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

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Tracking Financial Performance Standards of Microfinance InstitutionsSl.No.Name ofTool/InstitutionBroad performance areaIndicators to measure performance4. Small EnterpriseEducation andPromotion(SEEP)This guide setsout a frameworkfor analysing, thefinancialcondition of anMFI. Theframework isdivided intothree groups,each of whichcomprises a set ofratios.1. The first group ofratios analyses thefinancial sustainabilityof the MFI – or theability of an MFI tomeet the needs of itsclientele withoutreliance on externalassistance.Return on performing assets =Financial cost ratio =Loan loss provision ratio =Operating cost ratio =Adjusted cost of capital =Financial incomeAverage performing assetsFinancial costsAverage performing assetsLoan loss provisionsAverage performing assetsOperating expensesAverage performing assets[(Inflation X (net worth –net fixed assets)] +[(inflation – int. rate paid)X conc. loans]Average performing assetsDonations and grants ratio =Donations and grantsAverage performing assetsOperating self-sufficiency =Financial incomeFin. & Opr. costs +Loan loss provisionFinancial self-sufficiency =Financial incomeFin. & Opr. costs +Loan loss provision +Imputed cost of capitalContd. next page106
Performance Indicators of Microfinance Institutions : Some Popular Tools used WorldwideSl.No.Name ofTool/Institution4. Small EnterpriseEducation andPromotion(SEEP)Broad performance area2. The second group ofratios analysesfinancial efficiency ofMFIs. They must beconcerned withserving as manypeople as possiblewith their resources.Indicators to measure performanceOperating costsCost per unit of money lent =Total amount disbursedOperating costsCost per loan made =Number of loans made3. The third group ofratios helps MFIsmonitor their portfolioquality. If the qualityof the portfolio ispoor, the MFI cannotcontinue to operate inthe long term.No. of active borrowers =per credit officerPortfolio per credit officer =Portfolio in arrears =Portfolio at risk =Loan loss ratio =Reserve ratio =Average no. of active borrowersAverage no. of credit officersAverage loan outstandingAverage no. of credit officersPayments in arrearsValue of loans outstandingBalance of loans in arrearsValue of loans outstandingAmount written offAverage loans outstandingLoan loss reserveValue of loans outstandingSource: SEEP Network, 1995107
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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 Stan
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