Managing Loan Costs

Costs associated with microfinance operations at SRSP are managed in the following manner:

• Staff salaries, which is tend to be the highest expense as it is often more than the operational cost and one with the least amount of cushion. Instead of opening up additional branch offices (field unit), SRSP opens up village/union based village-post where adequate demand for micro-credit is witnessed. These village-posts are low cost and provide fewer services than a branch and aren’t opened on a full-time basis. Through these village-posts, staff is enabled to be closer to clients without incurring the cost of a full-fledged unit.
• At SRSP, each branch office is a profit centre. Branch has the capacity and the system to prepare monthly loan portfolio reports.  These reports track each branch’s progress compared with annual growth are also used as the basis for calculating staff incentives. This enables unit managers to assume the responsibility for keeping the costs low, keeping productivity and income high and also generating a surplus.
• Believing in standardization of systems and procedures, SRSP has the system accomplishes consistent procedures in all its retail location. For instance, to keep the staff focused on the three spares of operations i.e. loan appraisals, disbursements and subsequent recovery of installments. A month in general is divided into three quarters.  First ten days are utilized for collection of installments, next ten days for loan appraisals and the last ten days of a month for disbursement of loans and collection of fresh applications.

• The microfinance section at SRSP is indeed one of those sections, which enjoys a very low staff turnover as it provides a competitive compensation and other various incentives. Incentives includes not only in monetary terms but also providing opportunities for career advancement as almost all branch managers that we currently have are promoted from within of which many started as trainee (the lowest position in a branch).