Social Impact Assessment of Microfinance Programmes - weman

Rs. 228,234,500 while recoveries in principal are 198,826,128 and service charges are
Rs. 29,408,372. While OCT’s PAR>30days for this year is not available, in 2005 it stood
at 6.3 percent. However, the write-off ratio has lowered almost by half from 6.4 percent
to 3.74 percent (source: PMN MIX Analysis). According to OCT’s data, the recovery
rates have improved tremendously over the years with the current rate at 97 percent.
Loan Recovery (1987-2006)
450000000
444205788
400000000
350000000
342855408
300000000
286600604
250000000
200000000
150000000
157605184
198826128
144029280
100000000
50000000
87774476 101315769 56373242
13541293
29408372
26964870
0
Total Loan Repaid Principal Balance Service Charges
Repaid
Orangi
Outside Orangi
Figure 4.3
4.1.7 Institutional Development and Future Expansion
4.1.7.1 Diversification of Funding Sources
Honing the spirit of self-reliance, OCT started with a decision that it will not operate on
donor funding. Consequently, the funds were borrowed from national banks without any
concessions and then lent to family units without any delays or collateral. Since it worked
on a non-profit basis, OCT was able to take greater risks and bear losses of defaults and
bad debts. It was neither safeguarding the depositors as it didn’t accept any deposits nor
had to report profits because it didn’t have any shareholders either, and thus gave no
dividends.
However, a change in approach was necessitated by the growing demand for credit.
While the lending mechanisms were kept simple and free of red-tapism, OCT started
borrowing from various national and international banks and also accepted grants and
donations. An initial grant of Rs. 1.97 million from its parent body OPP was received of
which Rs. 1 million were pledged to National Bank for an overdraft facility. Amongst the
first few donors were the Federal Bank of Cooperatives, Swiss NGO Programme office
and NORAD.
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