smera comprehensive grading m1c1 - chaitanya india
TRANSCRIPT
SMERA Comprehensive
Grading
Chaitanya India Fin Credit Private Limited
To verify the grading, please scan the QR Code
Date of Report:
30th May, 2020
Valid Till:
29th May, 2021
SMERA
Comprehensive
Grading
M1C1
(Highest capacity of the
MFI to manage its
operations in a
sustainable manner and
excellent performance
on code of conduct
dimensions
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The grading is done on 8 x 5 matrix. The matrix assesses the entity on two broad parameters:
Capacity to manage their microfinance operations in a sustainable manner
Performance on COCA dimensions
Scale C1 C2 C3 C4 C5
M1 M1C1
M2
M3
M4
M5
M6
M7
M8
The MFI obtains comprehensive MFI grading of “M1C1”. It signifies Highest capacity of the MFI to
manage its operations in a sustainable manner and Excellent performance on code of conduct
dimensions.
To verify the grading, please scan the QR Code
SMERA’s MFI Comprehensive Grading Scale
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Grading Rationale
Microfinance Capacity Assessment Grade
Chaitanya obtains “M1” as its performance grade which signifies “Highest capacity of the organization to carry out its activities in a sustainable manner”.
Code of Conduct Assessment Grade
Chaitanya obtains “C1” as its Code of Conduct Assessment Grade which signifies ‘’Excellent performance on COCA dimensions’’.
Comprehensive MFI Grading provides opinion of the Rating Agency on MFI’s capacity to carry out its microfinance operations in a sustainable manner and its adherence to Industry code of conduct. MFI Capacity Assessment Grading has been done on the dimensions of Capital Adequacy, Governance, Management Quality and Risk Management Systems. Assessment on Code of Conduct has been done on the indicators pertaining to Transparency, Client Protection, Governance, Recruitment, Client Education, Feedback & Grievance Redressal and Data Sharing. Some of these indicators have been categorized as Higher Order indicators consisting of indicators on Integrity and Ethical Behaviour and Sensitive Indicators.
Disclaimer: MFI grading is not a comment on debt servicing ability, not a buy-sell recommendation
and must not be used for raising fund.
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Conflict of Interest Declaration
SMERA (including its holding company and wholly owned subsidiaries) has not been involved in any assignment of advisory nature for a period of 12 months preceding the date of the comprehensive grading. None of the employees or the Board members of the SMERA have been a member of the Board of Directors of the MFI for a period of 12 months preceding the date of the comprehensive grading.
Disclaimer
SMERA’s Ratings / Gradings / Due Diligence and other credit assessment related services do not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a buyer’s or lender’s independent assessment. Rating / Grading / Due Diligence are based on the information provided by the rated entity and obtained by SMERA from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true and correct, SMERA makes no representation or warranty, expressed or implied with respect to the accuracy, adequacy or completeness of the information relied upon. SMERA is not responsible for any errors or omissions and especially states that it has no financial liability, whatsoever, for any direct, indirect or consequential loss of any kind arising from the use of its Ratings / Gradings / Assessments.
Historical Rating Grades
Date Rating Agency Rating/Grading
April, 2020 ICRA BBB+ March 26, 2020 CRISIL A- May 31, 2019 SMERA M2C2
March 23, 2018 SMERA M2C2
January 25, 2017 SMERA M2C2 Feb 2016 SMERA COCA 3
October 2015 ICRA M2
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Microfinance Capacity Assessment Grading Symbols and Definitions
Grading Scale Definitions
M1 Highest capacity of the MFI to manage its operations in a sustainable manner.
M2 High capacity of MFI to manage its operations in a sustainable manner.
M3 Above average capacity of the MFI to manage its operations in a sustainable manner
M4 Average capacity of the MFI to manage its operations in a sustainable manner
M5 Inadequate capacity of the MFI to manage its operations in a sustainable manner
M6 Low capacity of the MFI to manage its operations in a sustainable manner.
M7 Very low capacity of the MFI to manage its operations in a sustainable manner
M8 Lowest capacity of the MFI to manage its operations in a sustainable manner
Code of Conduct Assessment Scale and Definitions
Grading Scale Definitions
C1 Excellent performance of the MFI on Code of Conduct dimensions
C2 Good performance of the MFI on Code of Conduct dimensions
C3 Average performance of the MFI on Code of Conduct dimensions
C4 Weak performance of the MFI on Code of Conduct dimensions
C5 Weakest performance of the MFI on Code of Conduct dimensions
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Name of the MFI : Chaitanya India Fin Credit Private Limited
Operational Head – Microfinance Business
:
Name Mr. Anand Rao Designation Joint Managing Director Mobile No. 9886743054 Email ID [email protected]
Date of Incorporation/Establishment : 31st March, 2009 Date of commencement of microfinance business
: 05th September, 2013
Legal Status : NBFC – MFI
Business of the company : Microfinance Services Under Joint Liability Group (JLG) Model
Correspondence Address :
145, 2nd floor N R Square 1st Main Road, Sirsi circle, Chamarajpet Bangalore - 560 018 Karnataka India
Geographical Reach (As on 31/Mar/2020)
:
No. of States 5 No. of Districts 54 No. of Branches 235 No. of Active Borrowers
427,926
No. of Total Employees
2,201
No. of Field/Credit Officers
1,432
No. of Lenders : 29 lenders (including Banks and Institutional lenders)
Statutory Auditors : Walker Chandiok & Co LLP
Background:
Chaitanya commenced its microfinance operations in October 2007 at Nayakanahatti village in
Chitradurga district for two years at NGO. Later in 2009 Chaitanya obtained a Non-Banking Finance
Company (NBFC) license from Reserve Bank of India for a newly registered company, Chaitanya
India Fin Credit Private Limited (Chaitanya) and obtained NBFC-MFI license in the year 2013.
Company Fact Sheet
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Product Profile
Product Description Loan size (Rs.)
Repayment ( in Months)
Interest Rate
(In %) Reducing Balance
Processing Fees (In %)
APR (Interest Rate and Processing fees) (In
%) (C=A+B)
JLG Loan Income
Generation Loan
10,000 – 1,00,000
24 23.00 1.00 24.00
JLG Loan Asset
Generation Loan
10,000 – 1,00,000
24 23.00 1.00 24.00
JLG Loan Income
Generation Loan
5,000 – 30,000
12 23.00 1.00 24.00
JLG Loan Mid Term Loan 5,000 – 10,000
12 23.00 1.00 24.00
Capital Structure as of 31/Mar/2020
Authorized Capital Rs. 93.00 crore
Paid Up Capital Rs. 75.00 crore
Shareholding Pattern (as on March 31, 2020)
Equity Shares
Shareholders %
Holding
Chaitanya Rural Intermediation Development Services Private Ltd 99.9%
Mr. Anand Rao 0.1%
Total 100.00 Note: Chaitanya Rural Intermediation Development Services Private Ltd has been acquired by Navi Technologies Private Limited promoted by Mr. Sachin Bansal and has been renamed to Navi Finserve Private Limited.
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Promoters/Directors Profile
Director Details Profile
Name: Mr. Sachin Bansal He is the former Chairman and co-founder of Flipkart, India’s leading e-commerce market place, which was acquired by Walmart in 2018. He was named in the World 40 under 40 list by Fortune Magazine in 2012, as Entrepreneur of the year by Economic Times in 2013 and among TIME Magazine’s 100 most influential people in the world in 2016. He has served on Government committees for skill development in India.
Designation: Managing Director & CEO
Qualification: B.E (IIT, Delhi)
Name: Mr. Ankit Agarwal He is a former banker who has held
senior positions in the Treasury department across Deutsche Bank and Bank of America in their Mumbai offices for the past 10 years.
Designation: Additional Director & Deputy CEO
Qualification: MBA (IIM, Ahmedabad), Degree in Computer Science (IIT, Delhi)
Name: Mr. Anand Rao He started his career in BOSCH and
later in sales and supply chain management at PEPSICO. Later on he moved to the social impact sector, beginning at World Watch Institute and World Resources Institutes at Washington DC.
He was the head of Projects, Small Scale Sustainable Infrastructure Development Fund (SIDF) Bangalore, 2004-2009.
He is the founder of Chaitanya Foundation – (an MFI) 2007 – 2009.
Designation: Co-founder and Joint Managing Director
Qualification:
MA in International Relations from Syracuse University, USA, Mgt degree from IIT, Bombay, BE from Bangalore University
Name: Mr. Samit Shankar Shetty He is one of the founders along with
Mr. Anand rao. He had worked with Olam
International Limited, a Singapore based commodity trading house He has worked in various business roles in trading of cocoa and coffee in Cote’d’lvoire and Tanzania and later headed Outspan, an Olam Brazilian Subsidiary. He was the executive director for over 9 years and currently heading the functions of Navi Finserv Private Ltd.
Designation: Nominee Director
Qualification: MBA (IIM, Ahmadabad), B.E.(Bangalore University)
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Name: Ms. Usha A Narayanan She has more than two decades of experience in audit, risk and compliance in PwC and grew up to be the first woman partner. She is experienced in assessing the risks associated as well as internal control requirements for corporates.
She led several large Indian listed companies and Indian subsidiaries of multinationals. She served on various Boards and Committees (including as a Chairperson of the Audit Committee of Bank of Baroda).
Designation: Independent Director
Qualification:
CS (Institute of Company Secretaries of India), CA (Institute of Chartered Accountants of India), B.Com (Madras University)
Name: Mr. Ravi Kattemalalavadi Subramanyam
He is engaged is providing consultancy service to NGOs, relating to finance in the area of rural development and mentoring rural entrepreneurs. He is a visiting faculty of Regional Training Institute of AG’s Office, Bangalore, Member of Audit Board Bangalore, Income Tax Department, Bangalore and Karnataka Power Corporation Ltd., Bangalore.
Designation: Independent Director
Qualification: Chartered Accountant
Name: Mr. Nandakumar Rachamadugu
He is an ex-banker by profession with 41 years of experience having worked in ING Vysya Bank in different capacities.He retired as Vice President (Business Banking & Agri & Rural Banking) from ING Vysya Bank.
Designation: Independent Director
Qualification: B.Sc., CAIIB (Certified Associate of Indian Institute of Bankers)
SMERA Observations:
Chaitanya has seven-member board. Board members have strong experience in
microfinance, banking, finance, risk and development sectors.
SMERA believes that a well-diversified board, including a proportionate composition of
independent directors, augurs well from a strategic perspective.
Chaitanya has more one-third of its board members as Independent directors.
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Management’s Profile
Management Details
Designation Profile
Name: Mr. Vasudev S.B. He is experience of more than 40 years of working in various industries. He started his career as Senior Audit Assistant with M/s. U P PAI & Company, Chartered Accountants Firm in Mumbai and worked there for two years. Over the period, he has worked in industries like insurance, pharma, and construction.
Designation: Financial Controller
Qualification: Chartered Accountant
Name: Mr. Srinivasan C V
He has 20 years of experience in heading finance and accounts functions in varied industries like Medical Device manufacturing and distribution, IT (hardware & software distribution), Holding company with subsidiaries such as Food service, Equipment leasing, Construction, School, Etc. Before Chaitanya, he has worked in various organisations like Embrace Innovations as VP Finance, Inflow Technologies (Westcon) as Head of Finance, QIPCO Holding, Doha - Qatar, Sodexho (formerly RKHS) as Manager and Accounts.
Designation: Chief Financial Officer
Qualification: Chartered & Cost Accountant
Name: Mr. Mattar Rakesh Krishna He worked in a CA firm as an intern for 3
years before joining CIFCPL. He associated with Chaitanya as an account officer in the year 2009.
Designation: Business Support
Qualification: M.Com (Mangalore University)
Name: Mr. Ganesh K V Has worked as Branch Manager in ICICI
Bank and AVP Branch Head in HDFC Bank. Prior to joining Chaitanya, he was with IFMR rural Channels and Services Pvt Ltd., as Deputy CEO, handling varied responsibilities like Audit, Operations, treasury and funding.
Designation: President Operations- South
Qualification: B.Sc. (Bangalore University)
Name: Ms. Dimple J Shah
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Designation: Company Secretary She pursued her internship in Indegene life System Private Limited. Prior to her career as a company secretary, she was working in JP Morgan-Chase as Financial Analyst for a period of three years.
Qualification: C.S.
Name: Mrs. Rajitha Uday She has around 23 years of Retail Banking
experience and has worked with Banks like Bank of Baroda, HDFC bank and Dhanlaxmi bank as Branch Manager.
Designation: Head – Fund Raising
Qualification: PGDBA (Annamalai University)
Name: Mr. Deepak Kumar Jha He started his career with SKS Microfinance.
Later he joined Deworm the World Initiative (DTWI) as Program Manager, Bihar where he provided support to the Government of Bihar in conducting two rounds of world's largest school based deworming program. After DTWI, he moved to SKS Microfinance in Service Quality and Customer Grievance Management team before joining Chaitanya.
Designation: President-Operation (North)
Qualification: PGDRM (IRMA)
Name: Mr. Rajesh Pal He has 20 years of experience in strategic
and operational HR. He has handled areas of Human resource like Learning and Development, Organisation Development, Performance management, leadership hiring and coaching, HR Shared services, employee relations in sectors like Manufacturing, Automotive, E-commerce and Food processing.
Designation: President and Head HR
Qualification: MBA(HR)
Name: Mr. Abhik Sarkar He has diverse experience in risk
management, credit & strategic leadership for more than 7 years. He has earlier worked with the Indian Railways, Axis Bank and SREI Equipment Finance Ltd.
Designation: Risk Head
Qualification: PGDM (IMT Ghaziabad)
Name: Mr. Linjin T He has 12.5 years of experience in BFSI and
IT sector. He has diverse experience in implementing and executing IT Projects across various functions and geographies. Prior to this,he was working with Credit Access Grameen, Sumeru Software, Kotak Mahindra Bank, IDFC First Bank and ICICI Bank.
Designation: Head IT and Projects
Qualification:
M. Tech (Software Systems) BITS M.B.A(International Business)
SMERA Observations:
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Chaitanya senior management has extensive senior management team has extensive
experience across sectors such as microfinance, Banking, finance, audit, risk and development
sector.
A majority of the senior management members have been associated with it for long tenure and
have risen from ranks.
Chaitanya has dedicated department wise / function wise heads and no major functional
overlaps have been observed.
The senior management reports to the CEO & MD, except in areas of internal audit, in which
they report directly to the board of directors.
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RBI’s Direction Chaitanyas Status Compliance 85% of total assets to be in the nature of
qualifying assets
Qualifying assets forms 97.37% of
total assets as on 31/Mar/2020. Complied
Net worth to be in excess of Rs 5 Crore Net worth of Chaitanya stood at
316.90 Crore as on 31/Mar/2020. Complied
Income of borrower not to exceed Rs
125,000 in the rural areas and Rs
200,000 in the urban and semi-urban
areas*
Being a rural focused MFI,
Chaitanya extends loans to
households whose income does
not exceed Rs 125,000 in rural
areas only.
Complied
Loans size not to exceed Rs 75,000 in
first cycle and Rs 125,000 in subsequent
cycles*
Chaitanya offers loan in the range
of Rs 10,000 to Rs 30,000 in fist
cycle and 30,000 – 80,000 in
subsequent cycles depending on
client repayment capacity, type of
activity etc.
Complied
Total indebtedness of the borrower not
to exceed Rs 125,000 (excl medical and
education loans)*
Apart from taking declaration from
the client, Chaitanya conducts
credit check on the loans
outstanding through credit
bureaus.
Complied
Tenure of loans not to be less than 24
months for loan amount in excess of Rs
30,000, with prepayment without
penalty*
Tenure of loans is not less than 24
months for loan amount in excess
of Rs 30,000, with prepayment
without penalty.
Complied
Pricing guidelines are to be followed
Loans are provided at a range of
22% - 26% on reducing balance
basis which meets the RBI criteria. Complied
Transparency in interest rates to be
maintained
Interest, Processing fees and
insurance premium charged are
duly mentioned in the loan card
provided to the client.
Complied
Not more than two MFIs lend to the same
client
Chaitanya verifies the same though
credit check from credit bureaus. Complied
Compliance with RBI’s Directives for MFIs
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RBI’s Direction Chaitanya’s Status Compliance
Loan pricing to include processing fee
(not exceeding 1% of the loan amount)
Chaitanya is charging processing
fee of 1.00% on the disbursed loan
amount plus applicable service tax.
Complied
Collateral free loans Chaitanya does not accept any
Collateral for extending the credit. Complied
MFIs shall not collect any Security
Deposit / Margin from the borrower.
Chaitanya does not collect any
security deposit / margin from the
borrower. Complied
No late payment or prepayment
penalties
Chaitanya does not take late
payment or prepayment penalties
from the clients.
Complied
Share complete client data with at least
one Credit Information Company (CIC)
established under the CIC Regulation Act
2005, as per the frequency of data
submission prescribed by the CIC.
Chaitanya shares its client data
with CRIF Highmark, Equifax,
Experian and CIBIL.
Complied
Aggregate amount of loans, given for
income generation, is not less than 50
per cent of the total loans given by the
MFIs
Chaitanya provides more than
50% of total loans for income
generation activities as on
31/Mar/2020.
Complied
NBFC-MFIs shall maintain a capital
adequacy ratio consisting of Tier I and
Tier II Capital which shall not be less
than 15 percent of its aggregate risk
weighted assets.
CRAR of Chaitanya stood at
38.21% as on 31/Mar/2020 which
complies with the minimum CRAR
requirement of 15% for NBFC-
MFIs as prescribed by RBI.
Chaitanya does not have any
exposure in Andhra Pradesh.
Complied
The aggregate loan provision to be
maintained by NBFC-MFIs at any point of
time shall not be less than the higher of
a) 1% of the outstanding loan portfolio
or b)
50% of the aggregate loan instalments
which are overdue for more than 90 days
and less than 180 days and 100% of the
aggregate loan instalments which are
overdue for 180 days or more’.
The statutory auditor has certified
the appropriate provisions have
been made.
Complied
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Financial Snapshot (In Rs. Crores)
Particulars 31/03/2018 31/03/2019 31/03/2020 Total AUM (in Crores) 358.4 571.83 880.9 On Balance Sheet Portfolio Outstanding (in Crores)
312.52 399.38 843.01
Off Balance Sheet (in Crores) 45.88 172.45 37.89 Total Net Worth (in Crores) 49.12 61.48 316.90 Total External Borrowings (in Crores)
285.64 487.54 559.53
Particulars 31/03/2018 31/03/2019 31/03/2020 Financial Revenue from Operations (in Crores)
76.39 117.14 175.38
Finance Expenses (in Crores) 37.43 59.35 71.53 Operating Expenses (in Crores) 37.90 51.14 76.34 Operating Income (in Crores) (10.77) 5.32 7.13 Net Operating Income (in Crores)
(8.00) 4.42 4.55
Particulars 31/03/2018 31/03/2019 31/03/2020 Cost of funds ratios (%) 14.50 14.53 13.60
Capital Adequacy Ratio (%) 19.03 17.50 38.21
Operational Self Sufficiency (%) 88.79 104.75 104.24 Operating Expense Ratio (OER) (%)
12.00 11.06 10.79
Portfolio at Risk (>30 days) (%) 6.00 2.42 1.30
Debt to Equity ratio (in times) 5.81 7.93 1.77
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HIGHLIGHTS OF MICROFINANCE OPERATIONS
Particulars 31/Mar/2017 31/Mar/2018 31/Mar/2019 31/Mar/2020 No. of States 2 3 4 5 No. of Districts 23 29 41 54 No. of Branches 114 145 176 235 No. of Active Members 1,71,938 2,45,126 3,22,319 4,27,926 No. of Loans 1,79,108 2,59,292 3,39,574 4,63,597
No. of Total Employees 1,175 1,246 1,582 2,201
No. of Field/Credit
Officers 761 842 1027 1,432
No. of JLGS 36,508 52,216 68,568 91,072 No. of Individual Loans 7,282 2,150 850 20
Owned Portfolio Particulars 31/Mar/2017 31/Mar/2018 31/Mar/2019 31/Mar/2020 Total loan disbursements during the year (in crore)
358.91 532.41 847.44 1163.40
Total portfolio outstanding (in crore)
213.05 312.52 399.38 843.01
Securitised Portfolio Particulars 31/Mar/2017 31/Mar/2018 31/Mar/2019 31/Mar/2020 Securitized volume during the years (in crore)
31.77 45.88 172.45 37.89
Loan utilisation schedule:
Loan Utilisation 31/Mar/2017
(%) 31/Mar/2018
(%) 31/Mar/2019
(%) 31/Mar/2020
(%)
Agriculture 27 28 34 40 Cattle 26 28 27 23 Business 23 24 23 24 Consumption 23 20 17 13 Total 100.00 100.00 100.00 100.00
SMERA Observations: More than 85% of disbursed loan have been used for Income generating
purpose in FY2020.
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Operating Environment
The outbreak of COVID-19 has significantly impacted the operations of Micro Finance
Institutions (MFIs). The MFI sector which has registered the CAGR growth of over 35% in
last five years, amidst this pandemic crisis, faces serious challenges on collections, asset
quality and cash flow management. Due to the moratorium, the collection level has been
severely impacted in turn affecting cash flow and ALM.
It is understood that with the micro finance lenders allowing moratorium to its microfinance
clients till August 2020, the real impact on delinquencies would only come post the
moratorium window is lifted. MFIs might see steep increase in delinquency level as lower
income self-employed groups and micro businesses are the severely impacted. It seems it
would be difficult for MFIs to recover instalments over next few months even post
moratorium. However, rural areas expected to witness lesser delinquencies as compared to
urban and semi urban areas. Credit costs on account of higher provisioning and
delinquencies may more than double, thereby profitability expected to be impacted severely
in FY21
SMERA believes that industry might require top-up loan to help MFI beneficiaries to mitigate
the impact of pandemic and restart their business operations. Given the current liquidity
position, most of the MFIs are not in a position for fresh disbursement though ease of
lockdown can push demand of fresh loan.
Going forward, it is expected that the revival of agricultural related activities would be faster
and would gradually start putting MFI back to the track ahead of other asset class. Further,
high degree of self-regulations through enhanced process and controls, strong technological
adoption and continuous innovation in the industry are the strong pillars which might help
the industry to overcome the tough times. However, SMERA would keep close watch on the
developments and reforms measures pertaining to the industry.
Long track record of operations and extensive industry experience of promoters
Chaitanya commenced its microfinance operations in October 2007 at Nayakanahatti village in
Chitradurga district for two years at NGO. Later in 2009 Chaitanya obtained a Non-Banking
Finance Company (NBFC) license from Reserve Bank of India for a newly registered company,
Chaitanya India Fin Credit Private Limited (Chaitanya) and obtained NBFC-MFI license in the
year 2013.
Chaitanya has seven-member on board as on March-2020 having extensive experience in the
banking and finance segment. The board has two promoter directors, one additional director,
one nominee directors and three independent directors with banking & finance/Microfinance
expertise. The board meets on a quarterly basis and if required frequency of the meeting
Section 1: Microfinance Capacity Assessment Grading
18
increases. Among the board members, Mr. Sachin Bansal, Mr. Anand Rao and Mr. Samit Shetty
take strategic decisions and are actively involved in the day-to-day business operations.
Mr. Sachin Bansal, Managing Director and CEO of Chaitanya is the former Chairman and co-
founder of Flipkart, India’s leading e-commerce market place, which was acquired by Walmart
in 2018. He was named in the World 40 under 40 list by Fortune Magazine in 2012, as
Entrepreneur of the year by Economic Times in 2013 and among TIME Magazine’s 100 most
influential people in the world in 2016. He has served on Government committees for skill
development in India.
Mr. Anand Rao, Co-founder and Joint Managing Director of Chaitanya, started his career in BOSCH
and later in sales and supply chain management at PEPSICO. Later on he moved to the social
impact sector, beginning at World Watch Institute and World Resources Institutes at Washington
DC. He was the head of Projects, Small Scale Sustainable Infrastructure Development Fund (SIDF)
Bangalore, 2004-2009. He is the founder of Chaitanya Foundation – (an MFI) 2007 – 2009.
Diversified resource profile
Resource Profile %(as on 31Mar20) Banks 48 FIs 20 NBFCs 32 Total 100.00
As on March 31, 2020 Chaitanya has developed funding relationships with a large number of
lenders i.e. 29 lenders (including 11 PSU/Private banks). The relationships with lenders have
helped Chaitanya in meeting its funding requirements to meet the projected growth.
The cost of funds (COF) for Chaitanya stood comfortable at 13.60% in FY 2020 as compared to
14.53% in the previous year. The liquidity support from the parent company of Chaitanya has
enabled it to draw most of the borrowings at relatively lower rate than the market rate.
Leverage of the company has significantly improved to 1.77 times in FY2020, compared to 7.93
times in FY2019 on account of equity infusion by the shareholders.
Comfortable capitalisation and comfortable liquidity profile
Capital Adequacy (as on 31st
March, 2019) (as on 31st
March, 2020)
Tier -I Capital (in crore) 40.62 203.13
Tier -II Capital (in crore) 29.96 134.49
Total Capital (in crore) 70.58 337.61 Risk Weighted Assets 403.48 883.66
Capital to risk adjusted ratio (CRAR) (%) (A+B) 17.50 38.21
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Tie-up of funding sources
Access to debt (as on 31st
March, 2019) (as on 31st
March, 2020)
Net Worth (in crore) 61.48 316.90 Term loan from Bank & FIs (in crore) 487.54 559.53 Off Balance Sheet (in crore) 172.45 37.89 Total Borrowings (in crore) 659.99 597.42 Gearing (assuming assigned book as debt) (times) 10.74 1.89 Cost of Funds (from spreads) (%) 14.53 13.60
Chaitanya has adequate capitalization marked by total equity capital of Rs.316.90 crore as on
March 31, 2020 as compared to Rs.61.48 crore in the previous year on account of equity infusion
and internal accruals.
Chaitanya’s capital adequacy ratio (CRAR) has significantly improved to 38.21 per cent as on
March 31, 2020 as compared to 17.50 per cent in the previous year. CRAR is more comfortable
than the RBI stipulated CRAR for NBFC-MFI of 15 per cent.
Chaitanya’s has a comfortable liquidity position due to well matched maturity of assets and
liabilities. The tenure of loans is about 12-24 months, whereas the incremental bank funding is
typically with tenure of about 24-36 months. As informed by the management the company has
also drawn liquidity comfort from its parent company in the form of an agreement on inter-
corporate facility of Rs. 100 crores. The company has undrawn sanction of around Rs. 45 crore
from its lenders as on July, 2020.
As informed by the management, the comfortable liquidity position of the company has allowed
it not to avail any moratorium from its lenders.
Improvement in operational performance in FY2020
Particulars FY 2018 FY 2019 FY 2020
Net financial margin (In thousands) 2,71,311 5,64,579 8,34,729
Operating expenses 3,79,009 5,11,423 7,63,396
Operational Self Sufficiency (%) 87.64 104.75 104.24
Operating Expense Ratio (OER) (%) 12.00 11.06 10.79
Chaitanya’s has reported net profit of Rs. 4.54 crore on operating income of Rs. 175.38 crore in
FY2020. In FY2019, Chaitanya had reported net profit of Rs.4.42 crore on operating income of
Rs.117.14 crore.
20
As on Mar 31 2020, Chaitanya has an outstanding loan portfolio of Rs.880.98 crore spread over
235 branches of 5 states with about 4,63,597 borrowers. The companies’ portfolio outstanding
witnessed a growth of ~ 54% in FY2020 over the previous year.
Financial revenue of Chaitanya has increased by ~50% in FY2020 as compared to the previous
year; however, Net income after tax has grown by ~3% in the same period on account of
impairment of financial assets by Rs. 20.38 crore.
The operational self-sufficiency (OSS) of the company stood stable at 104.24% in FY2020 as
compared to 104.75% in the previous year. The company’s operating expense stood high at
10.79% in FY2020 due to increased operating expenses on account of expansion of branches in
newer geographical regions; however, it has improved from 11.06% in the previous year.
Diversified Geographical Reach
Particulars 31/Mar/2017 31/Mar/2018 31/Mar/2019 31/Mar/2020 No. of States 2 3 4 5 No. of Districts 23 29 41 54 No. of Branches 114 145 176 235
Chaitanya has moved its operations to 5 states over the years and has increased no. of branches
to 235 in 54 districts of 5 different states as on 31st March, 2020.
However single state and two-state concentration remained moderately high at 60% and 84%
as on 31st March, 2020. Moreover, no district has accounted for greater than 5% of the
company’s total loan book.
In order to mitigate any potential risk arising out of geographical concentration, Chaitanya has
been diversifying its presence across states.
Name of the State
No. of Branches
No. of Borrowers
Portfolio o/s (in crore)
PAR % (>30 days)
% of Total Portfolio o/s
Bihar 41 57,128 109.99 0.04 12
Jharkhand 10 6,925 14.84 0 2
Karnataka 108 243,628 524.39 1.65 60
Maharashtra 61 107,714 212.77 1.30 24
Uttar Pradesh 15 12,531 18.99 0.00 2
Total 235 427,926 880.98 1.30 100.00
Chaitanya’s has diversified its operations in 5 states i.e Karnataka, Maharashtra, Bihar,
Jharkhand and Uttar Pradesh.
As on March 31, 2020, Chaitanya’s portfolio is concentrated in the state of Karnataka accounting
for ~ 60 percent, and ~ 24 percent in Maharashtra and the rest 16 percent in the other 3 states
i.e. Bihar, Jharkhand and Uttar Pradesh.
As discussed with the management, the company has further planned to expand its operation
in state of Tamil Nadu, Gujarat, Rajasthan and Chhattisgarh.
21
However, it would also be key grading sensitivity factor for the company to replicate its
systems, processes and sound asset quality in the newer geographies while improving portfolio
diversity.
Productivity and efficiency of employees
Particulars 31/Mar/2017 31/Mar/2018 31/Mar/2019 31/Mar/2020 No. of States 2 3 4 5 No. of Districts 23 29 41 54 No. of Branches 114 145 176 235 No. of Active Members 1,71,938 2,45,126 3,22,319 4,27,926 No. of Loans 1,79,108 2,59,292 3,39,574 4,63,597
No. of Total Employees 1,175 1,246 1,582 2,201
No. of Field/Credit
Officers 761 842 1027 1,432
No. of JLGS 36,508 52,216 68,568 91,072 No. of Individual Loans 7,282 2,150 850 20
Financial Ratios 31/Mar/2018 31/Mar/2019 31/Mar/2020
No. of Active Borrowers Per Staff Member 196 204 195
No. of Active Borrowers per field executives
291 313 299
No. of members per Branch 1690 1831 1821
Gross Portfolio o/s per field executive (in thousands)
4,257 5,568 6,152
Average Outstanding Balance per client (in Rs)
13,822 16,839 19,364
Cost per Active client 1546 1587 1784
The company’s branch network and client network has expanded from 176 branches to 235
branches servicing over 1.79 lakh borrowers as March 2017 to 4.64 lakh borrower to March
2020.
Chaitanya’s field productivity remains above average in comparison to its peers; field outreach
and asset productivity indicators of the company have been stable over the years.
The growth is partially also driven by an improvement in loan ticket size; average loan
outstanding per client was worth Rs. 16,839 as on Mar 2017 and Rs. 19,364 as on Mar 2020.
Average loan outstanding per client of Chaitanya stood comfortable and below its peers.
Sound asset quality
Chaitanya has maintained sound asset quality with on-time repayment rate of 97.22% as on
March 31, 2020.
22
Period FY 2017 FY 2018 FY 2019 FY 2020
Portfolio o/s Portfolio o/s Portfolio o/s Portfolio o/s
On-time (in crore) 208.04 336.28 557.51 856.45
1-30 days (in crore) 6.80 0.63 0.51 13.05
31-60 days (in crore) 7.90 0.85 0.39 1.55
61-90 days (in crore) 6.52 0.43 0.19 1.53
91-180 days (in crore) 14.58 1.50 0.20 2.68
181-360 days (in crore) 0.65 4.70 0.13 2.31
> 360 days (in crore) 0.32 14.02 0.12 3.41
Write-off (in crore) 0.09 0.02 12.81 9.36
Total 244.82 358.41 571.84 880.98
On-time (in %) 84.98 93.83 97.49 97.22
PAR 0-30 days (in %) 2.78 0.18 0.09 1.48
PAR >30 days (in %) 12.24 6.00 2.42 1.30
PAR >90 days (in %) 6.35 5.64 2.24 0.95
The PAR 0-30 days stood at 1.48% as on March 31, 2020 as compared to 0.09% as on March 31,
2019 on account of COVID- 19 lockdown. The PAR >30 days stood at 1.30% as on March 31, 2020
as compared to 2.42% as on March 31, 2019.
Adequate credit appraisal processes, monitoring and risk management mechanisms have
supported the company to keep asset quality indicators under control.
23
Strong IT Systems Audit Mechanism
Chaitanya’s management information system (MIS) and Information Technology (IT)
infrastructure is adequate for its current scale of operations. It has dedicated MIS and IT team at
Head Office to ensure smooth flow of operational data between Head Office and branches. It uses
customized software ‘’ MIFOS-X’’, developed by the Grameen Foundation and currently managed
by Conflux Technologies.
The company has been using app-based MIS software to enable real-time tracking of micro
finance activities. The system also allows the functions like integration of LOS with Aadhaar Data
vault and three Credit Bureaus, Integration of LMS with digital platforms like Razorpay and PayU.
Credit Bureau Checks
The company conducts compulsory credit bureau check of its borrowers from CRIF High Mark
and Equifax. The company shares the credit data with all four credit bureaus i.e. CIBIL, Experian,
CRIF High Mark and Equifax on weekly basis as per the RBI norms.
Toll Free Number
The company has a dedicated toll free number, where calls are recorded automatically and
addressed within 7 working days.
Internal Audit Process
The company has a dedicated team of internal auditors who undertakes compulsory branch and
borrower audit once in every month. All audits are surprise audits.
Inherent risk prevalent in the microfinance sector
Chaitanya’s business risk profile remains susceptible to socio-political risk, regulatory and
legislative risks, along with the inherent risks existing such as unsecured nature of lending,
vulnerable customer profile and exposure to vagaries of political situation in the area of
operation.
24
`
COCA Grading – C1 (Excellent Performance on Code of Conduct dimensions)
SCORES ON PARAMETERS
Code of Conduct Parameters Code % Performance
Sensitive SEN 98%
Integrity and Ethical Behavior IEB 87%
Transparency TRP 95%
Client Protection CLP 91%
Governance GOV 98%
Recruitment REC 92%
Client Education CLE 86%
Feedback & Grievance Redressal FGR 86%
Data Sharing DSR 100%
98%87%
95%
91%98%92%
86%
86%
100%
SEN
IEB
TRP
CLP
GOVREC
CLE
FGR
DSR
COCA Dimension Scores
Max
Obtained
Section 2: Code of Conduct Assessment
25
Chaitanya with an overall grade of “C1’’ indicate Excellent Performance on Code of Conduct
dimensions.
93%
87%
97%
87%
Observance
Dissemination
Documentation
Approval
ADDO Scores
26
The Code of Conduct report for Chaitanya Microfinance Limited (Chaitanya) evaluates the company’s
adherence to various code of conduct parameters. The study examines and comments upon the
common minimum indicators such as:
Sensitive Indicators Integrity and Ethical Behaviour Transparency Client Protection Governance Recruitment Client Education Feedback and Grievance Redressal Data Sharing
SMERA believes that Chaitanya exhibits excellent performance on COCA dimensions. This document
details SMERA’s approach and methodology for this study and gives observations of its assessment
team while conducting the evaluation. The Approval; Documentation; Dissemination and
Observance (ADDO) framework has been used for assessment and measuring Chaitanya’s adherence
towards ethical operational practices.
Code of Conduct Assessment Summary
27
Strengths Weaknesses
Board with rich experience from
Microfinance and finance background.
Chaitanya has more one-third of its board
members as Independent directors.
Transparency in loan pricing and policies.
Adequate software based MIS to handle
current scale of operations.
Compulsory training on products terms and
conditions to client prior to every loan.
Board approved policies, compliant with the
RBI guidelines.
Code of Conduct framed as per the
Chaitanya’s mission, vision, values and
displayed in all branch offices & HO.
Membership with MFIN state industry
association of microfinance institutions
(AKMI).
Credit policies are well established
documented and communicated.
Adequate loan appraisal & monitoring
systems.
A specialized Credit Manager conducts
rigorous assessment for loans exceeding Rs
30, 000.
Chaitanya has a five step grievance
escalation process including the Branch
Manager, Regional Manager, Grievance
Redressal Officer (GRO) of Chaitanya, AKMI
toll free number for registering complaints
and the RBI.
Awareness among the staff on RBI
compliance was found to be moderate to
high.
Financial and operational data for FY 2019
is available on the website of Chaitanya.
Displays the details of the loan products
including their interest rates and client
grievance redressal system on its website.
It has an effective system to record
complaints received at the toll free number.
However, very limited entries were
observed in complaint registers
maintained at the branch level.
Strengths and weaknesses pertaining to Code of Conduct
28
Data sharing with credit bureau (Equifax,
CIBIL, Experian and High Mark).
29
HIGHER ORDER INDICATORS
Integrity and Ethical Behaviour
The MFI does have the policy to place reports on COC compliance
before the board at the end of every financial year.
The audit committee of the Board reviews the adequacy of audit
staff strength and scope of Internal Audit.
Board has approved a policy of recovering delinquent loans.
MFI prepares monthly reports about the number, nature and
resolution of grievances and feedback received for management
review and same is presented to audit committee set up at board
level.
The MFI has a practice that when it recruits staff from another
MFI, the said staff will not be assigned to the same area he/she
was serving at the previous employer for a period of one year.
In all the branches, the contact number and address of MFIN
nodal official was properly displayed.
Awareness among client and staff on MFIN greviance redressal
mechanism was found to be moderate to high.
The MFI have the policy to place reports on COC compliance before the board.
Fixed Component compensation of staff is not impacted in event
of overdues. Chaitanya, in its fair practices code provides
importance for transparency in pricing and clear communication
to the clients.
Sensitive Indicators
Clients interviewed were moderately aware of the charges and
price for all services availed.
Awareness among the staff on RBI guidelines was found to be
moderate to high.
There are no adverse observations in the Auditor's report
regarding accounting standards followed by the MFI.
Chaitanya shares accurate data with all credit bureaus on a
frequency prescribed by MFIN.
Chaitanya does not charge any extra fees from client apart from
processing fee and insurance premium. The loans are issued to
the clients without any collateral and no security deposit is
accepted. Further no penalty is charged for overdue and pre-
closure of loans. The organization also has a well-documented
policy on pre-payments.
The MFI gets an external CA agency to certify its compliance with
RBI's directions for NBFC-MFIs.
Significant Observations
30
BUILDING BLOCKS
Transparency
Awareness among the staff on RBI guidelines was found to be
moderate to high.
Chaitanya has documented the pricing of its loan products in its
operational manual. In the branches visited loan documents had
been maintained in local languages.
Circulars with the most recent directions were available in the
visited branches.
Chaitanya’s in its fair practices code provides importance for
transparency in pricing and clear communication to the clients.
The loan interest rate and processing fees is mentioned on the
loan passbook and loan agreement provided to the client.
Clients interviewed were moderately aware of the charges and
price for all services availed.
Audit committee verifies through the audit reports whether all
clients have received the necessary loan documents.
Chaitanya displays the details of the loan products including
their interest rates and client grievance redressal system on its
website.
Chaitanya issues loan agreement to the clients with all terms and
conditions of the loan including annualized interest rates.
Code of conduct compliance report of Chaitanya & previous
financial year annual financial statement and report is available
in the public domain.
Client Protection
Chaitanya has a board-approved policy regarding client data
security.
Employees are trained on aspects of appropriate behavior with
the clients.
Chaitanya has documented policy on client data security which
forms part of its fair practice code.
Chaitanya does not take written consent of the client for third
party disclosures and does not offer Non-credit products to its
clients.
Chaitanya has framed a Fair Practice Code and has also adopted
the RBI fair practices code.
Employees are trained on aspects of appropriate behavior with
the clients.
Staffs were found to be aware of the need to have professional
conduct with the clients.
Internal Audit checklist is comprehensive but can be
strengthened further by incorporating more aspects like
awareness regarding Reserve Bank of India (RBI) compliance
31
and Self-Regulatory Organization (MFIN ) among
clients/members and staff, Privacy of client information.
Governance
MFIs maintain high standards of governance by inducting
persons with good and sound reputation as members of Board
of Directors/Governing body.
Chaitanya has its board with rich experience from banking and finance. Chaitanya has more one-third of its board members as Independent directors.
Chaitanya discloses its MD’s compensation in its audited
reports (Ref. Audit Report 2020).
An audit committee of the Board with an independent director
as chairperson.
The MFI has got its accounts audited in a timely manner after
the end of the most relevant financial year.
No adverse observations in the Auditor's report regarding
accounting standards followed by the MFI.
Recruitment
Chaitanya’s board has reviewed its recruitment policies at least
once annually.
The MFI has a defined and documented process for responding
to reference check requests.
There is documentary evidence to suggest that MFI has
honored the notice period for all employees who have left it.
Chaitanya obtains NOC or relieving letter from the previous
employee, in case employees are recruited from other MFIs.
The MFI has a practice that when it recruits staff from another
MFI, the said staff will not be assigned to the same area he/she
was serving at the previous employer for a period of one year.
Client Education
Chaitanya in its fair practices code provides importance for
raising clients' awareness of the options, choices and
responsibilities regarding financial products and services
Chaitanya does not charge clients for the trainings provided to
clients, itself or through a related party.
Awareness among client on annualized Interest rate &
Insurance claim settlement process was found to be moderate.
Feedback and Grievance Redressal
The Board has approved a policy for redressal of its clients’
grievances, which requires board to be updated on the
functioning of grievance redressal mechanism.
MFI prepares monthly reports about the number, nature and
resolution of grievances and feedback received for
management review and same is presented to audit committee
set up at board level.
Chaitanya has a five step grievance escalation process including
the Branch Manager, Regional Manager, Grievance Redressal
32
Officer (GRO) of Chaitanya, AKMI toll free number for
registering complaints and the RBI.
Clients were found to be moderately aware of the helpline
number.
Feedback mechanisms are regularly tracked and monitored.
In all the branches, the contact number and address of MFIN
nodal official was properly displayed.
It has an effective system to record complaints received at the
toll free number. However, very limited entries were observed
in complaint registers maintained at the branch level.
Awareness among client and staff on MFIN greviance redressal
mechanism was found to be moderate to high.
Dedicated team at HO level to documents and follow up on the
client complaints.
Data Sharing
Financial and operational data for FY 2019 is available on the
website of Chaitanya.
MFI has a well-defined process for sharing data with the credit
bureaus.
MFI has provided data called for by MFIN and RBI as and when
required as per compliance.
Chaitanya shares accurate data with all credit bureaus on a
frequency prescribed by MFIN.
Chaitanya performs compulsory credit bureau checks for all its
clients.
33
ANNEXURES
34
Microfinance Grading Methodology
A) Operational Track Record
Business Orientation and Outreach of the MFI is an important parameter to gauge the growth strategies of the MFI and to assess its strategies for development. This parameter is analysed using the following sub-parameters.
Direction & Clarity Ability to raise funds Degree of association with promoter institution Alternate avenues for funds Outreach (No. of offices, No. of clients, No. of employees, Portfolio diversification)
B) Promoters & Management Profile
The elements in this parameter helps in assessing the Promoter & management quality evaluated on the basis of the basic educational qualification, professional experience of the entrepreneur; and business attitude that is related to the motivation of carrying out the business and pursuing business strategies. This parameter is analysed using the following sub-parameters.
Past experience of the management Vision and mission of the management Profile of the Board Members Policies and Processes Transparency and corporate governance
C) Financial Performance
SMERA analyses the credit worthiness of the organization through the following financial parameters. Various financial adjustments are done to get more accurate ratios for comparison. Financial analysis helps the MFI to know its financial sustainability. This parameter is analysed using the following sub-parameters.
Capital adequacy Profitability/Sustainability ratios Productivity and efficiency ratios Gearing and Liquidity ratios
35
D) Asset Quality
The loan portfolio is the most important asset for any MFI. SMERA analyses the portfolio quality of the MFIs by doing ageing analysis, sectoral analysis, product wise analysis etc. SMERA compares the portfolio management system with organizational guidelines and generally accepted best practices. This parameter is analysed using the following sub-parameters.
Ageing schedule Arrears Rate / Past Due Rate Repayment Rate Annual Loan Loss Rate
E) System & Processes
SMERA analyses the polices and processes followed by the MFIs, their ability to handle volume of financial transactions, legal issue and disputes, attrition among the employees and client drop out which impact the productivity of the organization. SMERA also analyses asset liability maturity profile of the MFI, liquidity risk and interest rate risk. This parameter is analysed using the following sub-parameters.
Operational Control Management Information System Planning & Budgeting Asset Liability Mismatch
F) Financial Performance
SMERA analyses the credit worthiness of the organization through the following financial parameters. Various financial adjustments are done to get more accurate ratios for comparison. Financial analysis helps the MFI to know its financial sustainability. This parameter is analysed using the following sub-parameters.
Capital adequacy Profitability/Sustainability ratios Productivity and efficiency ratios Gearing and Liquidity ratios
Thus an evaluation of MFI would be comprehensive assessment based on the financial and non-financial parameters of any MFI.
36
COCA Methodology
The Code of Conduct Assessment (COCA) tool was developed as a response to the need expressed in
a meeting of stakeholders in Indian microfinance by the Small Industries Development Bank of India
(SIDBI) and the World Bank in December 2009. The code of conduct dimensions were identified by
reviewing the various norms for ethical finance. These included RBI’s fair practices guidelines for
Non-Banking Financial Companies, industry code of conduct (Sadhan-MFIN) and Smart Campaign’s
Client Protection Principles (CPP).
In 2016, need was felt to harmonize COCA to the most recent industry code of conduct and to
standardize COCA tools of different rating/assessment agencies. This grading is based on the
harmonized COCA tool. In the harmonized COCA tool, the dimensions were classified in three
categories – highest order, higher order and building blocks. This grading is based on the harmonized
COCA tool.
Highest Order
Sensitive Indicators
Higher Order
Integrity & Ethical Behaviour
Building Blocks
Governance Client Protection, Recruitment
Transparency Feedback/Grievance Redressal
Client Education Data Sharing
Chart: COCA Indicators Framework
37
Number of indicators in each category is presented below
Higher Order Indicators Number of Indicators Integrity and Ethical Behaviour 32 Sensitive indicators 26 Building Blocks Number of Indicators Transparency 40 Client Protection 122 Governance 30 Recruitment 13 Client Education 14 Feedback & Grievance Redressal 25 Data Sharing 6 Total 250
Methodology
The Code of Conduct exercise is spread over four to eight days. The first day is spent at the head
office. The assessment team visits the branches over the next three to eight days. Depending upon
the size and the operational area of the MFI, eight to fifteen branches and between 120 and 300
clients are sampled for primary survey (except in cases where number of branches in an MFI is less
than eight).
Sampling guidelines
The following is taken as the guideline to determine the sample size for a COCA exercise.
MFI Size No. of branches to be visited
No. of borrowers to be visited
Small MFI (Less than 8 branches)
All branches 15 clients per branch covering minimum two centers.
Small / Mid-size MFI (up to 2,50,000 borrowers)
8 – 10 branches (geographically distributed)
120-150 clients (15 clients per branch covering minimum two centers).
Large MFI (>2,50,000 borrowers)
12 – 15 branches (geographically distributed)
240-300 clients (20 clients per branch covering minimum two centers).
Large MFI (>2,50,000 borrowers) and having gross loan portfolio (GLP)> Rs 500 crore
18 – 20 branches (geographically distributed)
360-400 clients (20 clients per branch covering minimum two centers).
38
Code of Conduct Assessment exercise requires:
1. Discussions with key staff members and the senior management at the head office, particularly the senior operational management team as well as the human resources team. These discussions focus on key issues of the code of conduct identified above.
2. Review of policy documents and manuals at the head office. These are reviewed in order to assess the policy as well as documentation regarding important aspects of the code of conduct. The last audited financial statements will also be required.
3. Sampling of branches at the head office. The assessment team samples branch for review. The branches are chosen in across different states in case the MFI operates in more than one state. Care is exercised to include older branches as well as branches that are distant from the head office or the regional office. The sampling of the branches is performed at the head office of the MFI.
4. Discussions with the branch staff at the branch office. Discussions with branch managers and the field staff is carried out to assess their understanding of the key code of conduct principles.
5. Sampling of respondents in the selected branches. A judgmental sampling is performed on the MFI’s clients by the assessment team to draw respondents from the interest group, in order to maximize the likelihood that instances of non-adherence can be detected.
6. Interview with the clients. Information from the clients is collected ideally during the group meetings. If this is not possible, visits are made to the clients’ locations for collecting information.
7. Review of loan files at the branch office. This review focuses on loan appraisal performed before disbursing loans as well as the documents collected from the clients.
As part of this assessment, we visited eighteen branches of the MFI. The details of the branches
visited are provided below.
Sr No Branch State No of clients
interviewed
1 Aimangala Karnataka 15
2 Ajjampura Karnataka 16
3 Jagalur Karnataka 18
4 Holalkere Karnataka 21
5 Hanamasagara Karnataka 23
6 Ginigera Karnataka 16
7 Kale Maharashtra 15
8 Kasegoan Maharashtra 19
9 Degloor Maharashtra 20
10 Sherghati Bihar 22
11 Tekari Bihar 17
12 Raniganj Bihar 16
13 Kutumba Bihar 19
14 Imamganj Bihar 21
15 Kurtha Bihar 21
16 Chatra Jharkhand 19
39
17 Panki Jharkhand 18
18 Lesliganj Jharkhand 20
Total 336
40
Profit & Loss Account (Rs. In Thousands)
Period FY 2018 FY 2019 FY 2020 Months 12 12 12 Financial revenue from operations 7,63,887 11,71,368 17,53,828
Less - Financial expenses from operations 3,74,261 5,93,473 7,15,264
Gross financial margin 3,89,626 5,77,894 10,38,564 Provision for Loan Loss / Write off 1,18,315 13,316 2,03,835 Net financial margin 2,71,311 53,156 71,333
Operating expenses
Personnel Expense 2,52,971 3,46,648 5,36,048
Depreciation and Amortization Expense 11,339 13,982 15,382
Other Administrative Expense 1,14,699 1,50,793 2,11,966
Net operating income (1,07,698) 53,156 71,333 Current Tax 4,116 16,937 55,823 Deffered Tax charge/(credit) (31,777) (5,961) (35,175) Comprehensive Income 0 2,069 (5,226) Net Profit After Tax (80,037) 44,249 45,459
Above financials are audited.
Financials
41
Balance Sheet (Rs in Thousands)
As on date 31/Mar/2018 31/Mar/2019 31/Mar/2020
SOURCES OF FUNDS
Capital
Equity Capital 2,17,314 2,45,345 7,50,000
Reserve and Surplus 2,73,935 3,69,421 24,18,974
Total Equity 4,91,249 6,14,766 31,68,974
Liabilities
Short-Term Liabilities
Commercial Loans from banks/FI 10,36,403 19,97,326 32,25,355
Account payable & Other short-term liabilities
1,20,423 2,52,747 2,85,073
Total Short-Term Liabilities 11,56,825 22,50,073 35,10,429
Long-Term Liabilities
Long-Term Borrowings
Commercial Loans from banks/FI 15,70,040 23,30,572 19,72,246
Concessional Loan/Subordinated Debt 2,50,000 5,47,484 3,97,714
Total Long-Term Borrowings 18,20,040 28,78,056 23,69,959
Total Other Liabilities 29,76,865 51,28,129 58,80,388
Provisions 2,08,670 49,415 94,660
TOTAL LIABILITIES 36,76,785 57,92,310 91,44,022
42
As on date 31/Mar/2018 31/Mar/2019 31/Mar/2020
APPLICATION OF FUNDS
Fixed Assets
Net Block 20,633 24,636 28,333
Investment 0 0 4,91,282
Cash and Bank Balances 2,11,820 6,39,537 58,442
Security Deposits 1,85,285 2,19,626 1,40,592
Net Loan Portfolio 31,25,254 47,55,594 82,89,077
Accounts Receivable And Other Assets 86,648 98,899 45,971
Intangible Assets 928 1,397 772
Deferred Tax Asset 46,217 52,621 89,553
TOTAL ASSETS 36,76,785 57,92,310 91,44,022
Note: Financials of FY 2020 & FY 2019 have been prepared in ‘Ind AS’ framework where financials of FY 2018
has been prepared in Indian GAAP standard.
43
Financial Ratios 31/Mar/2018 31/Mar/2019 31/Mar/2020
12 12 12 Capital Adequacy Ratio
Capital Adequacy Ratio (%) 19.03 17.50 38.21
Productivity/Efficiency Ratios
No. of Active Borrowers Per Staff Member 196 204 195
No. of Active Borrowers per field executives
291 313 299
No. of members per Branch 1690 1831 1821
Gross Portfolio o/s per field executive (in thousands)
4257 5568 6152
Average Outstanding Balance per client (in Rs)
13,822 16,839 19,364
Cost per Active client 1,546 1,537 1,784
Asset/Liability Management
Cost of funds ratio (%) 14.50 14.53 13.60 Yield on Portfolio (nominal) (%) 24.02 24.00 23.56
Profitability / Sustainability Ratios
Operational Self Sufficiency (%) 87.64 104.75 104.24
Operating Expense Ratio (OER) (%) 12.00 11.06 10.79
Return on Assets (RoA) (%) (2.69) 0.92 0.78
Portfolio at Risk (>30 days) (%) 6.00 2.42 1.30
Return on Equity (RoE) (%) (16.29) 8.65 6.00
Leverage Ratios
Total Outside Liabilities to Tangible Networth Ratio (Times)
7.17 9.23 1.94
Debt/Equity Ratio (Times) 5.81 7.93 1.77
Financial Ratios
44
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