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LOCAL INITIATIVES PROJECT MFI PERFORMANCE STANDARDS | |
| AREA OF OPERATION | STANDARD TO BE ACHIEVED BY END OF PROJECT - DECEMBER 1999 - FOR INVESTMENT |
| INSTITUTIONAL CAPACITY | |
| LEGAL REGISTRATION | currently legally registered and able to be legally registered as a microcredit / microfinance institution under the appropriate law, once a capital grant is received. |
| BUSINESS PLAN | strategic plan projecting updated financial and institutional goals |
| ACCOUNTING and INTERNAL CONTROL SYSTEM | accounting system which meets international standards with internal controls audited financial statements for one year |
| LOAN TRACKING SYSTEM | loan tracking system able to provide weekly situation on total loan portfolio, including aging of arrears |
| FINANCIAL PROJECTION SYSTEM | system which provides reliable financial forecasting for the institution, especially cash-flow |
| GOVERNANCE | statutes which require an independent Board of Directors and give clear ethical and operational guidelines |
| HUMAN RESOURCES | staff necessary for prudent management of a financially viable MFI within in a defined organizational structure |
| CLIENTS | |
| IDENTIFY CLIENTS | clear commitment to low- income entrepreneurs in the business plan and statutes |
| LOAN SIZE |
first loan less than 5000 DM average loan size of less than 10,000 DM |
| FINANCIAL PERFORMANCE | |
| PORTFOLIO QUALITY | less than 5% portfolio at risk after 30 days less than 4% write off (of loan funds managed) - both for the last year of operation |
| PROFITABILITY | cover all costs from non-grant i.e. operating income, including loan loss reserve and the cost of funds |
| CAPITAL REQUIREMENT | minimum of 250,000 DM in capital/equity from any source. |
| CAPTITAL / ASSET RATIO | capital / asset ratio not greater than 1: 5 |
| LOCAL RESOURCES | 10 % of assets funded by local resources other than retained earnings |
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