STRATEGIC PLAN 2009 - 2013
BERENDINA MICROFINANCE INSTITUTE

TABLE OF CONTENTS
ABBREVIATION: ................................................................................................................................................. 4 1. CURRENT SITUATION ............................................................................................................................... 5 1.1 1.2 1.3 1.4 2. COMPANY INFORMATION ........................................................................................................................... 5 MICROFINANCE METHODOLOGY ADOPTED BY BMI .................................................................................... 6 VISION AND MISSION ................................................................................................................................. 7 PRODUCTS AND SERVICES .......................................................................................................................... 7

STRATEGIC PLANNING METHODOLOGY .............................................................................................. 7 2.1 SWOT A NALYSIS ...................................................................................................................................... 8

3.

STRATEGIC GOAL & OBJECTIVES ........................................................................................................ 10 3.1 3.2 STRATEGIC GOAL FOR 2009-2013 ............................................................................................................ 10 STRATEGIC OBJECTIVES ........................................................................................................................... 11

STANDARD BRANCH MODEL ............................................................................................................................. 11 3.3 LEADERSHIP AND MANAGEMENT ............................................................................................................. 25

ANNEXURE 01: PRODUCTS AND SERVICES.......................................................................................................... 27 ANNEXURE 02: SELECTION OF INSURANCE PRODUCTS ...................................................................................... 28 ANNEXURE 03: LIST OF STEERING COMMITTEE MEMBERS .................................................................................. 30 ANNEXURE 04: THE STANDARD BRANCH PROJECTION MODEL ........................................................................... 31 ANNEXURE 05: PROJECTIONS FOR THE STANDARD BRANCH MODEL.................................................................... 32

LIST OF FIGURES
FIGURE 1: BMI OPERATING AREAS - 2008 ..................................................................................................... 10 FIGURE 2: PROPOSED BRANCH STRUCTURE FOR NEW BRANCHES ......................................................... 11 FIGURE 3: ACCUMULATIVE COST & INCOME .............................................................................................. 13 FIGURE 4: MONTHLY COST AND INCOME OF A BRANCH .......................................................................... 13 FIGURE 5: STRUCTURE FOR EMERGENCY LOANS ...................................................................................... 16 FIGURE 6: ORGANIZATIONAL STRUCTURE FOR 2009 ................................................................................. 26 FIGURE 7: CONCEPTUAL ORGANIZATIONAL STRUCTURE FOR 2013 ....................................................... 26

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LIST OF TABLES
TABLE 1: BMI AT A GLANCE ...................................................................................................................... 5 TABLE 2: IMPORTANT ELEMENTS OF BMI CREDIT PLUS METHODOLOGY ....................................... 6 TABLE 3: SWOT ANALYSIS OF BMI ........................................................................................................... 8 TABLE 4: OUTREACH TARGETS FOR THE NEXT FIVE YEARS ............................................................ 12 TABLE 5: INITIAL PRODUCTS OFFERED BY A BRANCH ...................................................................... 12 TABLE 6: FUNDING REQUIREMENTS ...................................................................................................... 12 TABLE 7: EXPANSION STRATEGIES ........................................................................................................ 14 TABLE 8: STRATEGIES TO INCREASE THE EFFICIENCY ...................................................................... 15 TABLE 9: STRATEGIES TO ENSURE CLIENT RESPONSIVE TO PRODUCTS ........................................ 16 TABLE 10: STRATEGIES FOR STAFF RECRUITMENTS .......................................................................... 18 TABLE 11: STAFFING REQUIREMENT ..................................................................................................... 19 TABLE 12: STRATEGIES TO INCREASE THE PROFITABILITY .............................................................. 19 TABLE 13: STRATEGIES TO DEVELOP COOPERATIVE SOCIETIES ..................................................... 20 TABLE 14: STRATEGIES TO INCREASE EFFECTIVENESS AND SUSTAINABILITY OF EDS .............. 21 TABLE 15: STRATEGIES TO INCREASE FUND RAISING ........................................................................ 23 TABLE 16: STRATEGIES TO IMPROVE CO-OPERATE AND INTERNATIONAL IMAGE AND LINKAGES ................................................................................................................................................... 24

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Abbreviation:
AAO AM BDS BM BMI Bu EDO EDS Gi GN MFO NDTF PAR ProMis Th YA Account & Administrative Officer Area Manager Berendina Development Services Branch Manager Berendina Microfinance Institute Bulathkohupitiya Branch Enterprise Development Officer Enterprise Development Service Ginigathhena Branch Grama Niladhari Microfinance Officer National Development Trust Fund Portfolio At Risk Promotion of Microfinance Sector Project Thirappane Branch Yatiyanthota Branch

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1. Current situation
1.1 Company information
Berendina Microfinance Institute (BMI) was established in May 2007. It is a non profit company registered in Sri Lanka with registration number N (PBG) 271 under Companies Act number 7 of 2007 as a company limited by guarantee in Sri Lanka. The legal name of the company is Berendina Microfinance Institute (Guarantee) Limited. BMI has 3 board members who are leading microfinance and development related practitioners in Sri Lanka and abroad. The BMI general body has 4 Dutch Nationals in addition to the 3 Sri Lankan directors. BMI is the microfinance organisation of Berendina Group in Sri Lanka. Berendina Group has another organization ‘Berendina Development Services (BDS) for social development work. Both BMI and BDS was restructured from the operations of Berendina Foundation (Berendina Stichting) which was a international NGO operated in Sri Lanka since 1992 having head quarters in the Netherlands. Berendina Foundation implemented credit as well as other social and economic development programs, now these activities are continued under BMI and BDS separately. BMI operation commenced in May 2007 and thus the organization is one and half years old. The performances of BMI as of 30th November 2008 is given in the table No 1 bellow. Table 1: BMI at a glance
No Outreach Indicator 2008 – November 30th 3 4 4 452 11,460 (including 556 BF loans) 163 (US $ 1.56 million) including Rs 10 m in BF portfolio 0.1% 34 727 123% 22,000 (US $ 208) 13% of GNP per capita >15,000 52% 7,500 – 15,000 45% <7,500 3% Income of 50% of borrowers is less than 9% GNP per capita

1 No of districts covered 2 No of divisions covered 3 No of Branches 4 No of Clusters 5 No of borrowers Portfolio and Efficiency 6 Outstanding loan balance (Rs m) 7 Portfolio at Risk (1 day) 8 No of staff 9 Case load (No of loans per MFO) Sustainability 10 Operational Self Sufficiency Poverty Focus (GNP per capita is (US $ 1,600 ) 11 Average loan size Rs 12 Family income levels of borrowers Rs/month

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1.2 Microfinance Methodology adopted by BMI
The first and foremost activity of BMI was designing the microfinance methodology in a comprehensive manner and the development of a standard operational manual. This initial work had to be done between February to April 2007 before commencement of BMI operation in May 2007. There are number of changes in microfinance methodology adopted by BMI compared to BF, where increased outreach, poverty focus, efficiency, effectiveness and sustainability were targeted as a best practice approach The 10 most salient features in the approach and methodology are as follows. Table 2: Important elements of BMI credit plus methodology
No 1 2 3 Feature Cover the whole village Less in number but frequent and effective client meetings Quick loan disbursement Description Each microfinance officer is given maximum only 7 Grama Niladhari (GN) divisions to have minimum 600 clients. Minimum average is 100 clients from each GN Clients are met at a Cluster which has 30 borrowers maximum. They meet for 1 hour for each month. The clients have access to MFO fortnightly in the village. Loans are disbursed within 7 days of the application. Usually it is 3-4 days. Emergency loans disbursement as and when needed through an agent in the village. The other MFIs usually take more than 2 weeks. As a poverty focused approach BMI provides loans at the lowest interest rate in the market. BMI rate is only 10% where as the interest rates charged by competitors such as Lakjaya is 20%, SEEDS 15% and Ceylinco Grameen 24%. Each MFO should have minimum 600 clients. The present average is 727. The operation is standard as specified in the operational manual. This includes client handling, documentation, disbarment, recovery and monitoring follow up etc. BMI achieve 0.1% PAR. BMI will never tolerate delinquency while clients’ genuine issues are understood and responded. BMI operation is profitable since the completion of its first year. However due to low interest rate charged BMI will 10 months to reach 100% OSS and 16 months to reach break even. BMI adopts credit plus approach. Each branch office has an officer to provide business advice to clients. A coupon system linked to credit is in operation to increase clients’ capacity to pay for the services. BMI does not take even savings as a collateral for loans as done in many MFIs.

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Low interest rate

5 6

Increased efficiency in the operation Structured standard methodology Zero tolerance on delinquency Operationally profitable

7 8

9

Cost effective and demand driven EDS 100% collateral free loans

10

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1.3 Vision and mission

Vision
Create an empowered, equitable society wh ere poverty do es not exist

Mission
BMI mission is en suring that p oor h as access to qu ality microfinance and EDS services at the lowest possible p rice resu lting in p rogressive future for them. 1.4 Products and services
BMI offer Loan Products and Enterprise Development Services (EDS) only. The common name used for EDS is Business Development Services (BDS) but BMI use the EDS to avoid confusion with its sister Company ‘BDS’. There are 10 loan products offered which are client driven. In addition BMI has done an initial assessment to offer an insurance product which is a major requirement of clients. The list of products BMI offer is given in the annexure 01.

2. Strategic planning methodology
The strategic plan 2009 – 2013 for BMI started with the strategic planning process map. The process map traverses a set of phases and identifies areas as follows. • Appoint of a strategic planning committee A team of 17 staff and board members and external consultants were identified as the strategic planning committee for BMI. The list is given in annexure 03. • Series of workshops The team (board and staff) had several workshops to discuss and generate strategies for the five years 2009-2013 under the guidance and facilitation by the board. From the inception in May, 2007 BMI use the team concept as much as possible and decisions were made by the management with the consideration of staff ideas and views. This team approach to plan and make decisions has helped BMI to forge ahead well. BMI was able to increase the outreach, efficiency and impact to the satisfaction of all the stake
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holders so far and at some point the performances are more than what were expected. But there is a room for further improvement. This strategic plan is a result of the team work of the staff where BMI used its own experiences; learn from the others and also the experience gains from the exposure visit to BRAC, ASA and Grameen Bank in Bangladesh and the best practices learnt.

2.1 SWOT Analysis
Strengths, weaknesses and opportunities and threats of BMI was analysed and results are given bellow. Table 3: SWOT Analysis of BMI
Strengths Weaknesses • Leadership comprising of specialists • Inability to mobilize savings • Experienced and skilled staff • Inadequate access to loan funds • Documented standard operational manual • High PAR of loans issued under Berendina Foundation • Having a Eusiness Development (ED) section and • High cost of operations sustainable ED approach (coupons) • Inadequate mechanism for staff appraisal • Sufficient transport facilities for field staff • Inadequacies in utilization of co-operative methodology • Linkages with external organizations (savings are not utilized for on lending) • Registration under Government as a Microfinance • Working environment of the branch offices is not Company adequate • Staff capacity development / Training programmes to • Inadequate internal audit system update the knowledge • Insufficient promotion and marketing of BMI as an MFI • Team work • Limitations in lending mechanism – less flexibility for • Social development activities (BDS company) loan settlement • Well maintained loan tracking and other information • Insufficient interest income to reach FSS (even OSS management systems within a shorter period) • Awareness of the international standards and usage of • Liquidity issues arising from the longer term loans such indicators 3 years. • Incentive system for the staff • Monitoring is not 100% coverage • Funding and professional inputs from Berendina Stichting • Take more time to implement the decisions • Have several loan products • Quick book accounting system is not up to date • Bottom up approach of sharing information and • Opening a branch is not standard: (Thirappane did not communication – staff involvement for the development of commence as a BMI branch) organization. • Weak fund management (Idling funds) • Low PAR • Weak documentation of out comes and impacts. ( inadequate impact monitoring system) • Being a part of a respected NGO in the area (Positive Image of Berendina) • EDS coupon market is not tapped adequately by ED staff

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Opportunities • Existing untapped market • There is no good competitors • Competitors charging higher interest rates • External organizations provide funding, technical services like NDTF and ProMiS • Can reduce the operational cost due to operating mainly in rural area • Clients attitudes – positive thinking • Has the backing of Berendina Stichting a reliable donor/support agency • Berendina Development Services works with same clients on other aspects of poverty alleviation • The goodwill of Berendina Group • Sufficient infrastructure for the microfinance operations

Threats • Customers attitudes about the MFI operations is still based on the BF operations in old areas • BMI is treated as another NGO by stake holders • Natural disasters such as floods, draughts • Recession of the economy/tea industry • Influence of government organizations such as state banks & government projects which gives loans for very low interest rates though they are limited in numbers• There are organizations provides ED freely • Lack of government regulations for microfinance • Estates are under the influence of a third party estate management. • Clients borrow from multiple organizations • Inflation

The strategic goal was derived through a brainstorming discussion of the strategic planning committee. To derive the strategic objectives the strategic goal and the SWOT analysis is used. From the SWOT analysis the current weaknesses of the organization is identified and from the goal, the future of the organization was determined. The strategic changes for these two statuses were identified and taken to derive the strategic objectives for next five years.

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3. Strategic Goal & Objectives
3.1 Strategic Goal for 2009-2013
Red uce poverty amongst our beneficiaries who will co mprise o f a minimum of 20 % minority commu nities and 70% wo men. We will reach the hard core poo r too in a financially sustainab le manner with an o verall 6 0% annual growth rate wo rking in at least 8 districts in Sri Lanka. The 60 average annual growth over five years will be achieved with higher gro wth rates such as 150% in 2009 and declining gro wth rates in t he other 4 years. Figure 1: BMI operating areas - 2008

Thirappanee

Ginigathhena
Yatiyanthota ota

Bulathkohupitiya Ginigathhena

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3.2 Strategic objectives
1. Development and Improvement of an appropriate expansion policy and methodology Presently BMI is operating in 04 branches in 3 districts in the country. To achieve the strategic goal BMI will establish 23 new branches within the next 05 years. Standard Branch Model Standard branch model will be used in future expansion. In this model the branch structure, furniture & equipments, funds requirements and products offered are all standardized. Branch Structure The standard branch consists of 01 Branch Manager, 05 Microfinance Officers, 01 Accounts and Administration Officer and a watcher. The required furniture and equipments for the standard branch together with the estimated cost is given in the annexure 04. Figure 2: Proposed Branch structure for new branches
BM AAO

MFO 1

MFO 2

MFO 3

MFO 4

MFO 5

EDO 1

Clusters 30 Watcher

30 members

BM – Branch Manager MFO – Microfinance Officer Targets

AAO – Accounts & Administrative Officer EDO – Entrepreneur Development Officer

The annual targets for the branch are as follows. • Case load per MFO Maximum 900 Minimum 600
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• Case load Branch -

Average 750 Maximum 4,500 Minimum 3,000 Average 3,750

Table 4: Outreach Targets for the next five years
Year 2009 2010 2011 2012 2013 # of branches 8 14 20 24 27 Clients Women Men Total Minority 17,920 7,680 25,600 5,120 28,672 12,288 40,960 8,192 45,875 19,661 65,536 13,107 64,225 27,525 91,750 18,350 73,400 31,457 104,858 20,972

Products and services Initially branch will start with two loan products. Table 5: Initial Products offered by a branch
Loan Consumption loan Business starting loan Duration 18 months 24 months Loan size 20,000 25,000

Cost of funds Initially the fund requirements of the branch will be borne by BDS funds at a rate of 5% reducing balance and the other funds at the rate of 9% reducing balance from NDTF and other sources. During the different years of the operations the funding composition from both sources will be as follows. Table 6: Funding Requirements
Year # of new branc hes 4 6 6 4 3 Total Total fund requirement per year /new branches 270,988,393 406,482,590 406,482,590 270,988,393 203,241,295 1,558,183,260 Total fund requirements per existing branches 239,324,000 510,312,393 916,794,983 1,323,277,572 1,594,265,965 4,583,974,913 Total fund requirements BDS 510,312,393 916,794,983 1,323,277,572 1,594,265,965 1,797,507,260 6,142,158,173 75,000,000 80,000,000 85,000,000 90,000,000 95,000,000 425,000,000 Source of funds NDTF/Other 435,312,393 836,794,983 1,238,277,572 1,504,265,965 1,702,507,260 5,717,158,173 % of funding requirement BDS 15% 9% 6% 6% 5% 7% NDTF/ Other 85% 91% 94% 94% 95% 93%

2009 2010 2011 2012 2013

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Overheads Overheads in a branch include 1/8 from the Head Office cost which is nearly Rs. 40,000. The total overhead for the standard branch is Rs. 99,140. The annexure 4 gives a detail of the overheads. Figure 3: Accumulative Cost & Income

12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 Ja nu Fe ary br ua ry M ar ch Ap r il M ay Ju ne Ju l A y Se ugu pt s t em b Oc er No tobe ve r m D b er ec em b Ja er nu Fe ary br ua r M y ar ch Ap r il M ay Ju ne

Accumulative Cost

Accumulative Income

Figure 3 shows that it takes 15 months to breakeven. And figure 4 shows that using this standard model in the 9th month from the commencement of the operation, new branch begin to earn profits. The annexure 5 shows the projections for the standard branch model. Figure 4: Monthly Cost and Income of a branch
1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 Ja n Fe uar br y ua M ry ar ch A pr il M ay Ju ne Ju l Se Aug y p t us em t O be N ctob r ov e r D emb ec e em r Ja ber n Fe uar br y ua M ry ar c Ap h ril M ay Ju ne

Total cost for the branch Total Income Linear (Total cost for the branch) Linear (Total Income)

-200,000 -400,000

BMI use the branch as the base structure for the expansion. For the year 2009, BMI
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expansion policy is to use existing operating areas as centre and expand periphery including plantation areas. In addition the eastern province will be added as a new area for the core program in 2009. The following table elaborates the strategies adopt with regard to expansion. Table 7: Expansion strategies
No 1 Strategy Development of an expansion policy to achieve the required growth Description of the strategy A branch covers average of 3,750 clients (range 3,000 to 4,500). To achieve 100,000 clients BMI should have 27 branches at the beginning of the 5th year. The current number of branches is 4 and there is a need of 23 new branches. The new branch commencement pan would be as follows. 2009 – 4 branches, 2010 - 6 branches, 2011- 6 branches, 2012 – 4 branches, 2013 – 3 branches 2 Develop a approach and methodology for selection of districts and divisions The criteria for selection of locations for a branch will depend on poverty levels and market potential and operational feasibility for profitable operation. BMI will avoid unhealthy competition as much as possible as a new entrant to areas. For 2009, two branches in the periphery of Yatiyantota (one next to Ginihathhena and another next to Yatiynatota and two in eastern province will be commenced. The locations for each year will be decided on the above criteria and any other consideration appropriate for that time at the beginning of each year. Expansion policy & methodology will be reviewed and improved by the senior management and the board from time to time but ensures that each year the annual policy statement is reviewed and published

3

Yearly review of the expansion policy and methodology and continuous improvement.

2. Improvement of systems and procedures for increased efficiency and effectiveness From the inception BMI was focused on improving its efficiency and effectiveness. The process and procedures have streamlined to get the maximum efficiency and effectiveness from the system. The table number 01 provides some ratios to indicate the current efficiency and effectiveness of the organization. Effectiveness is related to the impact of our microfinance programme. BMI is dedicated on poverty reduction as per vision and the mission of the organization. Five year strategic goal commits inclusion of marginalized with a minimum of 20% of the clients representing minorities and 70% been women. BMI collects baseline information such as family income, household assets to asses how poor is our clientele before loans are granted. Baseline information reflects whether our borrowers are comparatively poor. At the initial stage BMI changed the focus on

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increased participation of poor as it was evident that borrowers are not comparatively poor when this focus was not on such targeting BMI will continue to adopt following strategies to ensure the increased efficiency and effectiveness of the organization. Table 8: Strategies to increase the efficiency
No 1 Strategy Description of the strategy Increase the productivity of Information and Communication Technology (ICT) is a strategic tool for microfinance back office staff institutions to reduce the operating costs, making it viable for MFI to expand and have a greater outreach. BMI with its rapid growth plan it is fairly high stage to get the usage of ICT to enhance the quality of microfinance services. After doing an assessment of the available MIS in the Sri Lankan context and the performance, after Increase timely availability of sale services and customization it was decided to use “Senova” as the MIS of BMI for the next few years. Senova is not a new to BMI because for more than 1 and1/2 years accurate information BMI was using Senova system in cooperative societies supported by BMI. BMI strategy will look into the customization of Senova for BMI operations and use of the information for further customization. Initially technical know how will be outsourced but once the system is developed and implemented with a substantial scale technically capable Human Resources will be needed as an in house IT Manager. 3 4 Improved customer convenience Establishment of a policy on composition of vulnerable people in cluster to the branch level

2

The 70% women will be established as a policy at cluster level together with at least at MFO level in case each cluster cannot maintain this composition. 20% marginalized composition will be established at cluster, MFO and at least at branch level.

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6

Development of a practical mechanism to enroll vulnerable groups Establishment of impact monitoring mechanism

BMI will develop indicators to identify the vulnerable groups such as minority communities, disabled, ultra poor such as widows, land less etc. Then mechanism to ensure they are inclusive will be developed. The measurement of impact of BMI work on the lives of the poor is challenging and a difficult task . The issues are accuracy of impact data, level of attribution to BMI interventions and cost of impact measurement. However, BMI in 2009 will develop an appropriate impact monitoring methodology and improve this over the next 4 years. The social performance of the programme will be monitored and the indicators will be used to measure how we have achieved our social objectives within BMI microfinance programme.

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3. Ensure products/services are client responsive. Currently BMI has adopted a bottom - up approach to get the client requirements and develop products that are client driven. Seven (07) loan products were introduced in 2007 and only 06 products were received by the clients. One product was rejected by the clients due to the product objective was not met by the product. A new product for emergency loans was introduced in place of rejected product on pilot basis. Figure 5: Structure for emergency loans
MFO

Cluster 1

Cluster Leader / Agent

Cluster members

Non members

Micro Insurance is a valuable service that the most clients are demanded. It can be seen that most clients prefer to take loans from Ceylinco Grameen even for a very high interest rate, simply to benefit from the life insurance they provide. Following table provide strategies of BMI related to products in next 5 years. Table 9: Strategies to ensure client responsive to products
No 1 Strategy Monitor performance of each credit product offered and understand relative demand and feed back of clients in a informal manner Work towards identification of micro insurance products suitable for BMI clients Description of the strategy The MIS will be segregated product wise. The product performance in terms of disbursements, interest income, PAR and the seasonal variances of those aspects will be monitored. The directors and staff from senior management and field staff will provide a feed back on the products from clients. These information will be used in the annual update of the operational manual as well as in between times to improve or change of the products.

2

The demand on the microinsuranace product is now evident to BMI from client feed back. However, BMI is not legally able to provide insurance. Therefore, BMI is looking at the feasibility for a strategic partnership with a reputed insurance provider in the country. A product survey was undertaken. Out of 12 products surveyed, 4 products were identified for filed testing. The list and features of those products are given as
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annex 02. The product will be discussed with clients in focus groups and test clients willingness to buy them and also understand possible improvements required. By this way BMI will identify a product or product mix and offer those to BM clients. 3 Improve savings products offered through Cop-ops and commence BMI savings when it is possible legally Ensure clients need identification and feed back through formal client satisfaction surveys Alert on offerings of competitors and adjust BMI offerings accordingly The savings by co-operatives will be increased. So far savings were made as a mandatory requirement for loans and not as a product itself useful for clients. New products and a methodology developed for that is given in annex 01. The excess staff member due to automation of the accounts and MIS in Co-op will be in charge for this work. BMI will wait till the microfinance act is in place for mobilization of savings. There will be minimum of one client satisfaction survey undertaken by external consultants and not by the operating staff. Such surveys will be scheduled prior to annual operational manual update so that the clients’ feedback can be used in improving products in the manual.

4

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BMI will keep the eye on product offering of competitors in the country. The salient positive features in the competitor products will be embedded in to BMI products in the product improvement processes.

4. Development of Appropriate Human Resource (HR) policy BMI treat its staff as the most valuable resource. Development of appropriate HR policy is the key strategy for the development and enhancing the HR within the next five years. The policy will includes – Recruitments – Salaries & incentives – Performance evaluation – Succession plan – Training and Capacity Development Currently BMI uses a strong Incentive policy which is one of the reasons for the strong portfolio quality of the organization. These policies will be reviewed and change from time to time taking into account the views of staff and other external factors such as economic status of the country, efficiency and effectiveness of the staff members and profitability of the organization.

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Table 10: Strategies for staff recruitments
No 1 Strategy Recruitments of employees Description of Strategy Micro Finance Officers (MFO) and Accounting and Administrative Officers (AAO) will be recruited 100% externally. However, Assistant AAOs in two existing branches will be given an opportunity for promotion. Entry level recruitments will be done for 1-3 months training period. Those who do not fit in to BMI will be discontinued within the training period. BMI will recruit more than entry requirement in order to implement this strategy smoothly. For other potions the internal staff with suitable qualification which will be prepared before each recruitment will get the priority where as if there is no suitably qualified internal staff external candidates will get the opportunity. Already decided salary scale will be affected for the new recruitments from the external people. If it is internal staff then; 1. MFO promoted as a BM • If the salary of MFO is lesser than Rs. 18,000 then increase it up to 20,000 and promote him as an acting BM under probation of 06 months. After the probation period confirm him as BM through a proper performance evaluation. • If the salary is greater than Rs. 18,000 then increased it by RS 2,000 and after the probation period increased his salary through a proper performance evaluation 2. Assistant AAOs internally promoted to AAO • If an internal staff is promoted and the current salary is lesser than Rs. 12,000 then increased it up to Rs. 12,000. If the salary is greater than Rs. 12,000 no increase. Increments for new staff in the first year should be calculated as follows; Salary increment = approved increment/12 * no. of months worked All the staff will be provided basic operational knowledge. For MFO’s full exposure to operational manual and loan appraisal will be basic and essential. This will be classroom and on the job training during the first 6 months. For AAO’s BMI accounting and MIS and back office functions will consist the training. In addition the staff will be given specific training such as standard CGAP training. For MFO, Delinquency management and operational risk management will be essential. For AAO’s accounting and Financial Analysis will be essential. For BM’s all these training including business planning and product development will be essential.

2

Salaries

3

Increments

4

Staff Capacity Development

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The best staff will also be given opportunity to attend MF related training conducted locally and internationally depending on availability. BMI will also organize international best practice exposure programs itself or participate in such programs organized by others such as net work organizations.

Staffing requirement Table 11: Staffing requirement
Year # of branches Senior Management GM 2008 2009 2010 2011 2012 2013 4 4 6 6 4 3 1 0 0 0 0 0 AM 0 1 1 0 1 0 Middle Management Junior Management Field Staff Total

EDM 0 1 1 0 1 0

Investigation /Audit 0 1 1 0 1 0

BM 5 4 6 6 4 3

AAO 6 2 6 6 4 3

EDO 5 4 6 6 4 3 17 22 30 30 20 15 34 35 51 48 35 24

Total

27

1

3

3

3

28

27

28

134

227

5. Increasing the Profitability of the organization BMI has a strong vision of eradicating the poverty and BMI do not envisage extreme profits. The FSS that BMI wishes to achieve is 120% where the surplus profits will be reinvested in the microfinance operation. For the initial 6 months of 2008 BMI achieved operational self sufficiency (OSS) 74%. The OSS for the month of November 2008 has been 123%. The strategies to achieve estimated profitability are as follows. Table 12: Strategies to increase the profitability
No 1 Strategy Operational Cost reduction Description of the strategy Immediately in 2009, BMI work towards operational cost reduction. A standard branch structure with lowest possible cost was developed and the annexure 4 gives the details and the estimated cost reduction. BMI will continue to review operational methodology and reduce unnecessary costs wherever it occurs. The main income sources are loan interest income and fees for EDS. As a poverty focused MFI, BMI will continue to provide lowest interest loans and low cost EDS. In 2008, the average interest rate was 10% flat which is equivalent to 18% in declining balance. This rate was the lowest in the market. However, as per the realistic projections made taking current inflation into account, BMI will increase its interest rate to 13% flat average which is equivalent to 23% in declining which is also lower than all other providers except
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2

Increase in income

SANASA which has some unforeseen costs in borrowing. 3 Maintain high portfolio quality BMI throughout its one and half year history maintained zero PAR and recently it was increased to 0.1% due to few issues in Thirppane branch. BMI will ensure that the existing delinquency will be addressed soon and zero PAR will be continued to be maintained in next five years so that costs can be further lowered.

6. Increased capacity of Co-operative societies to undertake MF independently BMI extends credit to clients in Yatiyantota division and workers in plantations areas through people owned and managed co-operative societies. BMI provides a bulk loan to Cooperative society for on lending to clients. Co-operative mobilizes savings from clients and provide loans for short term needs of members in addition to BMI funded loans. However, major portion of the savings are kept in commercial banks as fixed deposits. BMI provided various kinds of capacity development support for 4 cooperatives in Yatiyantota. The most rewarding support in 2007/8 was computerization of accounting and MIS with standard microfinance software. BMI will further develop these Co-operative societies as described in following table no. 13 bellow, with the strategic view of increasing the contribution towards five years strategic goal of BMI. . Table 13: Strategies to develop Cooperative societies
No 1 Strategy Description of the strategy

Develop the capacity of The 4 cooperatives in Yatiyantota will be made 100% operationally independent from BMI the BOD and staff at the end of 2009. All the existing estate cooperatives will also make operationally independent by 2010. BMI will also strategically work with new estate cooperatives with 2 year horizon for making them 100% operationally independent. In order to do this the capacity development of director board and staff of those cooperatives will be undertaken in a well designed approach. Assess cooperatives as per standard performance criteria and offer BMI services in a way Cops motivate for increased performance Increased Savings mobilization The relationship with BMI after making co-ops independent will be providing bulk loans and regulation and supervision. The future BMI role will be further refined during 2009. A set of performance standards to assess cooperatives together with a grading system will be developed by BMI together with those cooperatives. The amount of bulk loans and even interest rates and other benefits will be related to the level of achievement of performance standards.

2

3

This is an strategy related which was described in the table 09.

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7. Increased effectiveness, and sustainability EDS During the first year of BMI operation, the use of coupon system for the payment of fees for Enterprise Development Services (EDS) as an demand driven service too proved successful. This was an extremely innovative tool to provide enterprise development or credit plus services and was practiced for the first time in Sri Lanka. The service started with one Enterprise Development Officer (EDO) was increased to 2 in 6 months and after observing performance of the first year, BMI has decided to appoint one EDO for each Branch Office and one Market Development Officer for BMI. The main service provided was different kind of training with limited support for marketing and other forms of EDS. BMI defines effectiveness of EDS in terms improvement in businesses of clients and impacting on income and employment generation and the sustainability in terms of BMI’s ability provide EDS in the long term with marginal profitably to BMI. The strategies for achieving the objective includes: Table 14: Strategies to increase effectiveness and sustainability of EDS
No 1 Strategy Organsing clients by sectors and area based business clubs. Description of the strategy This is the BMI outreach strategy for enterprise service clients. Business club will be a society of businessmen in one sub sector. The minimum membership for a club would be 25. Ex: Poultry producers, poultry feed supplies, poultry product sellers (main business). The objective is to make an effective communication mechanism between BMI and service providers with the businessmen in the sector. This club will be a body which can work regarding common issues in the sector and also organize ED services such as training and advisory services with BMI. The minor sectors which does not have sufficient number of clients to make a club will be reached thorough clusters and also on individual basis. The EDO in the branch office will be a general business consultant. EDO will not have technical know-how related to each and every business. BMI does not see that there enough work for full time staff in each technical area. BMI also know that such technical expertise is available in specialized institutes such as agriculture department, tea small holding authority industrial development board etc. There are professional private providers also. Therefore, it is cost effective to out source these human resources and will continue the same strategy. BMI will develop a directory of such experts in each area of operation so that such resources can be outsourced effectively. BMI believe that there are unidentified business opportunities for most of the areas. The identification of such opportunities and supporting the commencement of such activities will boost businesses activity in those areas. BMI will identify such opportunities with full feasibility study. Then such interventions will be piloted with small number of clients in economical scale and

2

Out sourcing technical knowledge and expertise:

3

Work towards development of new business with growth potential in the area.

21

based on the results of the pilot, rolling out to other potential clients will take place. Ex. Cut flowers cultivation for export. 4 Develop practical interventions to address issues in existing business sectors with growth potential. The existing businesses are the low risk interventions for those areas compared to new businesses. There are existing business opportunities which have potential for multiplication and growth. However, the growth in such sectors is hampered due to major issues in the sector. BMI will identify such issues and intervene on them in a sustainable manner. One of such example is dairy farming which is profitable with a good demand in the market. The expansion of diary farming is difficult mainly due to lack of good cows for new entrants. BMI will attempt to develop cattle breeding as an enterprise opportunity so that high yield cows can be produced in a planned manner to address the issue. BMI believes that the majority of businesses supported by BMI should have minimum business standards. Such standards would vary from one business type to sector. Some examples of such standards would be minimum monthly profit, having a calf from each cow every year in cattle farms, having pruning of tea plants every 3 years, having recommended soil erosion techniques in tea gardens etc. BMI will develop such standards for key sectors where there are more than 50 clients and develop a system which ensures those standards are met by BMI clients. This will be an identity of BMI supported business enterprise. Marketing is key to the success of any business. Market is one of the major issues faced by many clients due to its vibrant nature. Therefore, BMI will have specific market development approach for the clients while marketing will be handled in other strategies too. BMI will recruit a market development officer who will identify better and new markets for existing products. He or she will help clients to win new markets through provision of market intelligence and improving the competitiveness of products and services to ensure long term existence in such markets. BMI will also investigate existing demand and supply for products and services and introduce market niches to BMI clients which are appropriate and suitable for them. The BMI will ensure high quality service through a rigorous monitoring and regular improvement mechanism. Each EDO service will be monitored by a monitoring officer. Such a monitoring officer will be recruited for 5 - 10 EDO’s depending on the geographical area and number of branches. The EDOs and monitoring officer will work as a team together with BM’s of BMI in ensuring high quality and impact of services. There will be a workshop in very six month to improve the ED service and operation based on new learning coming from experience and other ways

5

Develop basic standards of a business supported by BMI and ensure those standards achieved by business clients.

6

Establishment of market linkages

7

Regular monitoring and evaluation of effectiveness of EDS and continuous improvement.

22

8. Increased fund raising The funding requirement for targeted growth is Rs 6,142Mn over the five years. Currently BMI has two sources of funding. They are annual contribution by Berendina Stichting (at 5% interest from BDS company) and borrowing at low interest rates (9% declining) from National Development Trust Fund (NDTF). There are other fund raising activities under way such as from GTZ for computerization of branches and savings improvement in plantation sector, Sri Lanka German Sri Lankan Association for the plantation sector are grant support expected.BMI is also working with ETIMOS for a loan at 12% declining balance interest rate. BMI also has approached Cordiad and Rabo Bank Foundation in the Netherlands and APT enterprise development, the current partner for Tsunami support project implemented by BMI for further funding support. Like wise BMI will continue to involve raising funds in the form of grants and soft loans to meet the above mentioned funding requirements. The financial projections of a branch is given in the annex 05. A branch needs Rs 79 million for loan funds and operational expenses for 15 months period at which the branch operation reaches breakeven. However, the branch will be operationally sustainable in 9 months. These projections are based on funds borrowing at 5% from Berendina Stichting and 9% from NDTF and on lending rate of 13% to borrowers. BMI in order to maintain poverty focus, charges only 13% average flat rate (declining 23%). Depending on availability of funds at low interest rates BMI can offer its services profitably within a short period. Therefore, BMI attempts strategically to seek minimum of Rs 25 million initial investments as a grant and balance Rs 54 million as a soft loan for a branch. The growth beyond this will be based mainly on borrowing from microfinance wholesaling. Table 15: Strategies to increase fund raising
No 1 Strategy Use of BS funds in initial loans as much as possible Description of the strategy The initial loans are small in size and given to more vulnerable clients. The risks of these loans are also high where increased credit and client assessment is essential. Most of these loans will be in new branches during first 2 years. BMI will utilize the funds given by BS for this segment as a policy. This will ensure BMI will continue to expand even with BS funds and also ensure continuous fund raising from other sources for continuity in branches older than 2 years. Repeated loans are large in size and clients are known to BMI. The credit worthiness of those clients is already known to BMI to a larger extent. BMI will dedicate as a policy to raise funds to on lending for repeated loans. BMI is already borrowing from National Development Trust Fund (NDTF) and applied for ETIMOS – an Italian funding source also for a loan. The capacity development in BMI is a crucial and will be a continuous process. This involves staff training and other forms of improving knowledge such as exposure visits.
23

2

Borrow from other Development finance sources for repeated loans

3

Raise grant funds for

capacity development

This also has components like system developments including computerization. BMI will seek sources of grants for such interventions. Already BMI is having negotiations with GTZ – ProMiS Project in Sri Lanka to support computerization of branches and staff training etc. There are potential donors for various forms of grants and loans for microfinance in Sri Lanka as well as abroad. In Sri Lanka there are government sponsored credit lines such as for diary sector development is an example. Internationally, BMI is in building up linkages with Cordiad, Rabo Bank Foundation and Sri Lanka Germen Society. This process will be continued.

4

Link with MF projects and programs and other donors which can provide funding

9. Improving Co-operate and International Image and Linkages Berendina is known in Sri Lanka as a development organization working in few districts in the country. BMI as a new organization building its image in the country as a highly efficient MFI. Further, BMI with its next five years strategy needs to be known better nationally as well as internationally. BMI is featured in Berendina official web site and also a member of Lanka Microfinance Practitioners Association holding a directorship in that too. Table 16: Strategies to improve Co-operate and International Image and Linkages
No 1 Strategy BMI annual report Description of the strategy BMI will publish a printed annual report starting from year 2008. The achievements and the progress of the year together with audited accounts will be reflected in the report. MIX market is a web site featuring performance of MFIs in the world. This is web site managed by the Consultative Group for Alleviating Poverty (CGAP) of the World Bank. At the moment MIX market has about 10 Sri Lankan MFIs. BMI will also be featured in this web site soon after audited accounts of 2008 is ready by March 2009. The MFIs in the MIX market get contacts with various organizations in the world whom can be benefited to BMI in the future in terms of technical assistance and funding. There are number of international networks of MFIs. Womens’ World Banking, INAFI, Banking with Poor Net Work, SEEP network are some of them. These net work organizations work towards the betterment of the member organizations. They organize meting, seminars workshops etc also. BMI can be benefited in increasing knowledge in addition to building up of it’s co-operate image world wide through participation of these networks.

2

Featuring BMI in MIX Market

3

Obtaining membership in network organisations

24

10. Increased contribution of Policy influencing Microfinance industry in Sri Lanka faces number of challenges. Some of them are reflected in the BMI – SWOT analysis. Lack of appropriate legal structure is a main issue. Difficulties related to foreign borrowing is another. BMI as an expanding best practice MFI will actively contribute in the lobbying and advocating for a better microfinance policy frame work during the next five years. BMI Directors are already involved in National level policy work in the capacity of National level consultants in Sri Lanka. For example Chairman and Director in charge of micro finance work assisted International Fund for Agriculture Development a UN body based in Rome to develop the microfinance strategy in Sri Lanka for next 5 years as part of the Sri Lanka country strategy for next 5 years. The operations manager of BMI is one of the directors of Microfinance Practitioner’s Association which is as APEX body for microfinance industry. BMI will lead the MFIs in Sabaragamuwa province for policy and other aspects common to practitioners.

3.3 Leadership and Management
The organizational structure will modernize with the strategic goal and the objectives for the next five years. With the expansion plan for the next year the organizational structure for 2009 is as follows.

25

Figure 6: Organizational Structure for 2009
GM HO AO & HR from BDS office

AM Ya

BM Bu

BM Ya

BM Gi-I

BM Gi - II

BM New

MO Estate

EDS 01 MO 01 Mkt.O

BM Thi

6MFO 1EDO

4Co-Op 1EDO

6MFO 1EDO

6MFO 1EDO

5MFO 1EDO

5 MFO 1 EDO 1 BDO

Figure 7: Conceptual Organizational Structure for 2013
BOD Audit Team

CEO

Area Managers 4 Branch Managers 10

EDS Audit

26

Annexure 01: Products and services

Types

Loan Category

Product

Purpose of Loan

Repayment period (Month) 18 24 24

Maximum Loan Amount 20,000 40,000 25,000

BDS Coupon Retained Amount 250

Interest rate Service taking 500 500 750 Co-op 7% 10 % 7% Individual 12 % 14 % 10 %

Early Settlement (months) 14 14 14

A-1 A-2 B-1

Consumption Consumption (repeat) Business Starting Business Development Business Development previous A borrowers) (for 1

Increase of Asset value Increase of Asset value Start a new Business for income generation Expansion activities of existing Business

B-2

30

75,000

250

2,750

10 %

14 %

20

B-2 -1

–

New business or Expansion existing Business activities

of

24

50,000

250

2,750

10 %

14 %

14

B-3

Business Expansion

Expansion of Business activities To meet expenses for initial arrangements (ticketing etc ) (except house made jobs) To purchase brand new motor cycles (70% of the market price up to maximum Rs. 75000/- ) To meet house loan emergency needs such as medicine for sickness, funeral etc. To help finance farming less than 6 months season

36

150,000

250

5,750

10 %

16 %

30

C

Foreign Employment

24

50,000

-

500

14 %

18 %

No

D

Motor cycle

24

75,000

-

500

14 %

18 %

14

E F

Emergency Agriculture loan – only for Thrappane

4 months 6

5,000 15,000 0 0

N/A N/A

5% per month 12%

1

No

27

Annexure 02:

Selection of Insurance Products
Option 01 Option 02 Sithumina Sanasa Insurance Legal Insurance Product Life - Death , to the member due to an accident or any other and permanent Disability Option 03 Ceylnico Loan Insurance Ceylinco Insurance Legal Insurance Product Loan Protection (death and total disability) plus Life - Death ,Total disability or partial to the member due to an accident and Hospitalization/medical cover to the member Option 04 Asian Alliance Asian Alliance Legal Insurance Product Life - Death ,Total disability or partial to the member due to an accident or natural cause

No 1. 2. 3.

Description Provider Legal base and stability Coverage

Jeewana Sahana Sanasa Insurance Legal Insurance Product Life - Death , to the member and Family due to an accident or natural causes

4.

Covers offered to

Member and Family

Member and spouse can be added for an additional cost (for spouse life insurance only) The benefits depend on the age the beneficiary avails the policy First year only for the accidental causes

Only to the member

Member

5.

General Conditions

Member, spouse, unmarried children than 21 years old. number of children not more than 4

Loan period should not exceed one year

No

6.

Premium

Rs. 225 – family

Rs. 3,000 ( One time payment annually) and additional cost for additional benefits

Up to Rs. 50,000 Rs. 300+tax Above Rs. 50,000 Rs. 0.7% +tax

Rs.240

28

7. 7.1 Death Rs. 5,000 Natural Rs.10, 000 Accidental. Little difference on family member 7.2 Permanent /Partial Disability Funeral Expenses No

Coverage Changes Rs. 392,040 ( For average payment period 15 years and the age beneficiary gets the policy is 18-35 years old) Rs. 50,000 Rs.100,000

Incentive payment for 10 years

Rs. 50,000 (Rs.25,000 for partial disability) Rs.7,500

Rs.100,000

7.3

No

Rs.10,000 ( on small additional cost) Rs.200 per day (additional premium of Rs.240) Maximum 10 days

Rs.10,000

7.4

Hospitalization Rates

No

Yes

No

hospitalization: Conditions

No

Rs. 4,000 annual limit Rs. 2,000 event limit (Per day 200 max)

No

8. 9. 10.

Coverage Effectiveness Maturity benefit Loan Protection

Immediate No No

Immediate Rs.35, 640 No

Immediate No Balance loan capital outstanding amount will be paid – on death or permanent disability No figures available ( This is sold to Ceylinco Grameen with some additional benefits)

Immediate No No

11.

Present Market penetration

No figures available ( This is sold Sanasa societies and other societies )

No figures available ( This is sold Sanasa societies and other societies )

No figures available (It is new product proposed)

29

Annexure 03: List of Steering Committee members
1. Mr. Dulan De Silva- Chairman 2. Mr. Anura Atapattu – director 3. Mr. Jagath Godakanada – Director 4. Mr. Kapila Subasinghe – Operations Manager 5. MS Chamila Perera – Accountant 6. Mr. A M Jayawardena – Manager BDS - Thirappane 7. Mr. Sisira Thilakarathene– Accountant 8. Mr. A N Udayasiri – Branch Manager 9. Mr. Ishan Rajika – Branch Manager 10. Mr. K P S Dhammika – Branch Manager 11. Mr. Rathnayake B M P– Branch Manager 12. Mr. Anusha Maniyangama – EDO 13. Mr. Buwaneka Samarasunda- EDO 14. Mr. A H M Ilham- Branch Manager 15. MS. Dumindi Pemadasa - AAO 16. Mr. Sisira Gunasena– MFO 17. Mr. Ravindra Kumara - MFO 18. Ms. Niroshani Swarnamadu- Consultant

30

Annexure 04:

The standard Branch projection model

Standard branch staff Position Branch Manager Accounts and Administration Officer Microfinance Officer Watcher Nos 01 01 05 01 Rate (Rs) 20,000 12,000 10,000 7,500

Furniture & Equipments for a standard branch Item Table Qty BM AAO MFO BM Staff Rate 1 9,000 1 5 1 6 2 1 6 1 1 1 1 1 1 9,000 6,000 6,500 4,500 12,500 9,500 700 1,200 150,000 75,000 20,000 25,000 35,000 2,000

Chairs

File cupboards Office cupboards visitors chair Plastic table - visitors Senova system Computer Jet Matrix Telephone & Email Safe Cash box small Overheads of a standard branch Office rent Electricity Telephone & Email Stationary Financial Charges Staff Welfare Depreciation Office & Equipments maintenance HO overheads Mislleneous

12,000 3,000 6,000 10,000 10,000 5,000 7,140 3,000 40,000 3,000

31

Annexure 05:
Branch Cost

Projections for the standard branch model

Qty Direct Cost Staff requirement BM AAO MFO Watcher ETF/EPF Total for Salary Cost Recovery BM + MFO MFO BM Total Direct Cost Over heads Total Over heads Total operational cost of Branch Cost of funds Funds Required cost of funds Total cost for the branch Accumulative Cost 6 1 1 5 1

January 20,000 12,000 50,000 7,500 16,110 105,610 900,000 45,000 7,500 2,000 1,060,110 99,140 1,159,250 1,587,650 1,159,250 1,159,250

February 20,000 12,000 50,000 7,500 16,110 105,610 18,750 45,000 7,500 2,000 160,110 99,140 259,250 259,250 5,292 264,542 1,423,792

March 20,000 12,000 50,000 7,500 16,110 105,610 18,750 45,000 7,500 2,000 160,110 99,140 259,250 259,250 6,156 265,406 1,689,199

April 20,000 12,000 50,000 7,500 16,110 105,610 18,750 45,000 7,500 2,000 160,110 99,140 259,250 259,250 7,021 266,271 1,955,469

May 20,000 12,000 50,000 7,500 16,110 105,610 18,750 45,000 7,500 2,000 160,110 99,140 259,250 259,250 7,885 267,135 2,222,604

Motor cycle investment

Runing expenses Allowances Incentives

Page 01

32

June 20,000 12,000 50,000 7,500 16,110 105,610 18,750 45,000 7,500 2,000 22,912 183,022 99,140 282,162 9,318,523 65,433 347,595 2,644,222

July 20,000 12,000 50,000 7,500 16,110 105,610 18,750 45,000 7,500 2,000 35,255 195,365 99,140 294,505 9,858,741 96,495 391,000 3,035,221

August 20,000 12,000 50,000 7,500 16,110 105,610 18,750 45,000 7,500 2,000 48,467 208,577 99,140 307,717 8,091,398 129,357 437,074 3,472,295

September 20,000 12,000 50,000 7,500 16,110 105,610 18,750 45,000 7,500 2,000 59,489 219,599 99,140 318,739 7,509,045 156,328 475,067 3,947,363

October 20,000 12,000 50,000 7,500 16,110 105,610 18,750 45,000 7,500 2,000 69,885 229,995 99,140 329,135 6,926,066 181,359 510,494 4,457,857

November 20,000 12,000 50,000 7,500 16,110 105,610 18,750 45,000 7,500 2,000 79,656 239,766 99,140 338,906 6,342,462 204,446 543,352 5,001,209

December 20,000 12,000 50,000 7,500 16,110 105,610 18,750 45,000 7,500 2,000 88,801 248,911 99,140 348,051 151,982 225,587 573,638 5,574,847

January 20,000 12,000 50,000 7,500 16,110 105,610 18,750 45,000 7,500 2,000 89,846 249,956 99,140 349,096 4,374,304 226,094 575,189 6,150,036

February 20,000 12,000 50,000 7,500 16,110 105,610 18,750 45,000 7,500 2,000 96,592 256,702 99,140 355,842 3,853,606 240,675 596,517 6,746,553

March 20,000 12,000 50,000 7,500 16,110 105,610 18,750 45,000 7,500 2,000 102,783 262,893 99,140 362,033 3,332,352 253,520 615,553 7,362,106

April 20,000 12,000 50,000 7,500 16,110 105,610 18,750 45,000 7,500 2,000 108,417 268,527 99,140 367,667 264,628 632,295 7,994,401

May 20,000 12,000 50,000 7,500 16,110 105,610 18,750 45,000 7,500 2,000 107,515 267,625 99,140 366,765 2,545,918 264,628 631,393 8,625,793

June 20,000 12,000 50,000 7,500 16,110 105,610 18,750 45,000 7,500 2,000 112,315 272,425 99,140 371,565 2,023,273 273,114 644,679 9,270,473

Page 02

33

Branch Income Borrowers

January Number of Existing Loans (1st of the month) Number of New Loans Number Current Loan (end of the month) Opeinng OB Average size of CL Disbursements of CL Average size of BSL Disbursements of BSL Total Disbursements Recoveries from existing loans Closing OB Loan Risk Fund Interest income from existing loans (BMI) Total Income Accumulative Income Monthly Profit/Lost Accumulative Profit 20,000 25,000 0 0 (1,159,250) (1,159,250)

February 50 50 20,000 400,000 25,000 750,000 1150000 1,150,000 28,750 0 (264,542) (1,423,792)

March 50 175 225 1,150,000 20,000 1,400,000 25,000 2,625,000 4025000 53,472 5,121,528 100,625 12,458 12,458 12458.33333 (258,181) (1,681,973)

April 225 225 450 5,121,528 20,000 1,800,000 25,000 3,375,000 5175000 240,625 10,055,903 129,375 56,063 56,063 68520.83333 (233,470) (1,915,443)

May 450 350 800 10,055,903 20,000 2,800,000 25,000 5,250,000 8050000 481,250 17,624,653 201,250 112,125 112,125 180645.8333 (200,538) (2,115,981)

Cash flow

Interest Income

Page 3

34

June 800 450 1,250 17,624,653 20,000 3,600,000 25,000 6,750,000 10,350,000 855,556 27,119,097 258,750 199,333 199,333 379,979 (148,262) (2,264,243)

July 1,250 500 1,750 27,119,097 20,000 4,000,000 25,000 7,500,000 11,500,000 1,336,806 37,282,292 287,500 311,458 311,458 691,438 (79,541) (2,343,784)

August 1,750 450 2,200 37,282,292 20,000 3,600,000 25,000 6,750,000 10,350,000 1,871,528 45,760,764 258,750 436,042 436,042 1,127,479 (1,032) (2,344,816)

September October November December January February March April May 2,200 2,650 3,100 3,550 3,750 4,150 4,550 4,950 450 450 450 200 400 400 400 200 2,650 3,100 3,550 3,750 4,150 4,550 4,950 5,150 45,760,764 20,000 3,600,000 25,000 6,750,000 10,350,000 2,352,778 53,757,986 258,750 548,167 548,167 1,675,646 73,099 (2,271,717) 53,757,986 20,000 3,600,000 25,000 6,750,000 10,350,000 2,834,028 61,273,958 258,750 660,292 660,292 2,335,938 149,798 (2,121,919) 61,273,958 20,000 3,600,000 25,000 6,750,000 10,350,000 3,315,278 68,308,681 258,750 772,417 772,417 3,108,354 229,065 (1,892,854) 68,308,681 20,000 1,600,000 25,000 3,000,000 4,600,000 3,796,528 69,112,153 115,000 884,542 884,542 3,992,896 310,903 (1,581,951) 69,112,153 20,000 3,200,000 25,000 6,000,000 9,200,000 4,010,417 74,301,736 230,000 934,375 934,375 4,927,271 359,186 (1,222,765) 74,301,736 20,000 3,200,000 25,000 6,000,000 9,200,000 4,438,194 79,063,542 230,000 1,034,042 1,034,042 5,961,313 437,525 (785,241) 79,063,542 20,000 3,200,000 25,000 6,000,000 9,200,000 4,865,972 83,397,569 230,000 1,133,708 1,133,708 7,095,021 518,156 (267,085) 83,397,569 20,000 1,600,000 25,000 3,000,000 4,600,000 5,293,750 82,703,819 115,000 1,233,375 1,233,375 8,328,396 601,080 333,995

June 5,150 400 5,550 5,550 400 5,950 86,396,181 20,000 3,200,000 25,000 6,000,000 9,200,000 5,935,417 89,660,764 230,000 1,382,875 1,382,875 10,994,479 738,196 1,724,006

82,703,819 20,000 3,200,000 25,000 6,000,000 9,200,000 5,507,639 86,396,181 230,000 1,283,208 1,283,208 9,611,604 651,815 985,811

Page 4

35