Social Impact Assessment of Microfinance Programmes - weman

CEBEMO, a Dutch funding agency, has been giving Rs. 80,000 for women entrepreneurs
while World Bank has generously supported OCT in creating a revolving funds. In 1995,
the Bank sanctioned an annual grant of Rs. 353,000 for appointing thirty loan-agents and
supervisors for loan groups, and the same amount for training other NGOs for replication
of the microcredit programme.
4.1.7.2 Financial and Operational Sustainability
OCT aimed to reach sustainability since its inception and for this purpose, the mark-up
rates were kept equivalent to bank rates and operational expenses were consciously kept
low. Within 3 years, the ratio of operational overheads to disbursed loan fell to 8.73
percent and then to 4.86 percent. The ratio of mark up to overheads increased to 128
percent in 1990 and then to 355 percent in 1994-95. For the year 2006-07, as its overhead
expense, OCT draws 3.7 percent of the loans and 45 percent from the service charges.
Operational Self Sufficiency (OSS) rates have grown consistently almost to double i.e.
from 83.30 percent in 2003 to 168.03 percent in 2005. Return on Assets and Equity rates
have also grown significantly from -3.19 percent ROA and -3.87 percent ROE in 2004 to
8.01 percent and 11.28 percent respectively.
The operational costs are low because of a very simple, lack-lustre approach to
microcredit with a strong support network. For instance, the core staff of OCT only has
16 members which is responsible for processing amounts of Rs. 20 million and over
1,000 accounts. The frugality of operations is enhanced by the computerized accounts
system where updated records help in monthly monitoring. Moreover, the World Bank
grant supported in hiring of loan agents who help in client selection and recovery.
Channelizing loans through 47 NGO/CBOs also reduces direct costs while the office
premises are free of cost, provided by OPP-RTI.
This has helped OCT become a self-sustained institution with a reserve fund of Rs.
35,500,000 made up from the mark-up received and savings from the grants received by
INFAQ Foundation. While few liabilities still exist, OCT has cleared its bank loans.
4.1.7.3 Management Information Systems and Research Functions
OCT presents a unique case as far as its MIS and its utilization are concerned. While all
accounts are computerized, they do not measure up to the standards of a full-fledged
functional MIS, despite the fact that the information utilization is extremely prudent and
across the board. The accounts section efficiently processes and records all information
pertaining to loan disbursement, operational expenses, prepares reports on annual budget
projections along with those on receipts and payments. Recovery officers also contribute
in record updation and later on, monthly and weekly status reports are circulated amongst
staff. All decisions are based on the trends analysis thus generated.
Partly because of the rich heritage of Dr. Khan and then through the institutionalization
of OPP-RTI, OCT is one of the few MFIs that have grounded their programme and
strategic direction in action research. OCT involves its staff and also encourages
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