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Rating System - GRADES

Rating System - GRADES. Welcome. Outline. Rating system evolution Rating concept & methodology G R A D E S Rating system development process Rating process Other information about Rating Rating other activities. Rating Concept & Methodology. Rating.. the concept. Assessment.

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Rating System - GRADES

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  1. Rating System - GRADES Welcome

  2. Outline • Rating system evolution • Rating concept & methodology GRADES • Rating system development process • Rating process • Other information about Rating • Rating other activities

  3. Rating Concept & Methodology

  4. Rating.. the concept Assessment Benchmarking Performance Rating Standard Gap Analysis Capacity Building

  5. Objectives: Rating Focus:SMFIs and SHPIs (NGOs, Special Projects etc.) • To assess Credit Worthiness • To assess Self Management, Financial Viability and long-term Sustainability • To identify Gaps for planning Capacity Building inputs • Benchmarking for promotion of Best Practices • Generating awareness for Self-Assessment

  6. Rating Process Sadhikaratha Foundation Client Request for assessment and LoU Assign QA team to Conduct Assessment Collection of Information,Preliminary Analysis and Debriefing Data Analysis Approval Committee Draft Report to Client Final Report to Client (Dissemination of rating findings/publication) Monitoring and follow up

  7. Rating System Development

  8. GIRAFE (PlaNet Finance) CAMEL (ACCION) PEARLS (WOCCU) Rating System Micro Rate The Philippine Coalition for Micro-finance Standards M-CRIL Review of Tools

  9. Review of various SHG Tool • Review of tools used by DRDAs, DHAN, MYRADA, BASIX, OUTREACH, DPIP, NABARD, CARE, etc • Identify the Key Variables • Decided relative weights of variables • Preliminary Tool Prepared

  10. Ratomg system development process

  11. GRADES 2.0 Weightage

  12. Key Areas in Federation Assessment Governance • Quality of Board • Understanding of the board members • Vision, Mission and Goals • Performance level of the member SHGs/VOs • Functioning of the Organisation • Role & Responsibility of Board • EC/ Board Meeting • Decision making process (including staff recruitment) • Selection of Board • Accountability & Legal Compliance • Member Satisfaction

  13. Key Areas in Federation Assessment Resources • Human Resources • Competence in work (theoretical concepts) • Roles and responsibilities performed • % of women in total staff and % of local staff • Long pending advances with staff (> 3 weeks) • Financial resources • Total funds available per member SHG • Idle funds • Repayment rate of External Loans • Capital Adequacy (Net Worth/Risk Weighted Assets)

  14. Key Areas in Federation Assessment... Asset Quality • Loan Distribution (outstanding) in terms of SHGs • Loan Adjustment/Rescheduling • Recovery rate of o/s loans (as on date) • Portfolio At Risk > 90 days • Portfolio At Risk >180 days • Arrears Rate > 90 days

  15. Key Areas in Federation Assessment... Design and implementation of systems • Accounting system • Regular updating of records & books • Accuracy of recording (correctness) • MIS • Internal Control Mechanism

  16. Key Areas in Federation Assessment... Efficiency and Profitability • Efficiency • Staff Efficiency (related SHG operations) • SHGs per staff (all SHGs/ all full time staff) • Total Outstanding Portfolio/Total staff annual salary • Operating Efficiency (Operating Cost Ratio) • Profitability • Yeild on portfolio/Annualise percentage rate • Operational Self Sufficiency (OSS) • Financial Self Sufficiency (FSS)

  17. Key Areas in Federation Assessment... Services to constituents or SHGs • Financial Services • Regular Savings • Loans • Insurance • Non- Financial Services • Bank Linkage • Training to SHGs/VOs - leaders, members, staff • Monitoring of SHG/VO performance • Annual Grading of SHGs • Auditing of SHGs' accounts • Development initiatives

  18. Key Areas in SHG Assessment... SHGs Performance • Homogeneity • Regularity – savings, meetings • Book keeping • Participation • Awareness level • Repayment patterns • Group norms • Democratic functioning • Transparency in operations • Social empowerment • Financial performance

  19. Grading Scale

  20. Rating Process

  21. Level of Effort for Rating of an federation

  22. Triangulation of Data Promoter Federation Executive Committee NGOs SHG Information VO & Fed. information Samakya SHG members Staff (Representatives)

  23. Tool / systems development

  24. Lessons learnt • Rating system for SMFIs is needed • Consolidation presentation leads to action plan • Where ever NGO is there significant improvement in federation after Rating (some follow up) • Follow-up support is must, hence need to be packaged for all future Ratings • Flexibility to spend more time in field if necessary • Split in qualitative indicators, no scope for subjectivity and bias in Grades-2.0 • Board members presence while making a presentation of consolidated findings is useful • Action plan workshops post Rating, to be included for all Self Help Promoting Institutions (SHPIs)

  25. Lessons learnt • Report writing to include local jargon/dialect and reduced technical jargons • Gaps in data entry/collection taking lot of time during preparation of consolidated presentations • Reports to be reached to all levels – promoter, staff and federation • Improvement in report writing with specific implement-able recommendations, rather than making broad suggestions. • Information about Rating dates to be given to Federations • Regular and periodical Impact Studies and follow-up visits • Regular monitoring/post follow-up with Action Taken Reports • Share of fee to be borne by Federation for the Federation to own the rating

  26. Issues/Concerns/Challenges External • Complex of rating for different federations • Doing Rating and Follow-up by Rating team • Meeting the demand for Rating • No significant demand from FIs • Availability : Data (FSs, loan schedule) and concern staff • Credibility for GRADES • Client acceptance Internal • Retention quality staff and availability competent staff • Data integrity, database management (incl. tracking the impact) • Integration of Rating & Capacity Building

  27. Rating System is not… • a Self Assessment Tool • an Impact Study • a Guarantee of future performance • considering Level of Operations • considering Local Socio-economic conditions

  28. Thank You

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