<strong>Tracking</strong> <strong>Financial</strong> <strong>Performance</strong> <strong>Standards</strong> <strong>of</strong> Micr<strong>of</strong>inance InstitutionsExplanation <strong>of</strong> Portfolio Report (Table 13) is given belowExplanation <strong>of</strong> each row (1 to 15) <strong>of</strong> Portfolio related Data for the Year ending March 31,2001, March31, 2002 & March 31, 2003, is provided here1. Total Value <strong>of</strong> Loans Disbursed during the Period – Refers to the total value (in currency) <strong>of</strong> loansdisbursed in a specific time period regardless <strong>of</strong> whether they are performing, non-performing or written<strong>of</strong>f. This value should not be confused with gross loan portfolio, which can be several times less than thevalue disbursed. (See Column II, Row P1).2. Total Number <strong>of</strong> Loans Disbursed during the Period – Refers to the total number <strong>of</strong> loans disbursed in aspecific time period. For MFIs using a group lending methodology, the number <strong>of</strong> loans should refer tothe number <strong>of</strong> individuals receiving part <strong>of</strong> a group loan, unless the MFI specifies a different definition.(See Column II, Row P2).3. Number <strong>of</strong> Active Borrower (end <strong>of</strong> period) - Refers to the number <strong>of</strong> borrowers with one or more loanin force that have neither been fully repaid nor written-<strong>of</strong>f. Borrowers, who have repaid their loan in full,are not considered in this number. The number <strong>of</strong> active borrowers will be lower than the number <strong>of</strong> loanoutstanding, if some borrowers have more than one loan. (See Column II, Row P3).4. Average Number <strong>of</strong> Active Borrower – Refers to the average no. <strong>of</strong> active borrowers (as defined above)over a period. Average number <strong>of</strong> active borrowers can be estimated by taking the no. <strong>of</strong> active borrowersat the first date <strong>of</strong> the period and adding the no. <strong>of</strong> active borrower at the last date <strong>of</strong> the period anddividing the sum by two. (See Column II, Row P4).5. Value <strong>of</strong> Loans Outstanding (end <strong>of</strong> period) - Refers to the current value (in currency) <strong>of</strong> loans still notpaid at a specific date. It differs from the “Total Value <strong>of</strong> Loans disbursed during the period” and itconsider just the amount that is currently owed to the organisation. In other words, only unpaid principalbalance <strong>of</strong> loan disbursed is included in Value <strong>of</strong> Loans Outstanding. (See Column II, Row P5) {for detailssee section 3.3.2.1 (c) in chapter 3}.6. Average Outstanding Balance <strong>of</strong> Loans - Refers to the average value (in currency) <strong>of</strong> loans outstandingover a period. Average Outstanding Balance can be estimated by taking the opening balance <strong>of</strong> loansoutstanding at the first date <strong>of</strong> the period and adding the closing balance <strong>of</strong> loans outstanding at the lastdate <strong>of</strong> the period and dividing the sum by two. (See Column II, Row P6)In order to increase the accuracy <strong>of</strong> this calculation, the balance <strong>of</strong> loans at the end <strong>of</strong> any given interval(midway through the period, end <strong>of</strong> each month, etc.) can be used, provided, the total figure is dividedby the number <strong>of</strong> intervals used.For example, to determine the Average Outstanding Balance for a 12-month period using monthlyintervals, the outstanding balance at the end <strong>of</strong> each month would be added together and the total figuredivided by 13.As per our example, for year 2002, the average outstanding balance <strong>of</strong> loans (as the approximate formula)is (104,000 + 140,000)/2 = 122,000. (Row P5 and Column IV). While for cursory analysis, one may usethe approximate formula <strong>of</strong> opening balance plus closing balance and dividing this by 2, it is imperativethat from a best practices perspective, the accurate formula <strong>of</strong> adding all month end balances with theopening balance and dividing by 13 is followed.7. Value <strong>of</strong> Payments in Arrears (end <strong>of</strong> period) - Refers to the value (in currency) <strong>of</strong> payments in arrears –payments that have been due and not paid. This figure includes principal only that has become due but hasnot been received as <strong>of</strong> the end <strong>of</strong> the period. (See Column II, Row P7)66
Constructing Loan Repayment Schedule Aging Schedule and Loan Portfolio Report for an MFI8. Value <strong>of</strong> Outstanding Balance <strong>of</strong> Loans in Arrears (end <strong>of</strong> period) - Refers to the total value (in currency)<strong>of</strong> loans that have one or more payments in arrears. Includes principal amount only, but covers the totalloan amount outstanding, not just the amount <strong>of</strong> principal that has fallen due and not been received. Alsoreferred to as “Portfolio at Risk” (for details see section 5.1.1 in chapter 5) when this is divided by theoutstanding portfolio. (See Column II, Row P8).9. Value <strong>of</strong> Loans Written-Off during the Period - Refers to the value (in currency) <strong>of</strong> loans that have beenrecognised for accounting purposes as non-recoverable and is removed from the outstanding balance <strong>of</strong> theloan from the gross loan portfolio and from the loan loss reserve in the Balance Sheet, without affectingbalance <strong>of</strong> the net loan portfolio, total assets, or any equity account. (See Column II, Row P9)Writing <strong>of</strong>f loans is always a difficult decision and it must be carefully taken (refer the bottom part <strong>of</strong>section 4.2.1 in this chapter)Writing <strong>of</strong>f loans too rapidly can make an organisation’s loan portfolio look much healthier than it maybe, as the Portfolio at Risk appears small.By the same token, past due loans, which should be written <strong>of</strong>f but are still included in an organisation’soutstanding loan figure overstate the size <strong>of</strong> the organisation’s healthy portfolio and consequently distortthe financial picture.10. Average Loan Size - Refers to the average size <strong>of</strong> loans at the time <strong>of</strong> disbursement. (See Column II, RowP10)This would normally be determined in the following manner:Value <strong>of</strong> Loans Disbursed during the period (P1)Number <strong>of</strong> Loans Disbursed during the period (P2)Using the above formula, we get the average loan sizes for years ending March 2002 as 100(260,000/2,600) and March 2003 as 100 (320,000/3,200).11. Average Loan Term - Refers to the amount <strong>of</strong> time that loans, on average, are outstanding. In other words,it’s the average period in which borrowers are supposed to pay back the entire sum <strong>of</strong> money lent by theMFI. (See Column II, Row P11)12. Average Number <strong>of</strong> Loan Officers during Period - The term “loan <strong>of</strong>ficer” refers to field personnel or line<strong>of</strong>ficers who deal directly with clients in disbursing loans and collecting loan payments (i.e., employees whoare part <strong>of</strong> the Micr<strong>of</strong>inance programme). Though ‘loan <strong>of</strong>ficer’ directly interact with the client, but notwith administrative staff or analysts who process loans without direct client contact. Loan <strong>of</strong>ficers includecontract employees who may not be part <strong>of</strong> permanent staff, but are contracted on a regular basis in thecapacity <strong>of</strong> loan <strong>of</strong>ficer.Number <strong>of</strong> loan <strong>of</strong>ficers is reported on a full-time-equivalent basis. In cases where a staff member managessome loans, but also has other duties (for instance, a supervisor), this indicator should include a fraction