Tracking Financial Performance Standards of ... - Sa-Dhan

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Tracking Financial Performance Standards of Microfinance InstitutionsSl.No.Name ofTool/Institution2. Microfinance InformationExchange (MIX)MIX is a not for profitprivate organisation thatsupports the growth &development of a healthyMicrofinance sector.Through its publication -Micro Banking Bulletinthat is one of the principaloutputs of Micro bankingstandards project fundedby CGAP, it collectsfinancial & portfolio dataprovided voluntarily byMFIs, primarily to helpMFI managers and boardmembers to understandtheir performance vis-a-visother MFIs.Secondary objectiveincludes establishingindustry performancestandards and enhancetransparency of financialreporting of MFIs worldwide.To address the issue ofdiversity in operatingenvironment of MFIs,while comparing thefinancial and portfoliodata, it has adopted a peergroup framework, wherefinancial performance ofMFIs are compared amongpeer group members on 7broad parameters.Broad performance areaInstitutional maturity, size andoutreachProfitability and SustainabilityIncome and ExpensesEfficiencyProductivityPortfolio qualityCapital and Liability structureIndicators to measure performance• Age of institution• Number of offices• Number of personnel• Number of active borrowers• Percent of women borrowers• Adjusted return on Assets• Adjusted return on equity• Operational self-sufficiency• Financial self-sufficiency• Adjusted profit margin• Adjusted operating income ratio• Adjusted total expense ratio• Yield on gross portfolio• Yield on gross portfolio (real)• Adjusted financial expense ratio• Adjustment expense ratio• Loan loss provision expense ratio• Adjusted personnel expense ratio• Adjusted administrative expense ratio• Adjusted operating expense ratio• Adjusted operating expense / Loan portfolio• Adjusted personnel expense / Loan portfolio• Adjusted administrative expense/Loan portfolio• Average salary / GNP per capita• Personnel productivity(No. of active clients/No. of all staff)• Loan officer productivity(No. of clients/No. of loan officer)• Personnel allocation ratio(No. of loan officer/No. of staff)• Average outstanding loan size• Depth(Avg. outstanding loan size/GNP per capita)• Portfolio at risk (> 30 days)• Portfolio at risk (> 90 days)• Commercial funding liabilities ratio• Capital / Asset ratioSource: Micro-Banking Bulletin (November 2002)104
Performance Indicators of Microfinance Institutions : Some Popular Tools used WorldwideSl.No.Name ofTool/InstitutionBroad performance areaIndicators to measure performance3. GIRAFE, PlaNet FinanceThe G.I.R.A.F.E ratingand evaluation instrumentwas developed by PlaNetFinance. This ratingevaluation is bothquantitative andqualitative to cover the fullrange of risks faced by apotential investor.G.I.R.A.F.E focuses on sixareas of assessment. Thesix areas of assessment aredivided into 26 factors;both quantitative andqualitative. The qualitativefactors cover mostly thegovernance, theinformation systems andrisks coverage issues. Thequantitative factors need afinancial analysis andpreliminary adjustments,in order to make financialinformation comparablebetween institutions.1. G - Governance anddecision making process2. I - Information andmanagement tools3. R - Risk analysis andcontrol4. A - Activities and loanportfolio5. F - Financing: liabilitiesand equity6. E - Efficiency andprofitability1. Maturity of institution2. Balance and efficiency of the governance system3. Technical organization of governance4. Weight of governance in relation to expenses5. Internal skills6. Staff turnover ratio7. Training efficiency1. Technical support for information systems2. Information management3. Organization of technical departments1. Identification of risks2. Coverage of risks by internal control1. Global balance of assets on balance sheet2. Relevance of services3. Loan portfolio management4. Write off ratio5. Portfolio at risk (> 31 days)1. Overall assessment2. Ratio of transformation equities into assets1. Administrative efficiency ratio2. Operating efficiency ratio3. Staff ratio4. Adjusted return on average assets5. Adjusted return on average equity6. Operating self-sufficiency7. Financial self-sufficiencySource: PlaNet Finance, 2000105
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TECHNICAL TOOL SERIES 1TRACKING FIN
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INTRODUCTION TOMICROFINANCE STANDAR
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5. PERFORMANCE STANDARDS - CONCEPT,
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ACKNOWLEDGMENTSThe need of the oper
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Tracking Financial Performance Standards of ... - Sa-Dhan

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