Test Case Grameen Koota (A)1

Grameen Koota (GK), the microfinance programme of the T Muniswamappa Trust, was headquartered on the outskirts of Bangalore, in India. The Trust had other activities such as education and solid waste management. Within the Trust, microfinance was a major activity with exclusive staff. GK had a 13-member Governing Board that was, in the legal sense, ‘informal.’ The fifth annual general meeting of this Board met on 7th August 2004, and reviewed past performance (Exhibit 1). The CEO, Vinatha M. Reddy, then presented the plan for the next five years. (Exhibit 2). There was momentary silence. Financial Services for the Rural Poor in India Despite several decades of state-directed intervention, huge gaps remained in the supply of financial services for the poor in India. In 2003, some 59% of the entire rural population had no deposit account, and 79% had no credit account with the formal financial sector (according to a Rural Finance Access Survey of the World Bank). For very small farmers the percentages were 70% and 87%, for deposit and credit accounts respectively. Similarly, there was a large gap in remittance services for the poor. Insurance penetration was also relatively low. Over the three decades ending in 1990, a huge banking network had been built in India. Commercial banks, cooperative banks, and Regional Rural Banks had between them over 100,000 branches. Directed lending built loan portfolios in the agricultural and other ‘priority’ sectors, but at the expense of quality. The banking sector began cleaning up its act after the Indian economy ‘opened’ in the early nineties. In 1999, the non-performing assets of the so-called ‘priority’ sector advances (dominated by agriculture) were about 10% higher than that of the non-priority sector (which itself was 15%). Agricultural growth in the nineties was less than half the annual overall GDP growth of over 6%. The share of rural credit (in overall credit) fell from a peak of 15% in 1991 to 10% by 2003. However, the inability of mainstream banks to reach the poor provided space for new organisations. The dominant form was the self-help group (SHG). Numerous SHGs were established by not-for-profit organisations and (less often) by banks. A typical SHG was a group of 15 to 20 members (usually women). Each SHG functioned as a micro bank, with savings and loans accounted for in the books of the SHG. An SHG could link to a mainstream bank and borrow. There were also a few new microfinance institutions (MFIs) that imitated the Grameen model (pioneered by Grameen Bank, Bangladesh). 1 Case prepared by Annapurna Neti (doctoral student) and R Srinivasan (Professor, Finance and Control Area), Indian Institute of Management Bangalore (IIMB) as the basis for classroom discussion rather than to illustrate effective or ineffective handling of an administrative situation. We acknowledge the generous support of the Microfinance Management Institute Washington (a joint initiative of CGAP and the Open Society Institute), provided through the Centre for Financial Markets and Institutions: Microfinance Group at IIMB.

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The regulatory framework made it difficult for MFIs to operate. A formal bank, that could provide a wide range of financial services, required a minimum equity capital of Rs 2 billion. A Non-Banking Finance Company (NBFC) required a minimum equity capital of Rs 20 million. Such an NBFC could lend but not accept deposits until it had been operational for several years and obtained a credit rating. The Indian central bank, the Reserve Bank of India (RBI), had signalled that it intends to move to a regime in which no NBFC would be allowed to raise deposits. The Cooperative Societies Act (at the state-level) was, in general, user unfriendly, vesting as it did significant control with the State. A version of the act (the Mutually Aided Cooperative Societies Act) was somewhat friendlier. In the few years ending 2004, there were some spectacular failures of relatively large cooperative banks. A very small bank could function as a ‘trust’. Such a bank operated in a grey area of legislation, as the legality of a trust raising deposits and lending was unclear. A bank would find it difficult to operate at a large scale as a trust. There were a few larger MFIs that used a combination of organization forms. One example was to use Mutual Beneficial Trusts (MBTs) to raise deposits from clients; these funds were then lent to an NBFC that, in turn, lent to clients. An MBT was not a public charitable trust (the usual form of trusts) but a private trust with a settler (usually an employee of the MFI). The state of Karnataka, where GK operated, did have its own share of the poor, with over three-and-a-half million households below the poverty line. This was the state that pioneered the concept of SHGs. However, even in 2004, apart from GK there was only one other Grameen Bank replicator in Karnataka. In the Beginning Vinatha Reddy had this to say about GK’s conception, “I trained to be a Montessori teacher, and eventually I moved back into Avalahalli village, close to Bangalore, to which I belong. Around the year 1995, my grandmother set up a trust in this village and my sister and I both thought that we should open a school for the village children and people from the locality. Sometime later, I read Alex Count’s book Give Us Credit. I found it very, very moving, and was so inspired that I wrote to the author, and said, ‘please give me some more information’. After a couple of months I got a letter from Prof. Yunus (founder of Grameen Bank, Bangladesh) himself, and I couldn’t believe it. He said that he was delighted to know that I was interested in the work of Grameen Bank, and he gave me the addresses of two Grameen replicators in India, ‘Share Microfin’ and ‘ASA’, and he also invited me to their Dialogue Programme. “I visited SHARE (in Hyderabad) and met with Udaia Kumar, he gave me a whole lot of literature. Then I took a train to Trichy, and visited ASA. This was before going to Bangladesh for the Dialogue Programme, and I came to know that Udaia was coming for the same Dialogue Programme as a resource person, so again I met him there and spent a lot of time. He gave me a lot of tips and ideas and mentoring at those meetings, we had in Dhaka.

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“After that I kept in correspondence. I used to keep writing letters, and the Grameen Trust asked me to apply to RBI – all those things were going on. And in March 1999 I got a letter saying that they have approved the Seed Capital Funding of US $35,000 . Then in April of that year school closed in the first week, and I was free to go about hiring staff. I had about 10 or 11 applications, and finally hired Suresh (currently the COO). Suresh has a master’s in sociology and a postgraduate diploma in computers. Suresh recollected, “ I didn’t actually think of micro-credit or anything, I had something else in my mind, because earlier to this I was also doing various other things…I was running my own small enterprises unsuccessfully! But then also I did have a little bit of exposure to development. But when I met Mrs Vinatha, after that it was a different thing. She talked about Grameen Bank and all that, and some of the things that she said at that time about rural poverty triggered something, and I agreed to join her.” Vinatha Reddy continued, “I think the initial staff hiring is critical, I know of another MFI where that went wrong. I rang up Udaia. He said, ‘never ever appoint just one person. You should always take in twos because you will be spending so much time with them, and if that one person leaves then you are back to square one’. He was conducting an MFI workshop for three days in SHARE, so he said, ‘by tomorrow evening, you hire that other person also and put them both on the bus to Hyderabad, let them attend this workshop’. So I just had 24 hours to get the other person. I called up a family friend and told him, ‘see I am on the lookout for somebody who has a B.Com background, can you figure out if you have anybody?’ So he said, ‘Amma, why don’t you take my nephew’. His nephew is Gopal, (now an Area Manager). “With these two in place, we hired a couple of more junior staff and started microfinance activity in two places simultaneously, Avalahalli itself, and in Kareyenahalli about 30 kms away on Kanakapura road. In Avalahalli we had the advantage, because everybody knew the school the Trust ran. Kareyenahalli was completely new to us.” According to Suresh, Kareyanahalli gave GK strength. The challenges faced there are those that recurred in other villages. “People were hesitant; they didn’t know who we were.” But once GK had worked in two villages their confidence level had gone up and a master plan was prepared. The Grameen Trust money effectively supported the first year of operations. Initially Avalahalli was effectively the Head Office and the branch. In December 2000, the first branch was opened in Kanakpura headed by Gopal, and another branch started in Kaggalipura by March 2001. Suresh recalled that by then, GK knew how many branches would be opened in the next five years. Suresh felt that their confidence in scaling-up came after their fourth branch had opened. “Our third branch came up with more capacity at one go. Like, we had full-fledged staff, all the infrastructure, right from day one of the branch; including vehicles; operation manuals; trained staff. Before that we also started the training of the staff. We had our training wing; we had developed a training manual; we have a one-month long training course. So once we did that, the fourth and fifth

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branches came up very quickly. Even now, for us to open a branch anywhere is easy – within one month the branch would be operational.” The Current Structure and Operations The organisation structure of GK is in Exhibit 3. In addition to the CEO and COO, there were two Area Manager positions (one yet to be filled) and a Programme Officer (responsible for branch computerisation). Branch Managers headed individual branches, supported by Field Officers. At the Head Office in Avalahalli, Hari Darshini, an electronics engineer from Regional Engineering College, Warangal, looked after planning and monitoring. Manorama looked after the insurance requirements of GK and also conducted insurance workshops for the members of GK. Nityanand, with a masters in commerce, was Manager in the finance department. GK hired a graduate from the Institute of Rural Management, Anand who joined in May 2004 and left in after a few months. GK also invested time on accounting systems. M-CRIL (a rating agency) commented in 2003 that the accounting system was good. GK was a Grameen replicator, with field staff located at branches and clients organized into Kendras (centres) each consisting of 6-8 groups of 5 women. GK Branch Operations Each Area Manager was in charge of six branches. These branches also had Branch Managers or Assistant Branch Managers in addition to four Kendra Managers (KMs) and a peon-cum-cook. The Area Manager visited each branch at least once in 10 days or whenever necessary. The branch offices were office-cum-residences. GK also employed a cook at each branch and provided necessary furniture including kitchen utensils, beds etc for its employees. All the KMs were provided with 2-wheelers. Typically a GK branch functioned as follows:

• Kendra meetings were conducted early in the morning (some may be conducted in the evenings from 4.00 pm onwards) to accommodate working women. The KM went to the meeting with a collection sheet to record the details of repayments and savings of the Kendra members. GK loan application and disbursement forms were also taken. A Kendra leader and secretary were selected from the members to assist the KM in collection of savings, maintaining passbooks, etc. All Kendra meetings followed a fixed schedule (pledge, attendance, collection of savings and loan repayments, loan applications, loan disbursements etc).

• Each Kendra meeting usually went on for an hour. A KM conducted 2-3 Kendra meetings in the morning. GK did not follow all Grameen practices, but was very

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similar in operation to SHARE. GK dropped the saluting and callisthenics, used by Grameen. Nor did GK require members to come to a branch for a loan.

• After the Kendra meetings were conducted, the KM returned to the branch and the cash collected for the day was handed over to the cashier. Disbursements for the next day were estimated and any balance cash was deposited in a bank the same day. All the registers and records pertaining to a particular Kendra were updated on the same day after the Kendra meeting. Training for new groups was usually conducted in the evenings.

• Two of the KMs in each branch took the responsibility of Cashier and Accountant respectively for a period of 3 months each.

Each GK branch maintained a number of records (General Ledger and Day Book, disbursement register, etc.). The members were issued passbooks that are updated during the Kendra meetings. Branch Mangers were paid a monthly salary ranging between Rs. 3000 and Rs. 5,000, while KMs were paid around Rs. 2,000. KMs were also entitled to an incentive linked to the number of groups formed in a month (Rs 250 for the first, stepped up by Rs 50 for each additional group; with an additional incentive of Rs. 100 if the group was very poor). Staff are typically male with a pre-university (higher secondary) educational qualification. The GK Groups The groups functioned as follows:

• After the GK opened a branch in a taluk, it was the responsibility of the Area /Branch Managers and KMs to identify the groups and form Kendras. This was done by undertaking village surveys. The villages were usually located within a radius of 20 kms. from the branch. Once a particular village was selected, 2-3 informal meetings were conducted with some people from the village. Then a formal meeting (called a projection meeting) was conducted where everyone in the village was invited and the procedures of GK and the rules and regulations were explained.

• During subsequent visits basic information was collected from interested women, who had formed groups of five. This was done in a prescribed format. Husbands and elders in the members’ families were also informed about the GK procedures, group responsibility etc. The GK focus was on the very poor.

• Compulsory Group Training (CGT) was conducted for 2-3 groups at a time for a period of one week. After the CGT, a Group Recognition Test (GRT) was conducted by the AM.

• Six to eight groups were formed into a Kendra and Kendra meetings were held as per mutually agreed time and place.

A summary of the steps involved in Kendra / group formation and subsequent follow-up is given below:

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Vinatha believes that a GK employee needed, “to be really committed. And then I think he needs to be having a lot of patience and constancy in that commitment – he cannot be committed and inspired for six months and then lose that. And I think we have to take good and fair decisions at all times. I think that was one of the main things in Grameen Koota – we have always taken the right decisions. Yes, I think we have very good values here in Grameen Koota. And, I think the staff also, the teamwork and staff are very important. Building up a relationship with them is very important.” Suresh added, “We need to practice what we preach. Like, when we say that we have to start the meeting at 7 o’clock in the morning, we need to be there at 7.00. If we were not doing that, then our staff would not have imbibed that at all.” Vinatha continued, “We have terminated the services of just three employees over the last few years. One was drunk in the branch, and he took our new vehicle and had an accident. In the other case, there was some fraud in the branch. Till today, we don’t know whether he has committed it, but he was responsible for some mess up over there. The amount of money was nothing much…we can’t call it a fraud, but basically he was not able to justify what he did, and also he started lying to cover that up. So that is what we didn’t like. And he was a member’s son also, but still we terminated him.” “ We have always been very strict, and when it comes to dealing with members, discipline is very important. We have been very, very strict on that. If their behaviour…because we work mostly with women, and we also know that if those core values are not carried by any of our people, then it is not to our advantage,” said Suresh. The Grameen model required significant interface between the members and GK staff. Suresh said, “That is one thing we have been very clear about, right from day one; we never took the decisions pertaining to the Kendra. We always facilitated discussions with them, but whatever the decision was, it was the krndras. We never imposed any decision on them – even for the loans, whether to issue or not to issue, neither of us has any control over that.”

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Financial Services GK provided a number of loan and savings products (see Exhibit 4). There was also a loan-linked insurance product, the Emergency Fund. In case a member died, this fund was used to both settle the loan and cover funeral expenses. As GK began providing financial services it did face problems from moneylenders. In addition, one formal competititor, the State government supported Stree-Shakti launched an official complaint against GK. There were GK members who simultaneously also belonged the Shree-Shakti groups. “Initially we were a little apprehensive,” said Vinatha, “and we were trying to weed out those who are already in Stree-Shakti, and then we realized that we shouldn’t be doing that.” When asked about client dropout, GK clarified that there could be individual or group drop-outs for range of reasons − migration of the client, family disputes, misunderstanding within the group, and difficulty in finding a fifth member so that the group becomes ineligible for a loan. An entire Kendra may dropout happens if, for the reasons cited earlier, the number of members in a Kendra drops to less than ten. Funding Exhibit 5 contains recent sources of funding. With growth came the hunt for funds. Vinatha recollected, “The Economic Times carried an article saying that HDFC (Housing Development and Finance Corporation) was funding NGO-MFIs. The first loan that we got from a commercial bank was so easy – three lakhs they gave so easily and within 15 days, and they also gave toilet loans. We exhausted that money, and then again we applied to them for 20 lakhs. At that time it took a little longer, and then Mr. Nagendra said, ‘you have to give security’. And even though we were so naïve, and it was the beginning, I don’t know how we had enough sense to tell him, ‘OK, today for 20 lakhs we will give security, but tomorrow we will ask for 50 lakhs, then what security will we give?” And he bought that argument, and he gave us the next 20 lakhs also. After that then we got a Grameen Trust scaling up fund, and Friends of Women’s World Banking (FWWB), which was relatively easy. But there was a terrible fund-crunch for almost one year. A couple of banks were terribly slow and the experience was traumatic.” Subsequently, GK raised funding from a number of sources. GK had more recently has had Rs. 30 million approved under the ICICI Partnership model. Under this model, money for on-lending to clients at GK interest rates would be made available by ICIC at interest rates of 9% to 10% per annum. While GK was responsible for microfinancial services like identifying clients, disbursing loans and collecting repayments; the client loan portfolio formally remained on ICICI’s books.

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Performance Financial statements are in Exhibit 6. Branch-wise performance is in Exhibit 7. The portfolio-at-risk (PAR30) of GK was zero in 2003 and 2004. According to the report prepared by M-CRIL, a staff member, in the average Grameen replicator in India (in 2003), served 144 clients and managed a loan portfolio of about Rs.0.50 million. Such an average Grameen replicator earned a yield of 35.6% on the loan portfolio, had an operational self sufficiency ratio of 103% and a financial self-sufficiency ratio of 91%, and had a PAR60 of 2.6% (this for all Indian MFIs was 11.2%). Vinatha had this to say about the first major loan related problem GK faced. “Actually one of our good members, belonging to our first Kendra, she was the secretary of that Kendra – she ran away. And that really hit us hard, she eloped with someone, and her husband was so hurt about that, that he committed suicide; left behind two children – it was very, very traumatic. We didn’t know how to handle it. People started saying that her husband was going to repay. When he passed away, they said, ‘you should write it off’. But it was a very dicey situation for us. We had a default for quite some time for about 10 weeks. In those 10 weeks, we got the repayments for 4-5 week from the members- who pooled in. “But by that time, I had been to Cashpor Financial and Technical Services, and that was a very good learning, they have what is called as collective responsibility. And I picked it up from there, and we used CRF (Collective Responsibility Fund-built out of a small contribution made by all members) here. That solved the whole problem. And slowly over a period of the next six months, we eventually got back the whole repayment. Eventually that member came back and repaid her entire loan. It was a great learning for us. That group and that Kendra are still there with us.” The Future On the subject of how GK would cope with the future, Vinatha was clear, “ I think we are looking at more and more professionals coming in because what we have done in these five years is all learning and doing; learning and doing. But now we have reached the stage where our skills are not sufficient to take it to the next phase of growth. We have only limited skills – after all, we are not trained in finance or accounts or economics or anything. We have brought it up to this stage, but we are looking at absorbing professionals, who will take it to the next stage. A worry is the legal status we are going to go into. Now if you are going into an NBFC where you have different people there and they are investing in the equity, then that would be worrisome, but I don’t see a solution as yet anywhere.”

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When asked was there anything she would have done differently, Vinatha was clear. “I think that I would do the same thing all over again.” Suresh differed. “If we were to do it all over again, I think we would have been more aggressive. We mostly learnt by doing things, and it took time. And I feel that, whatever stage we are in, we would have got more professionals, probably a year before.” The Governing Board consisted of Vinatha Reddy’s sister Vijitha Subbiah and Mr Jayaram Reddy (both trustees of T. Muniswamappa Trust), Gopal and six members of GK, and three ‘outsiders’ (a journalist, an educationist, and an individual who had worked with one of India’s most successful multinational fast moving consumer goods companies). Asked about the issues that the governing board looks at, Vinatha Reddy said. “Our board is very nascent. We are still trying to build it, you know. We were so naïve when we started the board. We didn’t know how to conduct a meeting and all that. It is just by asking people and learning from them, that we have started off this board. And we still know that it is not a very professional board; it is a very soft and naïve board.”

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Exhibit-1: Grameen Koota-Progress Statement as of 31st March Item 2000 2001 2002 2003 2004 Cumulative

1 Branches Nos. 1 2 5 7 122 Villages Nos. 10 38 84 153 3153 Kendras Nos. 12 42 91 185 4534 Groups Nos. 34 118 260 725 21475 Members Nos. 170 582 1258 3570 106596 Active borrowers Nos. 130 445 951 2718 82367 Field staff Nos. 3 8 21 30 608 Other staff Nos. 2 7 12 16 129 Savings Rs. Million 0.03 0.22 0.66 2.07 6.26

10 GK loans outstanding Rs. Million 0.37 1.24 2.62 7.39 22.3511 Group Fund loans outstanding Rs. Million 0.01 0.04 0.16 0.55 1.36

During Year 12 GK loans Nos. 130 557 1115 2818 846313 GK loans Rs. Million 0.50 2.11 4.71 14.78 43.1814 Group Fund loans Nos. 95 511 1547 5242 1300915 Group Fund loans Rs. Million 0.02 0.20 0.97 2.99 8.3016 Drop out (members) Nos. 16 59 166 332 112317 Emergency Loans Nos. - - - - 89418 Emergency Loans Rs. Million - - - - 0.39 Exhibit-2: Grameen Koota-Projections as of 31st March Item 2005 2006 2007 2008 2009 1 Members Nos. 32960 98880 164807 263691 3655372 Loans outstanding Rs. Million 89 258 593 993 15293 Branches Nos. 22 52 72 92 974 Total Staff Nos. 165 431 643 923 1020

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Finance Manager Planning & Monitoring Manager

Area Manager (Area II)

Area Manager (Area I)

Internal Audit Manager

Peon cum cook

Kendra Managers

Asst. Branch Manager

Branch Manager (Branch 6)

Branch Manager (Branch 1)

Chief Operating Officer Personal staff

Chief Executive Officer

Micro Credit Governing Board (2 trustees, 6 members, 2 Experts, 2 staff)

T.Muniswamappa Trust (9 trustees)

Exhibit 3: GK Organization Structure

Personal staff

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Exhibit-4: Grameen Koota–Details of Loan and Savings Products

Loan Products Repayment terms

Size (Rs.) Interest Rate

Income Generation Loan (for any income generation activity)

50 weekly installments

1st cycle 1000-5000 2nd cycle max 7000 3rd cycle max 9000 4th cycle max 11000 5th cycle max 15000

18% Flat + processing fee of 2%

Supplementary Loan (for enhancement or restart of income generation activity)

50 weekly installments

Max 2000 18% Flat + processing fee of 2%

Welfare Loan (for asset creation)* 50 weekly installments

4th and 5th cycle of Income generation loan

12% Flat

Emergency Loan (consumption) 10 weekly installments

Max 1000 Refer 2 below

Group Fund Loan (consumption) Members specify

50% of the group savings balance

0%

Other charges collected by GK: 1. Processing fee of 2% is collected at the time of loan disbursement by GK. 2. Emergency Loan Documentation fee (Rs 15 for loans less than Rs 500 and Rs 30 for loans between

Rs 500-1000) is charged. * The 4th and 5th cycle of Income generation loan is usually given as welfare loan which is used for asset creation. Type of Savings Interest

Paid Frequency of savings

Amount Withdrawal options

Group Fund 6% Weekly Rs.5 per week + Re.1 per Rs. 1000 of Income Generation or Supplementary loan taken

When member drops out of GK

Voluntary 4% A member can decide Any time Kendra Fund Nil Weekly Re. 1 per week When member drops out

of GK Other contributions by members: 1. Members have to pay an Annual Subscription Fee of Rs.25 towards membership for 4 years. 2. All the members contribute 2% of the loan amount towards the Emergency Fund along with the loan repayment. This fund is used to write off the loan outstanding of any member who dies. A compensation of Rs.500 or Rs.1000 is given to the member’s family towards funeral expenses. 3. A Collective Responsibility Fund (CRF) is started when there is a default in a Kendra and both the group or the Kendra are not in a position to meet the defaulted installment. Re.1 per week per member and Re. 2 per week per member of the defaulting group is collected. CRF is refunded to the members only after the arrears are collected.

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Exhibit-5: Grameen Koota-Sources of Funds [Rs. Million]

Disbursements Loan Interest Source Upto In Tenor Rate Mar-032003-04 [Years]

1 Housing Development & Finance Corporation 2.06 2.12 3 12.00%2 Friends of Women's World Banking 4.00 9.00 2 13.50%3 Small Industries Development Bank of India 0.00 2.00 5 11.00%4 Grameen Trust, USA 2.44 0.00 3 2.00%5 Canara Bank 2.00 0.00 3 10.50%6 Deutsche Bank 0.00 2.50 4 9.00%7 U.T.I.Bank 0.00 10.55 4 11.50%8 Grameen Trust (for operating cost) 0.35 0.00 3 0.00%9 Vehicle loans from 6 institutions 0.24 0.51

10 Indian Development Service, USA1 0.00 0.25 Grant 11 Grameen Foundation, U.S.A. 1.13 0.00 Grant 12 Small Industries Development Bank of India 0.00 0.26 Grant 13 Other donations 0.00 4.40 Grant TOTAL 12.22 31.58 1Initally a loan, converted into a grant after 31st March, 2004 Exhibit 6A: Income Statement of Grameen Koota for the year ending 31st March [Rs. Million] 2003 2004Branches HO Income 2.08 6.60 6.27 0.33 Interest and other income from loans 2.00 6.23 6.23 0.00 Income from other services 0.07 0.07 0.04 0.03 Income from investments 0.01 0.30 0.00 0.30 Expenses 4.08 9.78 5.06 4.72 Total financial costs 0.68 2.58 0.11 2.47 Loan loss provision 0.00 0.44 0.44 0.00 Staff cost 1.71 3.16 2.41 0.75 Other administrative expenses 1.69 3.60 2.10 1.50 Income tax 0.00 0.00 0.00 0.00 Net income /loss after tax -2.00 -3.18 1.21 -4.39

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Exhibit 6B: Balance Sheet of Grameen Koota as of 31st March [Rs. Million] 2003 2004Assets Cash and bank 0.95 5.32Short term investments 1.20 5.38Gross GK loans outstanding 7.39 22.35Less: Loan loss reserve 0.00 -0.44Net GK loans outstanding 7.39 21.91Group fund loans 0.55 1.36Emergency Loans 0.00 0.39Other short term assets 0.23 1.36Net property & equipment 1.22 2.09Total Assets 11.54 37.81 Liabilities 14.27 39.08Savings from members 2.07 6.26Voluntary 0.17 1.50Group fund 1.52 3.62Kendra fund 0.11 0.37Emergency fund + Collective Responsibility Fund 0.27 0.77Other short term liabilities 0.56 0.99Caution deposit 0.28 0.58Staff Welfare fund 0.03 0.08Other short term liabilities 0.25 0.33Long term debt 11.64 31.83Soft loans(Total) 4.25 4.06Grameen Trust 4.00 3.81India Development Service 0.25 0.25Regular loans 7.39 27.77Vehicle loans 0.68 0.66Housing Development & Finance Corporation 1.78 3.14Friends of Women's World Banking 3.20 8.92Canara Bank 1.73 0.00Small Industries Development Bank of India 0.00 2.00Deutsche Bank 0.00 2.50UTI Bank 0.00 10.55Equity -2.73 -1.27Donation & grants 1.13 5.78Previous earnings/(losses) -1.86 -3.86Current earnings / loss -2.00 -3.19Total Liabilities + Equity 11.54 37.81

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Exhibit 7: Grameen Koota–Branch Details as of 31st March 2004

Branch Set Up No. of

villages No. of kendras

No. of groups

No. of members

Operating Surplus 2003-04 Rs Million

1 Kaggalipura 36281 44 51 234 1155 0.522 Kanakapura 36861 40 49 244 1208 0.223 Channapatana1 37165 53 75 400 1985 0.764 Halagur 37257 33 49 242 1191 0.295 Malavalli 37257 43 62 313 1551 0.376 Channapatana Town 38018 7 7 27 135 -0.03 Area I 220 293 1460 7225 2.13

7 Chikkanayakana Halli 37653 21 38 171 853 -0.048 Turuvekere 37653 25 44 191 957 -0.019 Chelur 37712 23 37 165 825 -0.07

10 Gubbi 37712 25 40 156 781 -0.2611 Nittur 38047 1 1 4 18 -0.0412 Bellur [30 Apr 2004] 38047 4 6 24 119 -0.04

Area II 99 166 711 3553 -0.46 1Channapatna Branch Surplus Loan portfolio 31st March 2004 4.02 Interest and other income from loans 1.44 Financial cost 0.02 Staff cost 0.34 Other administrative expenses 0.32 Branch surplus 0.76