota - Bangalore, India

Mifos Specialist : MFTech

Project Champion: Suresh K. Krishna

Project Manager: Naganand Kumar

Mifos Specialists: MFTech and IBM

Number of clients: >100,000Number of branches: 44Status: all branches live

Implementation Status * Total Branches -- 44 * Running live in centralised server -- 27 * Running MIFOS locally -- 17

IIRM (Institute for Integrated Resource Management) - Tezpur, India

Project Champion: Dhattatreya Hosagrahar

Project Manager: Noel Anil

Mifos Specialist: Profound Infotech

Number of clients: >7,000Number of branches: 6Status: Deployment now underway

...contmifos: The Open Source Proposal

Mobile Banking

WIZZIT (South Africa)

M-Pesa (Kenya)

ICICI (India)

“The large scale spread of mobile telephony has opened up new vistas for banking in the form of mobile banking and the potential in this new sphere is enormous; adequate steps to ensure safety and security in a mobile based computing / communicating environment have to, however, be made.”

RBI’s Financial Sector Technology Vision: 2008-2010

o “A bank in your pocket“

o “The easy way to pay“

o No minimum balance requirement

o Variable monthly fees

o Pay as you go model

o Markets via WIZZ-Kids

WIZZIT study

References

www.cgap.org

http://www.microfinancegateway.org/resource_centers/technology/iss_software/?iss_orderby=rating

http://web.worldbank.org/WBSITE/EXTERNAL/WBI/WBIPROGRAMS/FSLP/0,,contentMDK:21368529~pagePK:64156158~piPK:64152884~theSitePK:461005,00.html

http://www.loanperformer.com/

http://www.mifos.org/about/open-source-technology

Thank You