The Philippine Coalition for Micro-finance Standards.

   


The Philippine Coalition for Microfinance Standards outlined the following critical performance indicators in setting the performance standards for microfinance NGOs: (1) Outreach; (2) Repayment Rate; (3) Portfolio at Risk; (4) Operating Cost Ratio; (5) Operational Self-Sufficiency; (6) Financial Self-Sufficiency; (7) Equity to Asset Ratio; and (8) Current Ratio.

  • Outreach: Number of Active Clients.
  • Collection Efficiency and Portfolio Quality: 1. Repayment. The repayment rate is used as an indicator for collection efficiency with respect to the amount due. A strong repayment performance is one of the pre-conditions for a viable microfinance program. 2. Portfolio at Risk. This measures portfolio quality.
  • Sustainability: 1. Operating Cost Ratio. Measures costs relative to average portfolio. 2.Operational Self-Sufficiency. This indicates whether or not enough revenue has been earned to cover the institution's costs. 3. Financial Self-Sufficiency. This indicates the degree to which an organization is earning enough revenue to sufficiently cover in the long run all operating costs and maintain the value of capital.
  • Capital Adequacy / Leverage: Equity to Asset Ratio. This ratio provides an indication of the capital position of the institution and its capacity to support both growth of the loan portfolio as well as a potential deterioration in assets. It also measures the ability of the institution to expand its available resources by increasing its liabilities.
  • Liquidity: Current Ratio. It measures the institution's capacity to meet current obligations from out of its liquid assets. The inclusion of this indicator is on account of the potential market volatility and seasonal liquidity risk under which MFIs operate.
Hari Srinivas - hsrinivas@gdrc.org
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