Microfinance operations of SRSP seriously suffered in the past because of the organization incapability of grasping the intricacies of microfinance and weak operational controls at the field in the past. Micro credit being a financial intermediation was recklessly confused with the social intermediation and the risks associated with the operations (both internal and external) were incredibly overlooked. Focused in the past was on greater outreach ignoring the fact that the organization had an infected portfolio on its balance sheet. Credit discipline both at the staff and field level was lacking. Staff training in ‘client assessment’ was never imparted. Separation of poorest loans from the rest and moving out clients and also communities who had poor records as they paid off their loans was never thought about. Scaling down of micro credit operations to a limited number of union councils and revisiting the entire microfinance programme for its compliance with the basic principles and methodologies was never considered. Resultantly, 10% of the total disbursement that the organization made since its inception went into chronic default, costing millions of rupees to SRSP, which unlike other major Rural Support Program in the country, has no cushion (endowment or savings) to fall back on.
With the suspension of the micro credit delivery back in November 2003 with the Board’s approval, the microfinance section had the required breathing space to revisit the organization microfinance policy and procedures. With various exposure visits, under the new management, the staff was given the desired understanding on the principles of microfinance. The learning imparted included that organizations with a holistic approach shall never overlook the risk associated with the microfinance operations while offering a mix of financial and social intermediation to its target group.
During the past one and half year, the microfinance section got engaged into the development of various spheres of the micro-credit component of SRSP. The achievements to date included:
- Developed new loan products that not only entails good financial yield (essential for cost recovery and sustainability) but also address the issue of fungibility of money;
- Standardized all systems and procedures with the aim to ensure standard monitoring systems and efficient on-ward replication to new areas;
- Built the capacity of microfinance staff members in the standard practices in micro-credit technologies (enrichment of human resource);
- Implanted the best of management information system at all three levels i.e. head office, district and community (for effective monitoring);
- Reorganized the institutional structure to cater for these innovations;
- Introduced a very effective performance based incentive systems that closely works with the microfinance staff recruitment policy and career development plan;
- Expanded the microfinance programme to the urban areas by taking a start from Peshawar district.
|
|
