SMERA MFI Rating Report

Date of Report : 22nd June, 2015*

Valid Till : 21stJune, 2016

Legal Form : NGO - MFI

SMERA- MFI Rating : MF3 (Above Average)

MF1 Highest

MF2 High

MF3 Above Average

MF4 Average

MF5 Below Average

MF6 Inadequate

MF7 Low

MF8 Lowest

*This rating is a one-time exercise and does not envisage automatic surveillance. This rating is valid for a period of one year; subject to however, no significant changes / events occur during that period which could materially affect the business and financial parameters of the organization / project. SMERA recommends that the user of the rating may seek a review of the rating, if the rated entity experiences significant changes / events in the business. Recommended for review in next financial year. *As informed by the management, NEED is planning to takeover a NBFC. So SMERA recommends NEED should seek a review of the rating once takeover is done.

NETWORK OF ENTREPRENEURSHIP & ECONOMIC DEVELOPMENT (NEED)

38-39, Neel Vihar, Sector – 14,

Near PowerHouse, Indira Nagar, Lucknow - 226 016 Uttar Pradesh

India

1

SNAPSHOT

D&B D-U-N-S® Number 65-054-5986

MFI Name NETWORK OF ENTREPRENEURSHIP & ECONOMIC DEVELOPMENT (NEED)

Trade Style “NEED”

Registered Office Address

39, Neel Vihar, Sector – 14, Near Power House, Indira Nagar, Lucknow - 226 016 Uttar Pradesh India

Telex (91) (522) (2712671) (91) (522) (2712311)

Website www.needindia.org www.needindia.org.in

Email need@needindia.org

need.lko@gmail.com

Line of Business Microfinance services using Joint Liability Group (JLG) and Self Help Group (SHG) Model

Chief Executive Mr.Anil K. Singh, An Ashoka Fellow Chief Executive Officer

SMERA MFI Rating MF3 (Above Average)

Legal Form NGO-MFI (The Societies Registration Act, 1860)

Date of Incorporation 22/Jun/1995

Year of Commencement of Microfinance Operations

2005

Total Employees 280

2

RATING RATIONALE SMERA has assigned a rating of MF3 to NETWORK OF ENTREPRENEURSHIP & ECONOMIC

DEVELOPMENT (hereafter referred as NEED). The rating indicates that in SMERA’s current opinion,

the rated MFI’s ability with regards to credit strength is Above Average.

The rating assigned to NEED reflects following strengths:

Experienced and Qualified Management

NEED has experienced & qualified board members. NEED is managed by an international Advisory

Council Comprising Social Entrepreneurs, Trainers, Behavior Scientist, Volunteers,

Professors/Researchers, Consultants, 19 members from General Body and 07 members from Executive

Committee, which includes 04 women out of which a few are from the grassroots women micro-credit

organizations. Mr. Anil Singh, promoter issenior research fellow from Indian Institute of Management

(IIM) Ahmedabad who took specific action research project in remote tribal villages of India. After

working about 15 years in the formal sector, he started working for social and economic

entrepreneurship.

Standardized operational procedures

NEED has appointed department-wise personnel for operations, management information system (MIS),

Internal Audit (IA), Finance & Accounts, Risk cum Mobile Manager Team, Human Resource. The NGO-MFI

has documented operational policies covering details of loan products, field operations, credit approval and

monitoring process.

Asset Quality NEED’s assets quality is at adequate levels with almost 99% on-time repayment rate during the period

under study.

Capital Adequacy NEED is capitalized with capital adequacy ratio at 45.13 % as on March 31, 2014 as against 31.78% on

March 31, 2013.

3

Net Worth

The net worth base have increased during the period under study and stands at `̀̀̀ 51,420 (in thousands)

as on 31/Mar/2014.

Check on Multiple Lending

NEED was found to have adequate policy to check multiple lending / indebtness of the borrower

through credit bureau check i.e. “HIGHMARK”

Lending for Income Generation

Almost 80% of the total portfolio is provided for agriculture, production, small services, animal

Husbandry etc.

.

Diversity in Social and Economic Services

NEED with deeper penetration in the under-served states of Uttar Pradesh & Bihar is an organization

of 280 social entrepreneurs focusing on following areas

• Promoting Pro-Poor Livelihoods& micro-enterprises including entrepreneurship,

• Micro-finance way to promoting Social & Economic Enterprises includingHealthcare and Sanitation,

• Safe Drinking Kits,

• Nutrition,

• Creating a cadre of community based Village Health Guides,

• Community School Teachers

• Micro-Planning with Village Councils with public and private service institutions.

4

However the rating is constrained by following weaknesses:

Decrease in Revenue

The revenue of NEED has decreased during the period under study. NEED has earned revenue of around

`̀̀̀ 47,680 (in thousands) for FY 2012, 34,126 (in thousands) for FY 2013 and `̀̀̀ 27,110 (in thousands) for

FY 2014.

Lack of connectivity of branches on real time basis

NEED lacks a robust MIS system. There is limited real time tracking and capturing of information

mechanism available with the management. Head office needs to be dependent on branches to have access

to records which gets updated in the HO MIS system on T + 1 day basis.

The current MIS system deployed in the organization seems to be sufficient considering the current scale of

operations and nature of the organization. However considering management future plans to transform into

NBFC, it is viable to have a technologically sophisticated mechanism that can be connected to all branches

on real time basis. Hence management will be able to extract any type of company report on real time basis;

the systems will also assist in monitoring and controlling in addition to supporting audit function.

Decrease in Loan Portfolio

The loan portfolio has decreasedover the years owing to decline in credit supply by banks and financial

institutions to the Society entity like NEED. It has decreased from Rs 175,704 (in thousands) in FY 2012

to Rs 96,437(in thousands) in FY 2014.

Lack of Awareness of Products

Few of the individual borrowers when asked about the insurance coverage availed were not aware of

the purpose for which it was availed. NEED should provide adequate training and create awareness

among the borrowers about the purpose of insurance at the time of disbursement. Further some of the

borrowers were not aware of their Group ID number.

Loan Utility Check

The branch staffs were found to be aware of how to conduct the Loan appraisal and PLUC as per the

guidelines but the same was not being conducted effectively as per compliance.

5

Untapped and Unexplored Market The market for Micro finance is highly untapped and unexplored in the areas catered by NEED. The

loan portfolio can be enhanced by increasing the loan amount which is being restricted at Rs 25,000 due

to funding constraints on account of decline in credit supply by banks and financial institutions.

Geographical Concentration NEED’s operation is confined and restricted to 06 districts and 02 states (Uttar Pradesh and Bihar).

6

MFI BACKGROUND NETWORK OF ENTREPRENEURSHIP & ECONOMIC DEVELOPMENT (NEED) was established on

22nd June, 1995 as a Not for Profit entity under The Society Act, 1860 by Mr. Anil K. Singh after having

completed his post graduate study from Xavier Ranchi (Rural Management) and then after his long

association in advance research experience from IIM, Ahmedabad followed by his good length of

working experience in livelihoods cum micro entrepreneurship both in private and public institutions.

NEED with deeper penetration in the under-served states of Uttar Pradesh & Biharis an organization of

280 social entrepreneurs focusing on following areas

• Promoting Pro-Poor Livelihoods& micro-enterprises including entrepreneurship,

• Micro-finance way to promoting Social & Economic Enterprises includingHealthcare and Sanitation,

• Safe Drinking Kits,

• Nutrition,

• Creating a cadre of community based Village Health Guides,

• Community School Teachers

• Micro-Planning with Village Councils with public and private service institutions.

The above diversity of services also supplements and supports the Micro-Credit Products of NEED and also

enhances the credentials and trustworthiness of relationship between NEED and Micro-Finance borrowers

in a verymatured way The targeted communities mostly includes Minority groups, Youth, Artisans,

Women, Marginal farmers, Children and many others who are in a still very deprived and disadvantageous

condition.

NEED is managed by an international Advisory Council Comprising social Entrepreneurs, Trainers,

Behavior Scientist, Volunteers, Professors/Researchers, Consultants, 19 members from General Body and 07

members from Executive Committee, which includes 4 women out of which a few are from the grassroots

women micro-credit organizations.

7

Product

NEED provides microfinance loans under Joint Liability Group (JLG) and Self Help Group (SHG)

model; each group consists of 5-20 members.

The loans are provided for various income generating activities i.e. petty trade, mess, tailoring, animal

husbandry etc. NEED charges interest of @ 26%p.a. on reducing balance basis (Cost of Funds plus 12%)

along with 1% of loan amount as loan processing fees and loan amount insurance. NEED offers these

loans with monthly repayment frequency.

Predominantly NEED operates in rural areas and offers monthly loans, as these align with the

cashflows of the borrowers. NEED is currently offering loan in the range of 10,000- 15000 at first cycle

with repayment tenure of 12 months and fourth cycle ending at Rs.25,000 with repayment tenure of 18

to 24 months. Out of 15 branches, only 2 branches i.e. Sitapur and Lucknow slums and this too with

limited groups are having tenure of 18 months in an absolute resonance with actual needs and

necessities of borrower’s requirement. Many times borrowers are placing their request to have loan for

shorter duration based on their seasonal demands and also quicker way of seeking next cycle of loan

for their seasonal requirement. Otherwise, in rest of their units, NEED has all along been lending for 12

and 24 months in line with volume of above Rs .15000.

Note:

The repayment tenure for fourth cycle has been reduced from 24 months to 18 months as per the

request initiated by the clients.

Insurance

NEED has tied up with PNB MetLife under which all the borrowers are covered with term insurance

where the insured amount is equal to loan amount.

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BOARD STRUCTURE

Name Qualification Designation Background

Mr. Anil K. Singh

• Graduate in Science (1975-77) from Magadh University, Bihar

• Post Graduate in Social Service (1978-80) with specialization in Rural Management from Xavier Institute of Social Service (XISS) Ranchi-1, (India)

• Awarded Six Months certificate course of Management of Entrepreneurship Development from XAVIER INSTITUTE, Ranchi

• Advance Research at IIM, Ahmedabad

Member Secretary cum Chief Executive

• Mr. Anil Singh came in contact with the pioneering Indian Institute of Management (IIM) Ahmedabad as Senior Research Fellow to take-up a specific action research project in remote tribal villages of India. After working about 15 years in the formal

sector, he started working for social and economic entrepreneurship.

• Mr. Singh has been selected as a lifetime member of the Ashoka Global Fellowship Program and is a Fellow of the UK based initiative Management In Development (MIND).

• Only recently, he has been awarded as “Best Citizen of India” in recognition of his

contribution and outstanding performance in the social sector.

• He has traveled across the world and delivered his rich experiences including at Oxford, LSE, Princeton, New Mexico, Berlin and several places.

• Under his coordinated team leadership, NEED has been acclaimed several awards and recognition

� National Financial Inclusion

Award

� The Best Merit Certificates on promoting gender driven interventions

� An ISO- 9001 of Kvalitet

Veritas Quality Assurance.

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� Certificate of Membership with Banking With The Poor Network (BWTP) Singapore

� Presidential award from

Global Find for Children (GFC), USA.

� UNIFEM at South Asia level- First time recognized EIGSEP model.

Mrs. Pushpa Singh • Master’s degree in

Psychology from Ranchi University.

Treasurer

• Mrs. Pushpa Singh is in-charge of the market exposure aspect of

entrepreneurial skill building program linking micro-finance for micro-enterprises sustenance.

• She is responsible for the overall development of women and children including fair trade promotion.

Mrs. Usha Mishra • Graduate

Chairperson

• Mrs. Usha Mishra is a micro-credit member who runs an enterprise at her own.

• She advocates on behalf of the poor women like her so that NEED could enhance its

capacity and scale of operation to the greater extent.

Shri Abhinav Goel

• Bachelor of Science (Economics) from London School of Economics and Political Science (LSE), London.

• D.Lit from Washington University in Law

Member • Shri Abhinav Goel is currently

working as a consultant to World Bank HQ, DC, USA.

Mrs. Nilanjana Das • Post Graduate

(Management) Member

• Mrs. Nilanjana Das is a carrying experience of about 13 years in Corporate Social Responsibility

(CSR), Self Help Groups, Mobilizing the people and micro-credit driven income generation activities.

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• She is also assisting NEED on developmental issues like Fair Trade, Fair Financing and Fair

Approach.

Mrs. Priyanka Dutta • Post

Graduate(English) Member

• Mrs. Priyanka Dutta is a carrying experience of about 10 years in Fair Trade, Documentation, Self Help Groups, Financial inclusion

etc.

• She also assists NEED on developmental issues like Fair Trade, Fair Financing and Fair Approach.

Mrs. Lalita Devi • B.A., B. Ed., M.Ed.

Member

• Mrs. Lalita Devi has been a trainer to a handicapped school for last 15 years with a very clear spirit of helping the deprived and disadvantageous section of

community.

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Board Processes The board members are actively involved in strategy formulation, developing & approving business plans,

fund mobilization. Board meetings are conducted at least once in every six months to discuss about the

growth in operations and programme implementation. Board meeting are conducted to discuss the overall

performance, recruitment, updating policy, to ensure the use of resources, approve annual work plan and

budgets, implement programmes that are in line with the mission and vision, monitor MFI’s performance

and review monthly reports. The management team updates the board regularly on operations and key

developments in each department.

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HIGHLIGHTS OF NEED OPERATIONS

Particulars 31/Mar/2012 31/Mar/2013 31/Mar/2014 31/Mar/2015

No .of States 02 02 02 02

No. of Districts 13 08 07 06

No. of Branches 11 08 07 15

No. of JLGs 17,816 19,944 21,381 22597

No. of SHGs 481 526 568 590

No. of active borrowers 26,781 14,247 10,984 8259

No. of employees 139 96 87 73

No. of field officers (FOs) 88 64 56 44

Cumulative loan disbursements

(Rs. thousands) 8,70,949 10,06,907 10,93,623 11,83,503

Loan disbursements during

the year (Rs. thousands) 159,590 135,958 86,716 89,880

No. of Loans Disbursed

during the year 13,078 9,267 6,424 5,348

Portfolio outstanding

(Rs. thousands) 175,704 123,745 96,437 75,917

Loan outstanding per

borrower (In Rs) 6,561 8,686 8,780 9,192

ActiveborrowersperFO 304 223 196 188

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BRANCH WISE DETAILS AS ON 31/MAR/2014

District Name No. of active borrowers

Loan Outstanding

(in thousands)

Overdue Amount (in

thousands)

PAR > 30 days (in

thousands)

Mahmoodabad 5,135 41,743 15 12

Fatehpur 479 4,826 23 21

Motipur 990 5,821 572 664

Saraiya 1,681 17,930 0 0

Chakiya 2,014 18,770 880 60

Patna 480 6,255 0 0

Malihabad 205 1,091 0 0

Total 10,984 96,436 1,490 757

BRANCH WISE DETAILS AS ON 31/MAR/2015

BranchName

No.ofactive borrowers

Loan Outstanding

(in

thousands)

Overdue Amount (in

thousands)

PAR>30 days(in

thousands)

Pahla 946 11,724 0 0

Mahmoodabad 1,658 16,088 0 0

Rampur Mathura 1,047 11,526 06 06

Biswa 78 472 25 22

Fatehpur 419 4,561 0 0

Pukraira 625 4,432 0 0

Vaisali 536 4,135 0 0

Paru 540 3,963 0 0

Mehasi 410 2,548 30 28

Barmadiya 439 2,821 0 0

Kesariya 428 2,263 0 0

Patna 736 7,719 85 79

Maner 269 2,469 0 0

Lucknow 59 918 01 01

Malihabad 69 276 0 0

Total 8,259 75,915 147 136

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SECTOR WISE LOAN OUTSTANDING

For the period ended as on

31-Mar-13 31-Mar-14 31-Mar-15

Industry Amount

% Amount

% Amount

% (`̀̀̀ in ‘000) (`̀̀̀ in ‘000) (`̀̀̀ in ‘000)

Agriculture 19,849 16.04 18,323 19.00 14,500 19.10

Income Generation

Activities 57,022 46.08 43,397 45.00 33,866 44.61

Production 6,410 05.18 6,751 07.00 5,694 7.50

Small Services 12,474 10.08 2,893 03.00 2,984 3.93

Animal Husbandry & Others

27,991 22.62 25,074 26.00 18,873 24.86

Total 123,746 100.00 96,438 100.00 75,917 100.00

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AGEING SCHEDULE OF THE LOAN PORTFOLIO (`̀̀̀ IN THOUSANDS)

As on 31st March FY 2012 FY 2013 FY 2014 FY 2015

(31/Mar/2015)

Total loan outstanding that are

Value of Portfolio o/s

Value of Portfolio o/s

Value of Portfolio o/s

Value of Portfolio o/s

On time 170,994 119,286 95,639 75,781

Late (At least one payment)

1-30 days 26 0 40 0

31-60 days 107 0 88 01

61-90 days 85 0 58 0

91-180 days 246 27 265 22

181-360 days (Loans written off)

4,246 4,432 346 113

Total 175,704 123,745 96,437 75,917

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SYSTEMS AND PROCESSES MIS The current MIS system deployed in NEED has been published by Vexil Info Tech Private Limited for

complete micro finance solution. Furtheron daily basis during the course of recovery and

disbursement, two persons from the HQ as Risk Managers are constantly in communication with every

units and further cross checking the flow of capital by viewing the online of bank accounts. In addition,

Operation Manager gets instant SMS from all units regarding the deposits of recovery on daily basis.

Besides NEED has already been in the process of introducing further upgraded online software

including mobile driven tracking system on instant basis.

Lending Model NEED provides microfinance loans under SHG & JLG model for various income generating activities &

animal husbandry. NEED charges interest of @ 26%p.a. on reducing balance (Cost of Funds plus 12%) along

with @ 1% of loan amount as loan processing fees. The repayment tenure is of 12 months for ` 10,000 –

15,000 and 24 months beyond 25,000 except in just two areas with those borrowers who are in demand for

shorter duration i.e. for 18 months based on their seasonal requirements of livelihoods. The targeted

communities mostly includes Minority groups, Youth, Artisans, Women, Marginal farmers, Children and

many others who are in a still very deprived and disadvantageous condition.

Client/Group Identification/Selection Registration of potential customers is done by the Loan Officer after carrying out various details

pertaining to the potential borrowers and their household. Generally, a Joint Liability Group is formed

in case of potential woman customers, which consist of 5 to 6 members.

The following observations are made by the loan officers when an individual approaches him with

loan proposal:

1. Whether the individual has good credentials with family members, local people, informal leaders

and bankers?

2. Whether the individual is consistent in his economic activity for which he is seeking or likely to

seek loan?

The loan officers collect the above information from different sources in the village. The Loan Officer

visits the potential customer twice atleast to assess his economic worth for granting any credit to

him/her.

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The following enclosures are required:

• Xerox copy of Proof of identity (can be ration card/election identity card/driving license)

• Xerox copy of Asset holding (if owning agricultural land, house etc.)

LOAN APPLICATION

Loan application contains details of loan amount sought, present sources of earnings of applicant or

other members of family, present sources of credit (Banks, Finance Cos., commission agents, traders,

relatives etc.) and financial assistance sought for.Finance Executive or Loan Officer / Area Head also

puts up his comment on the application form.

The application form for small loans is used for JLG members after their registration. It is used for

agriculture, production, small services, animal Husbandry etc.

LOAN APPRAISAL:

Loan appraisal is a core part of Credit Operations. Loan applications ready along with the enclosures

are passes on, by the loan officer, to the concerned Finance Executive/Unit Head. He verifies the loan

application to confirm whether it is complete in all respects, including his remarks/comments. Finance

Executive/Unit Head also makes appraisal visit in coordination with the loan officer.

Appraisal is essentially an evaluation of loan application done by FinanceExecutive to take decision on:

• Whether to recommend for a loan? And if so, how much?

• Does each member of the group (JLG/SHG) know the rules, regulations and other norms

regarding interest, installment, insurance policies, joint liability, etc.?

• What should be the repayment schedule?

• On what guarantee the loan is being provided?

• Is there a noble cause behind applying for loan?

During appraisal, Finance Executive/Unit Head once again communicates the entire rules, regulation

of the entire process and the repayment schedule along with the insurance plan.

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LOAN SANCTION:

After appraisal Branch Manager reports to the Operation Manager of NEED giving a communication

to Head office with all the approved volume of loan requirement depending on which the loan

committee takes the decision for disbursement of loan on monthly basis.

Mutual Guarantee Agreement In case of JLG all the borrowers sign a mutual guarantee agreement on a stamp paper of Rs. 50/= for a

loan up to Rs. 50000/= and of Rs.100/= for a loan more than Rs.50000/= which clearly says that they

are responsible of each other’s loan repayment.

LOAN DISBURSEMENT

Once an applicant agrees with terms and conditions of the sanction, the Unit Head/Finance Executive

will prepare the necessary documents fordisbursement of loan. Disbursement of loan involves:

• Clear communication of terms and conditions to the loan applicant and co-obligator.

• Confirmation on acceptability of the repayment schedule to the borrower and co-obligator.

• Collection of LPF.

• Execution of documents applicable.

• Conveying general guidelines regarding repayments take proper receipt on every payment and

issue of cheque towards disbursement of the loan.

Procedure

• Sanctioned amount handed over by cheque to each borrower, individually, along with CS, LPF,

receipt, repayment schedule.

• Loan disbursement done in unit office on a pre decided date.

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Guidance

• The Unit Head and BM’s presence is compulsory during all disbursements. Units should take

approval from General Manager in writing in case either UH/BM is not available for

disbursement.

• Units are to strictly follow the routine of informing the borrower/co obligant the terms of the

loan and their rights and obligations.

• All JLG members was present together during disbursements. It is strongly advised to close the

disbursements at least two days in advance before close of the month, which enables HO to

process the month end transactions for completing the monthly accounts and back up.

• Photo identity proof was taken from Co-obligant for all the loans. A recent photo of the borrower

was collected every time his loan application is built up.

• For the loans above Rs 50,000 per JLG/SHG the stamp paper of Rs.100/ was taken otherwise it

should be of Rs. 50/= only.

• Insurance premium deposit slip was attached with the insurance forms given in HO accounts

section.

LOAN RECOVERY

Procedure

• After around a month’s gap (a date fixed earlier) Loan Officer goes for recovery of installments

from all the borrowers on respective dates to each village.

• Monthly installment consists of interest (calculated on the principal outstanding on her/him),

and part of principal amount.

• A consolidated amount is taken from the borrower on a fixed date.

• In the starting of the month date wise recovery sheet is provided to the loan officers from the

branch through Unit Head.

• On the evening of the recovery dates the report of the day is to be given to all concerned

authority without fail.

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Responsibility

• All recoveries should preferably be scheduled between the 1st and the 10th of every month. This

will help Units recoup the less than 30-day overdue loans by the month end.

• No Cash system is introduced for recovery in case if in any emergency any LO receives cash it

should be intimated to the UH, BM on the same date and should be deposited in bank by next

working day.

• Each LSA fills Daily Recovery sheet completely and submit to the Branch and Report every day.

This is the most important action which the branch needs to fulfill without any compromise on

daily basis. The recovery sheet has to be absolutely on the format developed by the Chief

Executive covering the following step by step major components like Overdue interest, Current

Interest, Overdue Principal, Current principal + IDPD (if any)

• There should be no refund of Cash Security (CS) in the field. CS should be refunded only at the

Unit/Branch office.

• UH to visit all borrowers who became OD for the first time within 48 hours and enters outcome

and generates report (OLAC Report - Overdue Loan Action Report).

• BM reviews OLAC Report and visits all those accounts where FX visit was not successful in

recovery, by the 10th of the month.

• The Branch Manager is most seriously required to take the entire stock of recovery as per the

daily recovery sheet positively on 10th day of every month during 5-8pm. In case where the Unit

branch more than 15 km distance they report 11th day of the Month at Branch office between 9-

10am. No compromise on the final operational date by anybody.

• HO will review the overdue status of unit with BM before 25th of every month, with particular

focus on new overdue loans.

• In the starting of the month date wise recovery sheet is provided to the loan officers from the

branch.

• On the evening of the recovery dates the report of the day in manual form is to be given to all

concerned authority without fail.

• Only Group’s payment will be collected, i.e. no part payment is allowed since this proved to be

very effective tool for creating peer group pressure except in worst situation.

• All legal notice and action will be the sole responsibility of BM but in consultation with

Operation Chief and Chief Executive of the organization.

21

EMPLOYEE(s) DETAILS FOR MICROFINANCE OPERATIONS

2012 2013 2014 2015

Total staff 139 96 87 73

No. of FOs 88 64 56 44

No. of managerial / Support staff 51 32 31 29

INFORMATION ON BANK(S)/ FINANCIAL INSTITUTION(S) AS ON 31/MAR/2015

Nameofthe Funding Agency

Amount Sanctioned (in Millions)

Date of Sanction

Interestrate (%)

LoanTenor (inmonths)

Repayment Frequency

Amount Disbursed

(in Millions)

Amount Outstan

ding (in Millions)

SIDBI 107.50

30/09/2005 26/09/2007 19/01/2009 03/03/09

9.5% 12%

13.25% 1% Service charge

24-48 Quarterly 107.50 0

Maanaveeya

Holdings&Invest

ments

150 04/10/08 05/05/10 18/1/2012

12% 13.5% 13.00%

36-72 Quarterly & Half Yearly

150 0

HDFCBank 21.5 06/08/06 02/05/08 03/09/10

9.75% 12.50% 13.50%

18-24 Quarterly 21.50 0

Aryavert

Gramin Bank(AGB)

80 24/08/2009

14.50% 36

Monthly

80 13.11

Ananya

Financefor

Inclusive

Growth Private

Limited

37 27/02/2009

13.50% 18

Monthly

37 0

Indian Bank 20 18/09/2008

13.25% 24 Quarterly 20 0

Development

Credit Bank 24

09/12/08

11/02/09

14.25%

13.75% 24 Monthly 24 0

Vijaya Bank 20 18/03/2009

13.25% 30 Quarterly

20 0

BASIX 0.2 08/04/06

- 36 Quarterly

0.2 0

SBI, Patna 19 08/04/10

11.75% 36 Monthly

19 0

National Housing Bank

10 01/12/11

9.00% 36

Quarterly

10 0

NABARD 15 25/03/2008 22/04/2010

3.5% 8%

84 Yearly 15 2

Union Bank of India

3.15 23/03/2015 11.50% 3 Month Monthly 3.15 3.15

22

MONTHLY CASH AND BANK BALANCES (`̀̀̀IN THOUSANDS)

CashPlusBankBalances FY2012 FY2013 FY2014 FY2015

April 4417 18279 2208 2007

May 4213 16578 17448 2132

June 4324 32204 23630 3469

July 6328 59893 24602 2656

August 3077 60980 33038 2192

September 3495 31330 38371 1115

October 3703 28997 37715 2075

November 3092 26200 36230 6452

December 3756 33297 28892 4410

January 19773 9614 12672 2185

February 28663 8191 16355 7783

March 32415 2083 1816 1832

INFORMATION ON LOAN PRODUCTS

Type of loan Product A Product B

Eligible Criteria Customer availing Loan for

the First time

Customer who repays the loan On-time and with long term

relationship

Loan term 12 months 18months to 24 months

Repayment Frequency Monthly Monthly

Loan size (Amount in `) ` 10,000 to ` 15,000 ` 25,000

Interest rate per annum 26.00% on reducing balance basis

Loan processing fees 1% of loan amount

Penalty Not Applicable

Other Fees Insurance premium as applicable

23

Graph

60.9345

1054

2701.45

4338.9

7113.59

8709.4510069.07

10936.23

0

3000

6000

9000

12000

Mar 2005-

06

Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14

Loan Disbursement( Rs in Lakhs)

Loan Disbursement( Rs in Lakhs)

888 3886

11944

28886

44072

68555

81633

9090097324

0

40000

80000

120000

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

No of Borrowers

No of Borrowers

24

47.1344.96

766.08

1729.63

2013.61

2605.86

1757.04

1237.45

964.37

0

600

1200

1800

2400

3000

Mar

2005-06

Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14

Loan Outstanding( Rs in Lakhs)

Loan Outstanding( Rs in Lakhs)

25

FISCAL BALANCE SHEET (`̀̀̀ IN THOUSANDS)

As on date 31/Mar/2012 31/Mar/2013 31/Mar/2014

SOURCES OF FUNDS

Equity Share Capital 39,271 45,983 51,420

Total Equity 39,271 45,983 51,420

Liabilities

Short-Term liabilities

Security deposits from borrowers 22,304 3.970 -

Commercial Loans from banks/FI 11,667 2,349 -

Interest payable on funding liabilities 2,211 1,172 526

Account payable & other short-term liabilities 1,990 1,484 1,306

Total Short-Term Liabilities 38,172 8,975 1,832

Long-Term liabilities

Commercial Loans from banks/FI 146,991 97,321 65,063

Total Long-Term Liabilities 146,991 97,321 65,063

Provision for loan loss 8,315 6,357 7,940

Total Provisions 8,315 6,357 7,940

TOTAL LIABILITIES 232,749 158,636 126,255

26

APPLICATION OF FUNDS

Fixed Assets

Gross Block 1,130 1,154 859

Less: Depreciation 385 295 243

Net Block 745 859 616

Current Assets

Cash and Bank Balances 32,707 2,160 1,973

Loans & Advances 2,126 8,556 6,410

Investment in FD 21,023 22,713 20,048

Loan Portfolio

Gross Loan Portfolio 175,704 123,745 96,437

Net Loan Portfolio 175,704 123,745 96,437

Accounts Receivable and Other Assets 444 603 771

TOTAL ASSETS 232,749 158,636 126,255

27

INCOME AND EXPENDITURE STATEMENT (`̀̀̀ IN THOUSANDS)

Period FY 2012 FY 2013 FY 2014

Months 12 12 12

Financial revenue from operations 47,680 34,126 27,110

Less: Financial expenses from operations 20,164 18,274 12,253

Gross financial margin 27,516 15,852 14,857

Less: Provision for Loan Loss / Write off 3,514 2,475 1,929

Net financial margin 24,002 13,377 12,928

Less: Operating Expenses

Personnel Expense 15,115 10,529 8,801

Depreciation and Amortization Expense 385 295 243

Other Administrative Expense 3,117 1,457 2,010

Net Operating Income

5,385

1,096

1,874

Non - Operating Revenue 2,000 5,616 3,563

Net Income Before Taxes 7,385 6,712 5,437

Less: Income Tax - - -

Net income after taxes 7,385 6,712 5,437

The above financials are taken from the audited financials.

28

RATIOS

Ratios Mar-2012 Mar-2013 Mar-2014

12 12 12

Capital Adequacy Ratio (CAR)

Capital Adequacy Ratio (%) 21% 33.7% 47.7%

Productivity / Efficiency Ratios

No. of Active Borrowers Per Staff Member 193 148 126

No. of Active Borrowers per field executives 304 223 196

Gross Portfolio o/s per field executive

(` in thousands) 1,997 1,934 1,722

Average Outstanding Balance Per borrower (In `̀̀̀)

2,152 1,.361 991

Cost Per Active borrower (In `̀̀̀) 695 862 1,006

Asset / Liability Management

Yield on Portfolio (%) 53.2% 22.3% 21.3%

Profitability / Sustainability Ratios

Operational Self Sufficiency (%) 112.7% 103.3% 107.4%

AUDITOR Shailendra Vishnu& Co., (Chartered Accountants);

FF-16, Goel Palace Sanjay Gandhi Puram, Faizabad Road

Lucknow – 226 016 Uttar Pradesh India

29

PROJECTED FISCAL BALANCE SHEET (` IN THOUSANDS)

As on date 31/Mar/2015 31/Mar/2016 31/Mar/2017

SOURCES OF FUNDS

Equity Share Capital 9,574 9,574 9,574

Reserves 51,506 64,085 81,422

Total Equity 61,080 73,659 90,996

Liabilities

Short - Term liabilities

Account payable &Other short-term liabilities 2,349 3,038 3,178

Total Short - Term Liabilities 2,349 3,038 3,178

Long - Term liabilities

Commercial Loans from banks/FI 50,712 55,031 59,049

Total Long - Term Liabilities 50,712 55,031 59,049

Provisions for loan loss

9,631

11,676

14,057

Total Provisions

9,631

11,676

14,057

TOTAL LIABILITIES 123,772 143,404 167,280

30

APPLICATION OF FUNDS

Fixed Assets

Gross Block 1,033 1,558 2,089

Net Block 2,523 4,784 7,652

Current Assets

Cash and Bank Balances 973 1,380 3,925

Investment in Fixed Deposits 22,298 20,448 19,048

Loan Portfolio

Gross Loan Portfolio 94,537 117,237 139,037

Net Loan Portfolio 94,537 117,237 139,037

Accounts Receivable and Other Assets 4,931 2,781 3,181

TOTAL ASSETS 123,772 143,404 167,280

31

PROJECTED INCOME AND EXPENDITURE ACCOUNT (` IN THOUSANDS)

Period FY 2015 FY 2016 FY 2017

Months 12 12 12

Financial revenue from operations 36,300 49,600 60,400

Less: Financial expenses from operations 11,997 12,181 13,773

Gross financial margin 24,303 37,419 46,627

Less: Provisions 1,891 2,345 2,781

Net financial margin 22,412 35,074 43,846

Less: Operating Expenses

Personnel Expense 14,070 22,220 23,140

Depreciation and Amortization Expense 182 275 369

Other Administrative Expense 3,000 6,000 10,000

Net Operating Income 5,160 6,579 10,337

Non Operating Revenue 4,500 6,000 7,000

Net income 9,660 12,579 17,337

The above financials are taken from financial projections report provided by NEED.

32

FUTURE PLANS

Particulars FY 2016 FY 2017

No. of States 03 03

No. of Districts 08 12

No. of Branches 20 30

No. of SHGs 60 100

No. of JLGs 3,000 4,500

No. of Active Borrowers 13,000 2,000

No .of Employees 90 140

No. of F.O. 60 95

Loan Disbursements (`̀̀̀ in thousands)

180,000 280,000

Portfolio Outstanding (`̀̀̀ in thousands) 120,000 190,000

33

CURRENCY: All amounts in this report are in local currency unless otherwise stated.

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