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

Tracking Financial Performance Standards of Microfinance InstitutionsApart from the above, best practices recommendations suggest that the following additional informationshould be a part of Portfolio Report in order to ensure greater transparency and accuracy in the riskestimates13. Value of Re-Scheduled Loans outstanding - Refers to the value of loans that have been re-scheduled – alloutstanding loans, whose terms have been changed but no new amounts have been given (additionally)(See Column II, Row P13).14. Value of Re-Financed Loans outstanding - Refers to the value of loans that have been re-financed – alloutstanding loans, whose terms have been changed and also new amounts have been given additionally(See Column II, Row P14).15. Value of Loans outstanding for which repayment is yet to begin - Refers to the value of loans outstandingfor which the repayment schedule is yet begin. These could include loans that have a longer moratoriumperiod as well as loans that have been recently disbursed. (See Column II, Row P15).· The reason for obtaining this information is that, inclusion of such loans (outstanding) in the totaloutstanding portfolio will understate the risk inherited in portfolio.· In some cases, clients’ repayment behaviour is not observable (as repayment has not yet started),hence, the Portfolio risk will remain understated. Therefore, to present the true picture of the risk,it is fair and accurate to make proper adjustment by deducting these amounts from the outstandingportfolio (also see section 5.1.1.6, 5.1.1.7 and 5.1.1.8 in chapter 5).· Of course, these amounts would have to be automatically included in the total outstanding portfolio,once the repayment schedule begins.The rows 16 to 23 of portfolio report is aging analysis of all outstanding loans for year ending March 31, 2003.It is similar as aging analysis table explained earlier in this chapter in section 4.2.2. A brief explanation of eachcolumn of aging analysis is given below:· Column I gives the row identification number,· Column II is the description of the type of loans classified as regular and various days past due.· Column III provides the number of such loans in the various categories, as mentioned above.· Column IV gives the value of unpaid principal balance (or loan outstanding) for the respective category ofloans (both current and past due by different days). This total should equal the amount given in row P5,Column V.· Column V shows the percentage of loans outstanding in each of the categories (as a proportion of the totalloans outstanding). The total here should equal 100%. It also highlights the Portfolio at risk for loans ineach of the categories of past due loans (for details see section 5.1.1 in chapter 5).· Column VI gives the risk factor in terms of the percentage of the loan outstanding that will (perhaps) benot recovered. This is available for each of the categories of loans (regular and past due loans by differentdays).· Column VIII provides the amount at risk for the different types of loans, taking into account the loanoutstanding and the risk factor.68