The Present Challenge The Microfinance industry has seen turbulent times, since the Andhra Pradesh crisis of Oct’10. The Malegam Committee had made its.

The Present Challenge

• The Microfinance industry has seen turbulent times, since the Andhra Pradesh crisis of Oct’10.

• The Malegam Committee had made its proposals to the RBI in Jan’11

• The Reserve Bank of India, as per its Monetary Policy Statement 2011-12, has decided to regulate the Microfinance sector as a separate category. Bank credit to MFIs shall be eligible as priority sector advance subject to the new definition of “qualifying assets”. Pricing guidelines and caps on margin and interest rate have also been specified.

The Way Forward

• Restructure the Products offered - to fall within RBI’s definition of “qualifying

assets” • Initiate requisite organizational capacity building

exercises so as to enable CTL conform to the guidelines for MFIs to be included in the regulatory framework

• Build on branding, by offering a comprehensive set of services, either directly or through strategic alliances with NGOs, Section 25 companies etc.

Proposed changes in Product

• The company will adhere to the new interest rate of 26%

• There will be five schemes of Rs 10000, 15000, 20000, 25000, 35000 for first cycle loan

• All schemes except Rs 10000 will require 4 cheques for re payments

• Tenure for 10000 & 15000 loans shall be 52 weeks & for loan amounts > 20000 tenure shall be 104 weeks

• Renewals for all schemes possible after 20 weeks

Capacity Building Exercises

• The following will need to be addressed –

- Equity Infusion

- New Branch roll-out

- Systems

- Corporate Governance

- Risk Structures

Comprehensive Services

• Capital Trust plans to move forward in its commitment to its clients by emphasizing on financial literacy and skill building.

• It shall work with NGOs, Section 25 companies operating in its locales and also through Vishwas Credit and Livelihood Program, to ensure that its clients receive a variety of financial services, including SHG linkages.

• As part of Corporate Social Responsibility, it is proposed that 10% of the profit is contributed to building the corpus of Vishwas

(in`MN)

Particular 2008-09 A 2009-10 A 2010-11(E) 2011-12(P) 2012-13(P) 2013-14(P) 2014-15(P) 2015-16(P)

Number of Branches 11 25 38 50 85 100 145 160

Number of Active Client 6494 18571 30146 24493 46325 53275 76820 108850

Client per Branch 590 743 793 490 545 533 530 680

Number of Loan Officer 45 122 146 200 340 400 580 640

Portfolio Outstanding as on 31st March 40 124 170 988 2389 3538 5145 6736

Loan Disbursement 56 208 357 1291 2917 4234 5529 8029

Cumulative Loan Disbursed 56 264 622 1913 4830 9064 14592 22622

Profit Per Year -13 2 4 21 36 46 48 127

Fund Requirement:                

Debt       1120 2158 3173 4358 4197

Equity       70 300 100 100 0

Future Projections

Cont.

Ratio Analysis Ratio Analysis

2008-09 A

2009-10 A

2010-11(E)

2011-12(P)

2012-13(P)

2013-14(P)

2014-15(P)

2015-16(P)

Average Outstanding Balance 6206 4420 4871 23642 36457 55628 56514 54574

Portfolio at Risk 0.00% 0.64% 0.91%         

Average Portfolio Per Loan Officer 895526 1015343 1163199 4941483 7027839 8844206

8871026

10524319

Operating Cost Ratio 53.29% 38.20% 34.13% 6.23% 4.17% 3.62% 3.07% 2.61%

Total Cost Ratio 72.71% 43.23% 48.93% 20.45% 22.77% 21.02% 19.65% 19.00%

Operating Self Sufficiency Ratio 25.48% 104.09% 106.81% 127.62% 114.86% 111.77%

108.96%

117.57%

Portfolio Yield 12.29% 37.04% 44.04% 13.43% 14.75% 15.04% 13.53% 14.65%

Return on Assets -12.85% 1.52% 2.10% 1.95% 1.73% 1.74% 1.18% 2.33%

Return on Equity -17.69% 2.94% 5.59% 18.83% 19.45% 23.31% 22.64% 28.26%

Debt Equity Ratio 0.49 1.03 1.63 5.38 3.13 3.08 4.12 3.74

CAR 172.36% 57.85% 44.67% 16.85% 21.03% 18.29% 15.25% 17.10%

Vishwas Credit and Livelihood Program

• Section 25 not-for-profit entity• Livelihood support services provided to the

marginalised community in the areas where Capital Trust is operating.

• Facilitate financial services at competitive terms

• Operates at the grass root levels with the regular staff and volunteers.

• Revenues from the Corpus, donations , consulting and fees

Areas of activity• Business Correspondent for Banks - SHG Model• Business Facilitator for delivering financial services

on fee basis– Insurance – Savings – Remittances– Pension etc

• Livelihood and Skill Building - Vocational Training• Provide and facilitate medical and medicinal

requirments for the community• Work with the women groups on their health and

nutritonal issues in collaboration with orgainsations working for women and girl children