annual report 2014-15 Microfinance Institutions Network 1 annual report 2014-15 annual report 2014-15 6 |CEO’s Message 4 |President’s Message contents MFIN Financials 67Financials |MFIN 56 |Microfinance 32 |Our Work 8 |About MFIN 3 3 1 7 5 51 |Industry Trends 20 |Governance Annex 3: Abbreviations 3: Annex 2: Attendance Board Annex 1:Annex List of MFIN Members 64 4 4 2 6 |Awards Recognition and 3 annual report 2014-15 President’s Message

Dear Friends,

I have had the privilege of being part attention and not mere lip service of the team led by visionary Vijay from the Central Government Mahajan since 2009 when 23 MFIs and the Reserve got together and set up Alpha to (RBI). Prime Minister Modi has bring new discipline and direction to put financial inclusion at the top of the microfinance sector. The first act the government’s agenda with the was to contribute to a corpus of Rs. spectacular launch of Jan Dhan 2.5 crores and invest in High Mark Yojana, MUDRA Bank and the in order to put in place credit bureau various insurance programmes. He services for the sector. MFIN was has set a hectic pace; yet as a realist formed in November 2009 with the he realises that a comprehensive main objective of establishing itself financial inclusion for the poor as a Self-Regulatory Organisation is likely to take 20 years - RBI’s (SRO). Alok joined MFIN as CEO centenary year. The RBI under the in July 2010. I had to fill in the big leadership of Governor Raghuram shoes of Vijay once he retired as Rajan has taken the pro-active step President in July 2013. We have to launch two new types of banks to crossed many hurdles, weathered promote financial inclusion: the Small major storms, and achieved many Finance Bank (SFB) and the Payment of our key goals – separate NBFC- Bank. In addition the big elephant in MFI Category; RBI regulations the pack is the possible conversion on responsible lending practices, of the Indian Post Office to a bank. through interaction with Malegam The two new commercial banks: Committee; MFIN recognised as a Bandhan and IDFC bank will also SRO and; announcement of Small be major players in this space. RBI, Finance Bank amongst others. It based on the good track record set is now my turn to hang up my hat. by MFIs after the crisis in 2010, has We as an industry are at a height considerably liberalised the scope of never before achieved in terms of business and permitted us to move our reach and recognition. But at to serve higher economic segments the same time there are many major like micro- entrepreneurs currently changes which are in progress. not served by MFIs. One thing is for The rivers of financial inclusion are certain, the environment in which shifting course. It will be necessary we operate and how we operate will for MFIN to re-invent itself to completely change in the next few remain relevant. years. This is a problem of success!

Future of the Industry Let us begin backwards – RBI’s new Financial Inclusion in India is in a guidelines to MFIs. The permitted state of change. For the first time in loan sizes up to Rs. 1 lakh will require the last decade, it is receiving real a different approach and skill set reserve Ratioreserve (CRR) Statutory and of abank comply and with Cash the balancethe sheet to conform to that will converting be liability the side of operations, challenge biggest the Third, SFB’s the once start will major second the challenge. pose organisationthe has to go through legal/regulatorycapital and hoops of domestic paucity The months. to obtain final the license after 18 raiseand domestic capital in order phase, will first to need restructure MFIs are who successful in the is to obtain provisional the license. hurdlesteeple first chase The race. setting up is aSFB like winning a license.the However, successfully would like MFIs to best the get see Governor indicated to us that he market same the The segment. an advantage, as they already serve MFIs have MFIs applied. The have initialthe line up. Seventeen NBFC- licenses despite 72 contenders in to get have these start ahead license. SFB the MFIs The Second, Members appropriately. role in monitoring guiding and the as SROs will to play need akey business.the MFIN Sa-dhan and changes in way the they conduct without making appropriate as alicense to grow their portfolio irresponsible lenders take who this path may litteredThe be with to individual lending will succeed. make who Those transition the than traditional the group lending. will coordination on depend and changinggame initiative success but This is a MFIsbanks, MUDRA. and high level of coordination between micro entrepreneurs will and require will provide working capital for card which is idea agood MUDRA it is politically acceptable. The viablebecome also and to ensure loans in order for business the to There are challenges of pricing of initiative.in-glove with MUDRA the works hand- Priorityand Sectors that RBI’s the regulations for MFIs initiative to succeed it is important In order for thishave start. ahead entrepreneurs. Here again MFIs the funding channelled to micro- of financial inclusionproviding by initiative to accelerate process the Bank is an excellent MUDRA The isSFB not faint for the hearted. candidates to take up this challenge. with selection of the best the start is ItRBI undertaking. will have to big This question. is test grand the successful SFBs in long the run is a contenders will establish run and taken. many How of 72 the current explore paths which have not been using latest the and technology models. SFBs will have to innovate require radically different business step door delivery‘high touch’ will ticket sizes customers and requiring highvery volumes, low transaction undertake, which is characterised by Finally, business the has SFB the to Liquidity Ratio requirements. (SLR) June 20th, 2015.June 20th, President Samit Ghosh Yours truly, inclusive growth’. Founderthe President, ‘engines of will continue goal the on set by CEO.new Iamconfident thatMFIN Viswanathan all success the as the MFIN Secretariat. Iwish Ratna CEO entire the Prasad and –Alok possible outgoing without the achieved would not have been contribution; all success the we of Board the for their invaluable years;last fellow the two Members reposing their faith in for the me I thank all Members for the Conclusion: SFBs. and Bank commercial Office Post banks, will have new to to shift two the of business. businessthis The type banks areThe not geared to do number of customers effectively. banks’ ability to vast the service regular the on depend commercial insurance the and programmes will successThe of Jan Yojana Dhan situation.win-win execution where all have parties a 5 annual report 2014-15 CEO’s Message

Dear Friends,

On 5th December, 2014, MFIN me do a listing of these defining celebrated its fifth anniversary. In moments. India the number five or ‘panch’ is regarded as very special. Equally, • 2010 – The first IPO in the in other cultures across the world industry (and still the only). this number holds tremendous • 2011 – Creation of the NBFC- significance - be it the five classical MFI category by the Reserve elements in Greek philosophy or Bank of India (RBI). the five core commandments in • 2012 – Introduction of the Buddhism or even the five rings in Microfinance Bill in Parliament. the Olympics logo. • 2013 – Malegam Committee’s recommendations fully MFIN’s five year journey has implemented and industry firmly mirrored the fortunes of the back on the growth path. microfinance industry. The • 2014 – MFIN recognised as SRO euphoria of the first nine months by the RBI – a first ever in the of 2010, the unremitting gloom industry. of 2011, the struggles of 2012, • 2015 – the feeling of hope in 2013, and framework (and the MUDRA finally, the success and smiles of Bank announcement !) 2014- 15. Looking back, in each of these years, something unusual It is almost as if the industry has happened for the industry. Each within this short span of five years of these years held a defining gone through the full karmic cycle of ‘moment’ for the industry. Let birth and rebirth. developments. The finalSFBdevelopments. The number of systemically important yearagenda. also The a witnessed of national the financial inclusion MFIs as key players for promotion India regarding RBI the )and (GoI with both Government the of credibility greater much gained merely heights. It new scaled also During 2014-15, not industry the • • • • following key metrics: evidenced is by the best Industry remarkableThe turn-around of the over 3.63 crore clientsover 3.63 Insurance (credit life) provided to branches at 10,553 stood branches Total number of NBFC-MFIs crores 40,138 at Rs stood Portfolio Gross Loan Industry The crore clients3.05 MFIs provided credit to over 31st on MarchAs NBFC- 2015, RBI inRBI his opening remarks at the distinguished Governor of the Dr. Raghuram Rajan, very the to promote responsible finance. financial inclusion space. It willstrive alland other stakeholders in the members strive its to serve better rapidly changing environment. It will continuously evolve adapt and to the MFIN SecretariatThe will strive to financegreater and efficiencies. improveddeepening, access to dramaticto pretty be -financial of all developments of these is likely medium the Over term, impact the banking getting accounts opened. inclusion with Cr over basic 1.5 meaning new a whole to financial PMJDY gaveground. The Scheme Bank initiativeMUDRA the got off applied license. for SFB the The AsignificantRBI. number MFIsof Guidelines were released by the CEO our outgoing Alok Prasad – June 30th 2015 30th June CEO Prasad Alok making MFIN what it is today. commitment, time the and given for Secretariat team energy, for the the MFINthe Board MFIN the and Associates, the Members, the To conclude, Iwould like to thank highest criticality for MFIN. that Iwould regard as being of the this observation of Governor the it 2015, June is CEO 30th the on inside…..”the Istep as down the As constantlyand rejuvenated from should from nurtured outside, the be to build. Therefore, existing ones hard are institutions national Strong anniversary) said, ‘ RBI’s 80th Mumbai 2nd on April (celebrating Financial Inclusion Conference in Felicitating 7 annual report 2014-15 about Microfinance Institutions Network is the industry for RBI regulated NBFC-MFIs and has positioned itself as an engine of inclusive growth for India. MFIN through its Members, helps provide financial services to low income households in a responsible and transparent manner, thereby helping them build sustainable livelihoods. about mfin

9 annual report 2014-15 The Microfinance Industry

Microfinance in India started in the late 1980s in response to the gap in availability of banking services to the underserved and low income population. The majority of the institutions that forayed into this sector were from the social sector and hence the legal entities comprised of Trusts, Societies or Section 25 Companies. As the industry continued to grow, the non-profit form became a limiting factor in making these institutions sustainable and scalable. Based on the recommendations of the Report of the (RBI) of the Malegam Committee, RBI created a new subset under Non Banking Finance Companies (NBFCs) for institutions specialising in microfinance called NBFC-MFIs. In the decade leading up to 2009, the NBFC-MFI model proved itself to be a viable and sustainable means of providing access to finance to meet the requirements of low income households. NBFC-MFIs have been playing a significant role in taking forward the financial inclusion agenda of the Government of India. What sets NBFC-MFIs apart is the fact that they do not depend on grants or subsidies to provide unsecured loans to people with low incomes and no access to the banking system. The industry has used market oriented solutions that encourage self-reliance and entrepreneurship amongst its clients. As on 31st March 2015, NBFC- MFIs have provided credit to over 3.05 crore low income clients pan India, with a total lending in excess of Rs. 40,000 crore. microfinance. dialogue through medium the of in larger the part financial inclusion stakeholders plays and an active with regulators other and key industry.the MFIN works closely lending client and protection for framework for responsibleeffective MFIs, MFIN an has supporting been (SRO) regulated of RBI the NBFC- Organisationas aSelf-Regulatory Membership Structured to MFIN. Bank of India, are eligible for as NBFC-MFIs with Reserve the microfinance” are and registered engaged in business the of institutions that are “substantially bye-laws its all per financialAs Societies Registration 2001. Act Pradesh under Andhra the 2009 (MFIN) was established in October Microfinance Institutions Network Genesis environment. environment. regulatory supportive a and governance good protection, client lending, by promoting: responsible microfinancethe sector robust development of is to work towards the MFIN’s objective primary OBJECTIVES livelihoods. sustainable build them thereby helping transparent manner,and in aresponsible 2020, by year the households to million 100 low income provide financialservices help India and for growth To of inclusive engine an be VISION 11 annual report 2014-15 about mfin Journey …so far and looking forward

December 2010: October 2010: MFIN Meeting with Andhra crisis and the Malegam Committee AP Ordinance at Hyderabad July 2010: March 2011: Alok Prasad joins MFIN MFIN meeting with a panel led as its first CEO by Dr. K.C. Chakravarthy, Deputy Governor to discuss the Malegam Committee recommendations December 2009: MFIN is set up

July 2011: MFIN Code of Conduct finalized

June 2015: October 2011: Announcement of new MFI Bill discussion with MFIN Board and CEO Parliamentary Standing Committee May 2015: August 2012: Adoption of MFIN RBI’s Guidelines for MFIs amended bye-laws

May 2015: September 2013: RBI’s changes in micro- RBI’s Discussion Paper on regulations for NBFC-MFIs Banking Structure August 2014: June 2014: RBI’s Small Finance Bank MFIN appointed by the Announcement RBI as SRO and looking forward and Journey …so far Weakest Sections of the Society Microfinance Serves Industry MFIN Members’- ConsolidatedOperations Overview (31stMarch2015) diverse in size geographic and spread. othersubscribe and MFIN standards. of Code Conduct to Currently, industry the MFIN has 45 members, community that of peer shapes strategic the MFIs part become directions and of MFIN industry the and go through awell laid process out including anon-site due-diligence Board and review. NBFC- members, As membershipThe of MFIN is to open regulated, RBI NBFC-MFIs. All applications membership for new the Membership Others 30% Branches 10,553 Minority 15% SC/ST/OBC 59% GLP (Rs)cr 40,135 59% SC/ST/OBC59% 99% Women clients rural &urban low income households, both NBFC-MFIs primarily serve Employees 80,097 Livelihood service Livelihood education Financial pension Micro-insurance, microcredit Primarily offered: Services (Annual Rs)cr disbursed 54,591 Loans 13 annual report 2014-15 about mfin Pan –India Presence of NBFC-MFIS States / UTs - 32, Districts - 48

Himachal Pradesh

Punjab Uttaranchal

yana Har Arunachal Pradesh Delhi

adesh Uttar Pr Nagaland

Bihar Manipur

Tripra Mizoram

h

Odisha Chhattisgar Maharasthra

Telangana >=20 Pradesh Goa Andhra 10-14 15-19

5-9 Tamil Nadu Kerala 1-4 reliance skill and development. tenets like self- empowerment, business that model adheres to Microfin guidedis socialby a March, 2013. Svatantra 1st on officiallyactivities its launched 2012 by Ananya Birla, Svatantra established 17th on February, micro it was Though loans. providing by self-sustainable economicallycustomers become is MFI aNBFC that helps its Ltd SvatantraPvt. Microfin Svatantra clients. reachingbranches 100 to out 28, with Uttarakhand) and 22 Pradesh (Delhi, Uttar , states four over operations a Delhi MFI NBFC having based Ltd. is Shikhar MicrofinancePvt. LtdPvt. Shikar Microfinance Nagaland Sikkim. and Meghalaya, Pradesh, Arunachal states of Assam, North-eastern in branches of five 104 network as 31st on March has 2015, a MFL, (NE) in Guwahati, RGVN Headquartered opportunities. livelihood and education health, facilitateand access better to five lakh clients by 2017)the year Eastern regionNorth (impacting a clear vision entire the to serve is aregistered with NBFC-MFI Ltd. aPublic Limited Company, East) Microfinance (North RGVN Ltd. Microfinance RGVN (North East) Members New in the back-end. in back-end. the discipline of retail modern banking that of technology, processes and customers with in front-end the training, financingservicing and of selecting, Bank methodology combines unique the Grameen their families.support NFPL economic also activities and to operate their productive own enables women and the them to createsmodel for opportunities operationalbusinesses. The family their Members and micro- their it supports Through them, economicallybut women. active toservices socially backward financial NFPL offers needs. toservices cover customers’ its of and micro-financialproducts NFPL providesNBFC-MFI. arange with Bank of Reserve India as an of 2013Act is and registered registered under Indian Companies Limited (NFPL) is acompany Nirantara Private FinAccess Ltd.Pvt. Nirantra FinAccess reliance skill and development. to tenets like self- empowerment, social business that model adheres Svatantra Microfin guidedis by a March, 2013. activities 1st on its Birla, Svatantra officially launched 17thon February, by 2012 Ananya it was established Though loans. self-sustainable by providing micro economicallycustomers become is MFI aNBFC that helps its Ltd SvatantraPvt. Microfin Services Ltd. Financial Pahal Services Financial IDF enhance their livelihoods. that activities generating women to engage in income directly enable marginalised loans These services. from mainstream banking arewomen who excluded extends micro-loans to poor Foundation, is that aNBFC Navachetana of institution sister Navachetana,a Ltd.Pvt. Microfin Services Navachetana needs of the people in of India. people the needs catersand to financial the operations in January 2010 microfinance its commenced 1956. Companies Apex Act, incorporated in 1996 under faster growing NBFC-MFIs is of one the Limited (Apex) Abishek FinanceApex Abishek Apex administration. planning, communication and promotion, corporate entrepreneurship technology, of transfer development, rural agriculture, sustainable enterprise development, micro- credit, micro- havewho in expertise Bankers Administrators and Developmental by founded organisation non-profit Foundation is (IDF) a Development for Initiatives 15 annual report 2014-15 about mfin BSS Microfinance Pvt. Ltd.

Bharatha Swamukti Samsthe (BSST), a not-for-profit Trust is registered under the Indian Trusts Act, to engage in providing microfinance to rural and urban poor. Effective from April 1st 2008, the microfinance operations of BSST were taken over by BSS Microfinance Private Limited, while the same team, as BSST, continues to run it.

Belstar Investment and Finance Pvt. Ltd.

Belstar Investment and Finance Private Limited is a highly developmental and socially oriented NBFC-MFI working closely with Hand-in-Hand India (HiH) in achieving its vision of alleviating poverty through job creation and integrated community development. NBFC-MFI: defined As by the RBI • • • • • following the satisfying criterion: naturethe of ‘qualifying assets’, 85 percent in of assets net the required to have not less than NBFC-MFI. NBFC-MFIs are titled of NBFCs category a new in 2011RBI December created loan amount exceeds less than 24 months when Tenure of loan the is not total indebtedness. excluded while arriving at the are medicaland expenses Education Rs.100,000. borrower not exceed does Total indebtedness of the in subsequent the cycles. cycleRs.100,000 and first in the exceed Rs.60,000 not Loan does Rs.160,000. rural areas not it exceed does while for non- Rs.100,000 areas not exceed does annual income in rural borrower whose household to loan a extended The following criteria: a loan which satisfies the means Asset’ ‘Qualifying ‘Qualifying Assets’. of MFI are in nature of 85 percent of total assets 2Cr.).Region- Rs Fund) 5Cr. of Rs. East (North Minimum (Net Owned NOF • • • • • small MFIs 10 and percent Margin percent at 12 cap for percent. interest exceed 4 cannot minimumthe maximum and for individual loans between maximum variance permitted may exceed 26 percent, the interest individual on loans rateprescribed The of cap. plus margin, the within the during that financial year average borrowing cost year not exceed the does loanson during afinancial averageThe interest rate borrower.the installments at choice the of fortnightly monthly or Loan is repayable by weekly, otherand emergencies. repairs, medical education, such as housingpurposes percent for50 other be can MFIs that so remaining the percent of total the loans of should constitute at least 50 given for income generation amount of loansAggregate collateral. without Loan to extended be penalty. borrowerthe prepay without with right the of Rs.15,000 • • • • • • • RBI. RBI. Bureaus as mandated by the onboardand data to all Credit Information Bureau (CIBs) members of all be Must Credit Code. Follow RBI’s Fair Practices days more. or which are overdue for 180 aggregate loan instalments percentdays 100 and of the daysthan less 90 and than 180 which are overdue for more aggregate loan installments Provisioning: percent 50 of the weighted assets. percent15 aggregate of its risk Capital requirement (CRAR): to taken. be deposit/margin security No is for delayedpenalty payment. There should any not be premium. insurance interest charged c) and the grossthe b) loan amount, the not exceeding 1percent of loans viz. a) Processing fees to included be in pricing of are threeOnly components crore). exceed Rs.100 portfolios for large MFIs (whose loan 17 annual report 2014-15 about mfin Associates

While MFIN Membership is confined to the retail NBFC-MFIs, as an industry association MFIN has continuously engaged with a diverse range of stakeholders as they are integral to the development and growth of the industry and important players in the larger financial inclusion dialogue.

In order to ensure a closer engagement with such stakeholders it was decided that other such stakeholders be brought on board under a new category of Associates. MFIN has the following Associates in its fold:

LandT Finance Ltd NBFC ASA International India Microfinance Pvt Ltd NBFC M Power Micro Finance Pvt Ltd NBFC Sarvodaya Nano Finance Ltd NBFC Share Microfin Ltd NBFC Svasti Microfinance Pvt Ltd NBFC Accion Think Tank Grameen Foundation India Think Tank ICICI Bank Bank IndusInd Bank Bank Lok Social Services Indian Foundation Vaya FinServ Pvt Ltd BC 19 annual report 2014-15 about mfin Governance

Governance Structure

General Body RBI

Governing Board

Chief Deputy CEO Executive & Compliance SRO Officer Officer Committee

Secretariat

Enforcement Committee of all of Members MFIN is and is General constituted Body The Body General revised last in May 2015. bye-laws were The landscape. changingthe regulatory and policy revised from time to time to meet bye-laws are The structures. governing and institution the of transaction ofthe business rules clearly Members, the spell out MFIN bye-laws The adopted by Bye-Laws 14th 2009. December registration as asociety, dated awardedbeen acertificate of 2011,Act under which it has Registration Societies Pradesh provisions of Andhra the MFIN is governed by the Governance Systems NBFC-MFI industry. healthy development of the governance system, ensuring the backbone of MFIN’s Policies and structures form universal access to finance. based approach to promote collaborative, consensus organisation with a MFIN is aMember driven

For year the 2014-15, MFIN becoming of aMember Board. the requirementis necessary a for fromby RBI the time to time, prescribed as criteria, Proper’ of at year. least one and ’Fit The for election agap only after stand for a term of three years may and of of Member each Board the is term The Members. Independent being one-third Members, provide for maximum of twelve currentBoard. The bye-laws fromobjectives Governing the in fulfilling overarchingits MFIN receives strategic guidance Governing Board and directionsand for Society. the is responsible for overall the vision annually meets General and Body supremethe governing body. The NBFC-MFI industry.NBFC-MFI healthy development of the to activities for ensuring its direction overall providing of organisation, the while implements broad the goals and to Society the Secretary as Member the acts who Governing Board a CEO and Independent) three and Members (seven elected MFIN has an 11 Member of Society. the Currently, isone from Associates the Members, Independent the Of Members. Independent of Board the consists of aCEO.and One-third President, President aVice Members including a amaximumand of twelve of aminimum of seven has aBoard comprising 21 annual report 2014-15 Governance Governing Board

PRESIDENT Suresh Krishna MD, Samit Ghosh Grameen Financial Services Pvt. Ltd. MD & CEO, Ujjivan Financial Services Suresh K. Krishna is the Managing Director of Grameen Financial Services Pvt. Ltd. He Samit Ghosh is the CEO and Managing has been a development professional since Director of Ujjivan Financial Services. Samit 1997. He is the Secretary of the Association has been a member of the international of Karnataka Microfinance Institutions banking community for over 30 years. (AKMI). Krishna is also the Chairman of He led the launch of retail banking for Microfinance Focus and the Promoter and in the Middle East and Director of Ekayana Media Services Pvt Ltd. South Asia, and for HDFC Bank in India. His last commercial assignment was Chief Executive (India) of Bank of Muscat. He is an alumnus of Jadavpur University and K. Paul Thomas the Wharton School of the University MD, ESAF Microfinance and of Pennsylvania. Investment

K. Paul Thomas is the Chairman and VICE PRESIDENT Managing Director of ESAF Microfinance and Investments Pvt. Ltd. He has a Master’s V.S Radhakrishnan Degree in Business Administration. Prior to CEO, Janalakshmi starting ESAF, he worked for 18 years with Financial Services the world’s largest fertilizer cooperative, IFFCO. In recognition of his contribution to the industry, ILO Geneva invited him to V.S Radhakrishnan is the CEO of Bangalore deliver a lecture on the scope of microfinance headquartered Janalakshmi Financial for livelihood promotion. In 2010, Services. He was with HSBC for over 25 International Labour Organization selected years where he held various senior positions ESAF as one of its partners for implementing before moving to ING Vysya Bank. He has its Project Microfinance. ESAF Microfinance been with Janalakshmi since August 2007. has won the prestigious Micro insurance Radhakrishnan has an MBA from Indian award constituted by Planet Finance and ING Institute of Management, Ahmedabad and Group in 2007. also holds a CAIIB qualification from Indian Institute of Banking & Finance. Limited. Intellecap Technologiesand Software (P) Microfinance Company Network (P)Limited is aDirector Boards the on of IntelleCash has qualifications tertiary in insurance.He graduate Mumbaipost also and from JBIMS, engineer from VJTI, management Mumbai,a of Ahli Manoj Bank in is Oman. amechanical Finance Company, CEO then Dy and KSA was COOof Oman, at Alhamrani Nissan retail headed He banking at National Bank GrindlaysANZ Bank Amro in India. ABN and withstarting Modi Xerox,GE Countrywide, in consumer finance and retail banking, Mr. Nambiar has over years 25 of experience Financial headquartered in Kolkata. Services, Manoj Kumar Nambiar is of MD Arohan the livelihood customers. for its customers to enable sustainable and abetter Inclusion player with focus employees on and becomingfocussed on aworld class Financial Micro Suryoday based is Finance. Suryoday is Promoter the & CEO of Navi Mumbai Capital in various leadership positions. He Cholamandalam, GE Bank and HDFC has earlier worked with First Leasing, Banking and experience Services and Baskar has Babu years 22 R. of Financial MD, Financial Arohan Services Kumar Manoj Nambiar CEO, Suryoday Micro Finance Micro CEO, Suryoday BaskarR. Babu consultant with KPMG. in 2011-12. is He associated as asenior “Committee Mis-selling on of Mutual Funds” Vinay also worked as of amember SEBI the Standards and Codes Board of India (BCSBI). Vinay was founding the CEO of Banking implementation of exchange control in India. he dealtRBI policy withframing and Office, Foreign Central Exchange Department, CGM, As Laundering. Anti-Money and Banking International on emphasis with India, regulatory for foreign frame-work banks in RBI for four dealingyears, with Office Operations Central Development, and worked of Banking Department as CGM, (RBI) working after there for 35 years. He Manager (CGM) from Bank of Reserve India Vinay Baijal retired as Chief General MEMBERS INDEPENDENT BOARD Infrastructure Development Fund. Development Infrastructure in and IndiaDC at Small Sustainable Scale at World Resources Institute, Washington In development the sector, has he worked hashe worked India at Bosch Pepsico. and development sector. In corporate the sector, six and yearssector of experience in the yearshas of experience two in corporate the with Chaitanyabeen He five past for the years. Director of Chaitanya Microfinance.He has Managing and is Rao Co-founder the Anand Fin Credit Fin MD, Chaitanya India Anand Rao Retired RBI CGM, Baijal Vinay 23 annual report 2014-15 Governance Alok Prasad CEO

The MFIN Secretariat is headed by Mr. Alok Prasad as its professional CEO who is also an ex officio Navin Kumar Maini member of the Board. Alok is a veteran Former Deputy Managing Director, SIDBI banker with over 30 years of both public and private sector banking and financial Navin Kumar Maini was the Deputy Managing services experience. He was formerly the Director of SIDBI. He has more than three and Head, Strategy & Business Development, a half decades of experience in commercial and of Citi Consumer Group, and Country development banking. He was also the Chief Director of Citi Microfinance Group Executive Officer of the Credit Guarantee Fund (India). He also served on the Boards of Trust for Micro and Small Enterprises (CGTMSE), Mumbai. An Citi Financial Ltd and Citicorp Maruti alumnus of St. Stephens College, Delhi, Navin holds a Degree in Law Finance Ltd. from Delhi University. Prior to joining Citi, Alok had a long stint with the RBI, across various departments, in both Central and Rajat Kathuria Sanjay Sinha Regional Offices. He was also a member of the start-up team of the National Director and Chief Executive at MD, M-CRIL Housing Bank, where he played a ICRIER significant role in the formulation of Sanjay Sinha is policies for the development of the Rajat Kathuria the Managing housing finance sector in India. Alok is is Director and Director of also serving as the Chairperson of the Chief Executive Micro Credit South Asian Microfinance Network at the national Ratings (SAMN) for the year 2014. think tank, International Limited (M-CRIL) Indian Council for Research – a leading development Ratna Vishwanathan on International Economic consultancy firm which conducts Dy. CEO & Compliance Officer Relations (ICRIER), New Delhi. assessments and ratings of He has worked with the Telecom microfinance institutions and As Dy. CEO and Regulatory Authority of India provides research and advisory designated Compliance (TRAI) during its first eight services for the development Officer of MFIN, years (1998-2006). He has sector. He holds an MPhil Ratna spearheads worked with the World Bank, in Economics from Oxford Self-Regulation and Washington DC as a Consultant University. Communications activity. She brings to and has carried out project MFIN a combination of Government assignments for a number of and development sector experience. organisations, including ILO, Belonging to the 1987 batch of the UNCTAD, Lirne Asia, Ernst prestigious Indian Audit and Accounts and Young, Consultancy Service, she comes with extensive audit/ Development Centre (CDC) and finance experience across a range of Standing Committee for Public Departments of the Govt. of India. In Enterprises (SCOPE). the development sector she has served at very senior levels with distinction in well-known international NGOs such as Oxfam and VSO. Board CommitteesBoard • • • • 2014-15 was as under: basis. composition The of this committee during financialsthe MFINof on a quarterly an annual and oversees investment the of surpluses reviews and Finance on Board Audit and sub-committee The Finance and Audit Committee Committees: Board MFIN two has

Ratna Vishwanathan (Member Secretary) N.K Maini N.K Suresh Krishna Rajat Kathuria (Chair) • • • • this Committee during 2014-15 was as under: otherand HR related composition issues. The of (HR) is responsible for senior level hiring at MFIN Human on Resources Board sub-committee The Human Resources Committee

Alok Prasad (MemberAlok Secretary) Manoj Nambiar Sanjay Sinha Samit (Chair) Ghosh 25 annual report 2014-15 Governance Task Forces

To assist MFIN in reviewing policy Task Force on Advocacy and issues and acting as a sounding Communications board for critical issues, MFIN has in place Task Forces that are comprised The Advocacy and Communications Task Force is of diverse Members coming together responsible for engaging with the Reserve Bank on a subject of vital importance to of India, Central Government, State Governments the industry. and other key stakeholders and decision makers. The Task Force holds regular dialogues with key These Task Forces generally include policy makers to create a favourable operating internal and external MFIN member environment for the Microfinance Industry. The representatives as well as other diverse Task Force is also responsible for managing the stakeholders. The Task Forces are communications strategy of MFIN. The members of assisted by the MFIN Secretariat. Task the Task Force are as under: Force members are appointed by the Board every year. Advocacy and Communication Task Force Members Name Representative Organisation The year 2014-15 had a total of five Samit Ghosh CEO & MD, Ujjivan Financial Services Ltd. Task Forces. A brief description of the Manoj Nambiar CMD, Arohan Financial Services Ltd Task Forces and their composition is V .S Radhakrishnan Founder & Chairman given as under: Janalakshmi Financial Services Alok Prasad CEO, MFIN

ACTIVITY HIGHLIGHTS

The Task Force members mandated a series of sustained dialogues with banking and insurance regulators (RBI, IRDA etc.), Ministry of Finance (MoF) and other relevant stakeholders on industry relevant issues. These engagements resulted into positive outcomes for MFI Industry in areas such as creation of Small Finance Banks and amendment on the lending limits for Group loans.

The Communication vertical in MFIN was set up during 2014-15 and a communication strategy for MFIN addressing external and internal communications is in the process of being rolled out. 4. 3. 2. 1. include: of key the Some of activities this Task Force HIGHLIGHTS ACTIVITY Task Bureau Credit Force Members are as under: Member, Suryoday. members of Task the The Force Baskar Director Founding and Babu, is by R. headed microfinance clients in country.the This Task Force strengthening credit the bureau system eco for CreditThe Bureau Task Force is responsible for (TFCB) Task Force on Credit Bureau Sugandh SaxenaSugandh Sadaf Sayeed Sengupta Subhankar Chatterjee Ritesh Babu R Baskar Name MFIs. MFIs. (directly/BC non-regulated etc.) and model Banks of dataof non-submission by SHGs, RBI highlighting data in CICs account on gaps Additionally, have regular sent to inputs been search the logic. strengthening TFCB withThe CICs both the for engaged has created. been has credit adetailed handbook bureau, around processes and systems necessary In to order that ensure in place put MFIs can April 2015. to of with comply from 1st the them expected are MFIs Members have and framed been member/associate for KYC standards

Arohan Financial Services Pvt. Ltd Pvt. Services Financial Arohan Director and Founding Member, Founding and Director Deputy COO, SKS Microfinance SKS COO, Deputy Representative Organisation COO, Muthoot Microfinance Muthoot COO, Member Secretary, MFIN Secretary, Member Suryoday Microfinance Suryoday State Chapters & Membership Task &Membership ForceState Members Chapters are as under: Chairman of this Task Force. members of Task the The Force make MFIN amore inclusive body. V.S Radhakrishnan is the responsibility of MFIN scope to the Membership after look to statethe district and level. This Task Force was assigned the communication self-regulatory and functioning of MFIN at through state chapters associations and to advocacy, deepen stateto level in put place engagement an effective model State level Task engagement. The Force objective had its in 2013-14 to develop acomprehensive of MFIN’s frame-work TaskThe Force State on Chapters Membership and formed was Membership Task Force on State Chapters and fold offold MFIN. within stakeholders the bring in important and to them that to offered order could be outline services the Associateship given was attention due by Task the Force in of introduced newly category The corrections. necessary reviewed from state the feedback initiatives the for Task The their etc. design and forums Force periodically role the of district structures, of these expectations role and affiliation stateAssociations,defining proposal to the the withclosely team the state to up the chapters shape and They engaged level of district statenetwork and structures. attention print providedfocussed ablue nationwide for operational framework state for level Their engagement. Task the external stakeholders, Force provided elaborate an organisationsMember improved and engagement with coordination In better for line MFIN. with among need the level district of state the design the on and workadvised of toguidance team year. the the throughout and It discussed Task The PaulKrishna Thomas. and Force provided detailed Taskthe Force K. Suresh Rao, were Govind Singh, Anand chaired by Radhakrishnan of V.S other the Members and TaskThe Force State for Initiatives was Associates and HIGHLIGHTS ACTIVITY Savyasaachi Achala Krishna Suresh Thomas Paul K. Name Govind Singh Govind Anand Rao V.S Radhakrishnan

Microfinance And And Microfinance ESAF MD, and Chairman Founder Pvt. Ltd. Pvt. Services Financial Koota Grameen MD Pvt. Ltd Pvt. Finance Micro CEO, Utkarsh AND MD Services Financial CEO, Janalakshmi and MD MD Chaitanya India Fin Credit Pvt. Ltd Pvt. Credit Fin India Chaitanya MD Representative Organisation Member Secretary, MFIN Secretary, Member Investments Pvt. Ltd Pvt. Investments Pvt. Ltd Pvt. 27 annual report 2014-15 Governance Self-Regulatory Organisation (SRO)

Compliance Officer

As required under the RBI Guidelines, MFIN has a dedicated Compliance Officer for oversight of the SRO functions within MFIN. In order to provide oversight and steer, the Board has set up an Enforcement Committee, which in turn reports into a Self-Regulatory Organisation Committee

Self-Regulatory Organisation Committee Powers and Functions of (SROC) of the Governing Board the SROC: • The SROC bases it’s mandate on For proper discharge of the SRO role and exercising oversight the RBI guidelines dated 26th for adherence to regulations and guidelines prescribed by the November, 2013 and any other RBI from time to time, as well as the CoC of the Society by directions issued in this respect by Members, there shall be a Committee designated as the Self- the RBI which broadly spells out the Regulatory Organisation Committee (SROC). role of the SRO • The SROC will keep the Board The SROC shall comprises of 5 (five) Members of which 2 informed of all facts and decisions (two) shall be from amongst the Elected Members of the • The SROC will be the appellate body Board and 2 (two) shall be from Independent Members for EC decisions. The SROC can on the Board. The remaining 1 (one) member of the SROC recommend suspension, expulsion shall be an independent person of eminence who is familiar and termination of Membership to with the financial services industry, whose appointment and the Board with a speaking order in remuneration will be approved by the Board. In addition, the writing. The Board will have the final Chairperson of the Enforcement Committee will be a member decision on this of the SROC. • In the event of a dispute between Members and the EC, the final Self-Regulatory Committee (SROC) appeal lies with the SROC and the Name Representative Organisation decision of the SROC will be final Vinay Baijal (Chair) Retired CGM, RBI and binding. Diwakar Gupta* Ex-MD, SBI R. Baskar Babu CEO, Suryoday Micro Finance Pvt Ltd Details of the meetings/concalls held by Samit Ghosh MD, Ujjivan Financial Services Ltd the SROC during the year under review: V. Vedakumari* Director, NIRD S No Date Concall/ Meeting Alok Prasad CEO, MFIN 1 26-Sep-14 Meeting * Member resigned from the SROC 2 12-Dec-14 Concall 3 10-Feb-15 Meeting 4 16-Apr-15 Meeting • • • • guidelines approved by Board: the EC takeThe can following the subjectto actions the redressal issues. client grievance and Members between resolution EC’sthe role as an entity that handles dispute (SOP), will duly approved by SROC, the define requiring redressal. Standard Operating Procedures grievances Members and the arising from clients issues arising of out internal disputes between roleThe of EC the shall to be primarily handle Independent of Members Board. the appointed they by are Board, the and other than the 3(three)Members and of persons eminence are which 2(two) are from elected within Industry (EC). EC The comprises of 5(five) members, of has constitutedSociety an Enforcement Committee Government/any other regulatory authority, the reference to regulatory compliance of RBI/ the oversight adherence to regulatory with norms For proper enforcement exercising and of CoC the EnforcementCommittee membership of any to Member SROC the Recommend suspension/termination of Fair CoC Industry the and Code Practices for violations fines Levy as laid RBI’s down in the Issue Censure Issue Warning 2014-15 below: as is for Committee Enforcement the of composition The Enforcement Committee: by the convened concalls meetings/ the of Details in writing. decision The of will SROC the final. be will an appeal Such have SROC. the to submitted be against appeal decision the An of EC the will lie with 7 5 4 3 2 1 S No Ratna Vishwanathan Rao Lalita S. Girotra Anil |Chair Kulshrestha Haresh External Members Services Sundaram Prakash H.K.N Raghavan H.K.N Internal Members 19-June-15 19-June-15 9-Jun-15 13-Jan-15 22-Dec-14 17-Nov-14 1-Oct-14 Date

Independent Microfinance Consultant

CEO Equitas Microfinance India Microfinance CEO Equitas Group CRO, Future Financial Financial Future CRO, Group Concall/ Meeting Concall/ Ex-ED, Andhra Ex-ED, Compliance Officer Ex-officio Member Ex-officio Retired CGM, RBI CGM, Retired Meeting Concall Meeting Concall Concall Meeting 29 annual report 2014-15 Governance General Body Meetings

MFIN Annual General Meeting MFIN Extraordinary General (AGM) Meeting (EGM)

The MFIN Annual General Meeting (AGM) was MFIN held an EGM on the 26th of May 2015 in conducted on 30th June 2015 in Mumbai. The Gurgaon to consider and change the inconsistencies General Body Members elected its new Board and anomalies of the bye-laws through which MFIN through a secret ballot process. The Governing is governed. Body members are: Manoj Nambiar President The agenda of the meeting was: R Baskar Babu Vice President • To consider and change the inconsistencies V S Radhakrishnan Member and anomalies of the bye-laws of MFIN K Paul Thomas Member in light of the changing financial inclusion Anand Rao Member landscape. H K N Raghavan Member • The revised bye-laws were approved and Govind Singh Member adopted by all Members present and voting.

The nominated Independent Members who continue from the last Board are: Rajat Kathuria Vinay Baijal Sanjay Sinha Navin Kumar Maini 31 annual report 2014-15 Governance Our Work Initiatives. Initiatives. Development and State Communication, and Regulation, Advocacy pillars of Self- rests on the four MFIN’s work broadly 33 annual report 2014-15 Governance Self Regulation

Key Activities

Surveillance

Grievance Dispute Resolution Redressal

MFIN’s role as a SRO as mandated by the RBI, hinges on five factors

Training and Knowledge Data Collection Dissemination two rounds is astwo of under: RBIndex, comparisonThis and summary of score data the of from self-reported 47 NBFC-MFIs member during the bi-annual exercise is and aself-assessment tool ResponsibleThe Business Index (RBIndex), is a ResponsibleA. Business Index D. C. B. A. processes: that in has put place been entails following the for surveillance methodology The ofCode Conduct. Fair the of RBI, the Industry the and Code Practices to ensure adherence to regulatory the prescriptions that proper processes are in put place by members In exercising role its as a SRO, MFIN to seeks ensure Surveillance Parameters Summary Disclosure tocustomers Customer engagement Institutional process Transparency Total - branch - Inloancard - inloanagreement - loanprocess(sanction,disbursement,repayment) - customereducation,rightsandwelfare - HR - complaintredressalsystem - auditandcompliance - board Any episodicAny occurrences Credit and Bureau Reports, Client Grievance Redressal Tracker Business Index) (currently, tool self-assessment Responsible by MFIs the a on based Self-Assessment Max Score 100 32 14 10 21 11 10 38 11 10 10 four broad areas using anonline survey. theirreport compliance with reference to above the MFIN NBFC-MFIs member areof asked 100. to sub-parameters to form maximum the total score four broad areasThe divided are into further 83 4. 3. 2. 1. areas: (CoC) underof following the Conduct four broad RBI’s Fair Code (FPC) Code Practices Industry and March indicators RBIndex The 2015. cover the Round (B) of exercise the covered data as of 31st information as 31st on July 2014. second The exercise in was 2014-15 conducted covered and of the (A) first of practices MFIs.Round and The principles business responsible evaluating for 8 7 9 Transparency (weightage 9%) Institutional processes (weightage 38%) Customer engagement (weightage 21%) Disclosure to customers (weightage 32%) 2014-15 A Avg Score 29 13 19 10 34 10 90 7 9 9 7 9 8 8 2014-15 B Avg Score 30 13 19 11 33 10 90 8 9 8 6 9 8 8 35 annual report 2014-15 Governance The overall score of the Industry from Round (B) • Based on average score, industry scored 90%, was: the highest in disclosure to customers and • Industry collectively had an overall score of transparency (93%) 90% • Average industry score for RBIndex and various • 32% (15) members scored > 95% parameters are as under: • 34% (16) members scored in the band of 90%- w Overall: 90% 94% w Disclosure to customers: 93% • Only 11% (5) members scored less than 80% w Customer engagement: 90% w Institutional Process: 87% w Transparency : 93% RBIndex-Performance of members

Disclosure to 4 1 Customers 93%

59% RBIndex Customer 11 15 90% Consolidated 66% 69% 90% Engagement

22% 53%

93% 87% Institutional Transparency Process 16

>95% 90%-94% 80%-89% 70%-79% <70% Average Maximum Minimum

• Graph shows the performance of industry in B. Credit Bureau Reports four areas using industry maximum, average, MFIN mandates all its members to become and minimum scores members of all CICs having a MFI bureau. MFIN

Frequency of data submission to 2 CICs

46 44 44 44 45 45 41 41 42 41 39 39 36 37 38 35 35 34

9 10 7 6 7 8 7 6 5 4 4 4 4 4 2 2 2 3 2 3 2 2 2 2 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 1 0 1 1 1 0 1 1 0 1 1 0 0 CHM EFX CHM EFX CHM EFX CHM EFX CHM EFX CHM EFX CHM EFX CHM EFX CHM EFX 0 0 0 0 0 0 0 0 0 July March August January October February December November September

M F W DNS

CHM – Crif Highmark, EFX – Equifax | M – Monthly submission, F – Fortnightly submission, W – Weekly submission As recommended by the EC, cases cases recommended by EC, the repay As loans. the over indebtedness of clients their and inability to that reason primary the observed for default was During evaluation the in Erode and Nanded it was compliance by MFIs to regulatory standards COC. & irregularthe behaviour of clients to and assess of evaluation the causes was tofor out the find of MFIsbranches purpose in places. both The these MFIN commissioned evaluation athird party of all Erode in Tamil in Nanded Nadu and , presencedefault active of the ring and leaders in information the on Based to MFIN mass about EpisodicC. Occurrences was shared with members as areference book. Credit on “Handbook Bureau Systems Process” and compliance a members, standards amongst of setting up high apart creditAs bureau plan. withback an action urging them to comply with CB standards reply and fortnightly/weekly data wrote and to members datanon/late submission, (ii) non-submission of ECall The identifiedmembers members. for (i) made to data be must ensure upload by 100% submitting data aweekly on basis, however efforts significant improvement number in membersthe of EC The was2015. of view the that there is a members for period from the April, 14 to March, ECThe analysed data the submission of 48 weekly frequency. submit full complete and data to both CICs a on stipulatesfurther -all MFIN members should Credit Bureau standards dated October, 2012 03,

And 8129And complaints are under process. complaints the Of received, 7,733 have closed. been Credit Information (CIR) Report provided by CICs. a MFI borrower. complaints These were on based complaints violation on based lender limit of two to In year the 2014-15, EC the received 19,965 Appellate for dispute Authority resolution cases. directives to SRO Committee MFIs. is The the that disputes addressesbody industry issues and unilaterally. Enforcement The Committee is the toby SRO not the taking resort and action dispute common a resolution mechanism mandated trade they rules, will address issues these through they believe fellow members are in violation of joining members agree in-principle MFIN, that if for dispute need hence the and resolution. By This leads to internal disputes members between other skews members and level the playing field. business the by of impacts amember Conduct MFIs, Fair of Code Industry and Code Practices violationAny of RBI’s the Directions NBFC- on Resolution Dispute meticulously by dealing the staff/officials. including preventive are followed measures loanand servicing to ensure that all guidelines processes of client acquisition, disbursing sanction, MFIs to review controls the strengthen and in the operations –preventive measures urging NBFC- ECThe issued adetailed MFI on advisory to RBI. the sharedbeen of SRO the with in RBI the Report the of highlighted non-compliance have in reports these 37 annual report 2014-15 Governance Grievance Redressal Summary of complaints received by MFIN members Grievance Redressal of microfinance clients is an important function of the SRO. As a consumer 40000 35000 protection measure, various activities related to 30000 grievance redressal have been initiated by MFIN 25000 in 2014-15. The EC has been exercising direct 20000 oversight of these activities. The details are as 15000 follows: 10000 5000 a. Grievance Redressal Tracking Tool 0

• MFIN members submit their Grievance data Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15

on a monthly basis to the SRO in a standardized Total Query Dispute template. Service Request Others

• The template captures various information, such as contact details of the customer, address, turn party products and status of insurance claims. around time of the Grievance, complaint log Based on the information provided through this number etc. This data is analysed and findings monitoring report, the EC is of the view that are presented to the EC. MFIN should take proactive steps to strengthen grievance redressal mechanisms in the industry • A summary of the data received from Aug taking into account the framework proposed in 2014 till April 2015 is as given under. As the Grievance Redressal study as mentioned in demonstrated, maximum cases received on the subsequent point (c). GRM helpline of member MFIs’ are those related to queries about product, job availability, third b. Toll Free Helpline MFIN has a engaged nodal person to receive and Category wise break-up of Complaints record grievances of a MFI customer. Further, MFIN plans to start a toll free number for registering Month Total Query Dispute Service Others complaints of microfinance customers. The outbound Request calling facility as part of this initiative will be used as Aug-14 20854 14535 4734 746 835 a validation of the self reported data to assess the Sep-14 25881 17914 1298 5798 871 efficiency of grievance resolution at member MFI Oct-14 21784 17489 262 3135 898 level. The helpline is a cloud based telephony system Nov-14 31826 24415 1130 5321 960 and shall be operational from July, 2015. Dec-14 34384 26209 209 7017 949 Jan-15 30188 24887 1588 3514 199 c. Grievance Redressal Framework Based on existing grievance redressal mechanisms Feb-15 24085 19209 1670 2818 388 in place with all MFIs, and in order to standardize Mar-15 25692 19562 2959 2989 182 the same so as to have a minimum benchmark Apr-15 25712 19461 1430 3463 1358 in place, MFIN commissioned Smart Campaign of the Reserve Bankof of Reserve the India supersede regulatory instructions or supervisory signsindustry not replace does Code up to. The or responsible ethical and business which practices, asetimposes of voluntary principles to ensure stipulations of Code Conduct he from RBI, the external stakeholders. In addition to regulatory the received and from NBFC- the MFIs, Non-Profits taking after revise into CoC, the account inputs set has up to been MFIN M-Cril and Sa-dhan, consisting of representatives IFC, from SIDBI, ago, amulti stakeholder Working Committee formulated been had Conduct almost three years Considering of of Code Code that Industry the Conduct Revision in Industry Code of grievance on practices member redressal. year for strengthening workshopsmember next of thispart Project will used to be now conduct GrievanceThe Redressal as framework proposed level analysis was shared with MFIN members. III The individual in timeframe. aspecified MFI will to be move level on those level Iand II to Level of mechanismsstrength the in effort place. The categorized three on levels depending the on field visits. select and MFI have been Reports Assessment Smart survey, interviews, telephonic categorization of MFIs was sourced via online informationThe data and for analysis GRM and • • • objectives: microfinancethe industry, with followingthe Grievance Redressal Mechanism (GRM) for to develop acomprehensive architecture of by MFIN members Redressal Mechanism that could adopted be To develop three of Grievance Grades To set practices benchmarks for good at GRMs level NBFC-MFI the strengthen To develop amonitoring mechanism to deliberations. has participating been actively in meetings RFF and address challenges the initiatives. new and MFIN trends ways and of in partnering to industry the various stakeholders share key developments and meetings RFF areThe held quarterly wherein Srinivasan. microfinance practitioners N.S Brij Mohan and renowned and Access Development Services MichaelDFID, SIDBI, Dell &Susan Foundation, consist of representatives World from IFC, Bank, microfinance.Other founding membersRFF of adherence of responsible financeprinciples into objective of institutionalizing adoption the and Finance Forum (RFF), in formed 2011 with the MFIN is afounding of member Responsible the Campaignthe have designed. been cards, animation, comic etc banner pans, book for A suite of campaign modules like picture posters, related financialeducation. consistent quality consumer protection credit and deliver,to effectively disseminate implement and across India to enhance their institutional capacity Awareness Campaign MFI’s aimed to support bureaus. Further, Credit the Bureau Consumer sharing, role the creditand of credit reports as well as implications the of credit information of buildingof importance the strong a credit history, consumerwas deepen to and understandingexpand Institutions in India Project objective The in 2012. Bureau Awareness Project for Microfinance MFIN in partnership with IFC initiated Credit the merits ofthe maintaining credit agood history, decisions. To raise awareness credit on bureau and resources that help can them make wise financial MFINeducation. provides clients with tools and client is protection client of component essential An Training &Capacity Building 39 annual report 2014-15 Governance Advocacy and Communications

MFIN’s vision of promoting Engagement with inclusive growth drives External Stakeholders its advocacy and communication efforts. MFIN continued a series of sustained dialogues with banking and insurance regulators (RBI, IRDA etc.), Ministry of Finance (MoF) and other relevant stakeholders on industry relevant issues. These engagements resulted in positive outcomes for the MFI Industry in areas such as Small Finance Banks, where, besides other pro- industry guidelines, change in nomenclature from “small banks” to “small finance banks” was affected to the advantage of MFIs.

With RBI, multiple levels of engagements were held for furthering the Industry specific agenda around issues such as MFI-micro regulations, strengthening of the Credit Bureau ecosystem and pro industry SFB guidelines. MFIN engaged with the RBI Governor to discuss issues and micro regulations pertinent to the functioning of the industry. bureau ecosystem. CICs to credit the strengthen directed to to by RBI the report size. All lending institutions were of clients end loan the ticket and towith income the levels respect MFI-micro regulations, especially were in relation to relaxations in engagementsOther with RBI regulations Relaxation in MFI –micro Mumbai in in 2014. October Business Correspondent in model of the techno-financial aspects MicroSave for Members on in technical partnership with A workshop was organised Correspondents Workshop on Business at large.Industry in positive outcomes for the presented to resulting RBI the a note was developed and E&Y. discussions, the on Based firms Delloitte,like and KPMG, Members with consultants from for sessions interactive facilitated for Members in Delhi New and MFIN organised aconference SFB Guidelines MFIN’s inputs to RBI on Key Activities the industry. the investors’ confidence in shoring-up on and PE Funds and firms strengthen to investments foreigndomestic and investment forums with representatives of meetings were held at various under PMJDY.BSBDAs Multiple openingin efficiencies new distribution network and existing channel NBFC-MFI in advocatingMoF for leveraging MFIN also engaged with the from Members. specific viewpointsinputs and representing all necessary in engaged with MUDRA country.the MFIN continuously with formal the credit system of institutions in MSMEs connecting of MFIs set of as an important acknowledgement and MUDRA refinancing MFIsof under were in terms of portfolio MoF,With engagements the Ministry of Finance (MoF) Representationsto 2015. regulations in Bangalore in May of changes in MFI micro- effects Member’s to meet discuss the regulations, MFIN organised a release the After of micro- transfer into nominee’s account. lender MFIs as against direct of customers deceased through insurance claims to nominee(s) also agreed channelisation on of insurance IRDA The agents. regulated NBFC- MFIs as micro- resulted in recognition of RBI with IRDA efforts advocacy The Insurance client studies. case feature interviews articles, and relatedIndustry updates, news which provides acapsule of monthly E-Newsletter (online) In addition, MFIN publishes its MFIN (B)LOG. Facebook, Twitter, LinkedIn and real time engagement on This activities. includes MFIN’S time standing feedback and of with aim the of gauging real within social the media space MFIN has also active been management. exercises especially for crisis toone relationship one building through media interfaces and gained at traction state the level national level has but also slowly is not only restricted at the This engagement with media the in print electronic and media. with MFIN spokesperson both four exclusiveand interviews MFIN coverage news stories yearone with atotal of 75 MFIN has received in past the from press the coverage that resource hub which is evident recognised as an industry media. MFIN has to come be stakeholders especially the proactively with external by engagingaround sector the building apositive perspective has primarily focused on MFIN’s communication strategy Effectively Communicating 41 annual report 2014-15 Governance Development

One of the core Data Points MFIN has a robust functions of MFIN is data collection and to aid and promote MFIN has been consistently analytics capability the development of a working towards structuring a robust microfinance comprehensive microfinance MFIN published quarterly and industry. industry Information Hub with annual industry reports viz, the objective of supporting MicroMeter and MicroScape in policy formulation/dialogue the FY 14-15. The MicroMeter Industry Report and guiding industry practices. provides quarterly trends of The Information Hub strives key operational and financial For the first time, at the behest to provide comprehensive indices for the industry at of the RBI, MFIN put together an data and analysis of the micro a pan India and state level. industry specific report on sector finance industry to be used by The MicroScape, based on performance. The report will now a wide range of stakeholders audited financials of Members, be an annual document. like regulators, government provides a comprehensive departments, funders, investors, annual analysis for full range academia, media, rating agencies, of operational, financial and consultants and MFIs. funding related data. A web based platform, Micrometrics is The successful implementation being developed for Members of the data hub will enable MFIN for data reporting. Both the to: publications are available on the • Converge existing data MFIN website. points to MFIN India information Hub MFIN has partnered with MIx • Rationalise and harmonise Market to leverage on their the data-sets to improve expertise and existing systems data quality and and processes to collect and quantity analyse data. This mutually • Improve efficiency to reduce rewarding partnership allows Members’ burden with both the partners to leverage respect to data reporting on each other’s competencies • Build capacities to enable and enrich overall information industry analysis ecosystem of the industry. • • • financial field in the eco-system that: initiativedelivery The points. aims to promote a finance practices upto the leglast of microfinance towards widening deepening and responsible the friendlyand environment. This step is an important otherand stakeholders towards building acohesive statethe district and level MFIN among Members coordinationa better cooperation and platform at Membership recommended that MFIN establish TaskThe Force State on Initiatives Associate and Initiatives State FPC Ensures mutual learning adherence and to the Brings up early signals of stress in field the if any responsible delivery of services Provides aclient ensures and connect Gujarat Rajasthan Goa Kerala Karnataka Maharashtra Jammu &Kashmir Punjab Haryana Pradesh Himachal Madhya Pradesh Ta Delhi mil Nadu T Uttaranchal Pradesh Andhra elangana garh Chhattis Orissa Jharkhand about the current the about state level establishments. chapters. following The map table and gives detail Presently RegionalMFIN office. 12 statehassuch level engagements work and closely with MFIN MFIs’ representatives provide guidance to state the coordination committees comprising of Member clubbed with adjacent the state chapters. State has achapter (the or own of its smaller states) are state Each either east. and west north, south, the initiative works through four regional its in offices PresentlyAssociations/bodies. MFIN the state MFIN chapters, by or affiliating withstate level This isMFIS. either done directly through areservices being provided by NBFC- Member initiativeThe covers 32 states where microfinance • • • approach: StateThe Initiatives athree adopt pronged Bengal W est Act as regional/stateAct platform level advocacy with Communications the vertical Engagement with Media local in consultation stakeholdersother important in State the Interact coordinate and with Government and Sikkim Local AssociationsisinProcessofMFINAffiliation Local AssociationAffiliatedwithMFIN MFIN State&DistrictChapterisinProcess MFIN State&DistrictChapterActive Meghalaya T ripura Assam Mizoram Arunachal Pradesh Manipur Nagaland 43 annual report 2014-15 Governance Region Name of the State Chapter/Association Region Name of the State Chapter State Chapter Gujarat State Chapter Delhi & Haryana Composite Chapter Maharashtra State Chapter Northern Composite Chapter (Himachal Pradesh, J&K, Punjab North & Central West Madhya Pradesh State Chapter Uttarakhand State Chapter Rajasthan State Chapter Uttar Pradesh – UPMA* North-East Composite Chapter (Arunachal Pradesh, Assam, Tamil Nadu State Chapter Eastern & Manipur, Meghalaya, Mizoram, Nagaland, Sikkim & North-Eastem Bihar & Jharkhand Composite Chapter Karnataka-AKMI* State Chapter South Kerala-KAMFI*

* UPMA – Uttar Pradesh Microfinance Association * AKMI – Association for Karnataka Macrofinance Institutions * KAMFI – Kerala Association of Microfinance Institutions

The state and district level forums play a districts are appended to the nearby district forums. crucial role in enhancing mutual understanding, For grounding this work, MFIN has organised coordination and facilitating collective action among training workshops for lead MFI coordinators Member NBFC-MFIS, policy making bodies, law to prepare them to play their role effectively enforcement agencies, state and district authorities, and efficiently at the district level. Efforts are media and other relevant stakeholders. being made to cover all the districts where MFIN Members are providing microfinance services

S No Region No of meetings No of meetings through the network of district forums. The current convened of the convened of the district forums coverage is as given below: state chapters district forums (excluding state (excluding state associations) associations) District Forum Coverage in 1 North 12 102 Percentage across India 2 East 8 218 3 West 10 98 17.38% 4 South 3 59 TOTAL 33 477 18% 64.62% MFIN has organised a total of 33 state chapter meetings and 477 district forum meetings across all regions. During such meetings various key business % of Coverage through MFIN district Forums 64.62% and industry related items were discussed and allied % of Coverage through Local Association’s Forum 18.00% collective coordination activities were taken up. % of Districts not covered through district forum** 17.38%

** MFIN State Chapters decided to set up district forums in District forums have been set up where there are these districts in future as right now there are no substantial substantial microfinance operations and other operations. operations with probable throws and causes up realon time basis. It tracks disruption the in the either directly through or banking correspondents microfinance delivery institutions including banks various policies followed adopted practices or by initiativeThe brings to fore ramifications the of India. across states that are Members operating districts in 489 MFIN MicrometerThe dated 31st March 2015, District wise district forum coverage details District Forum coverage details across India 100 200 300 400 500 10 20 30 40 50 60 70 0 0 member MFIshaving Bihar No ofdistrictswhere 24 6 Chhattisgarh operation 489

Delhi & Haryana 17 0 11 8 district forumacross monitored through Gujarat No ofdistricts 18 2 104 India Jharkhand Individual DistrictForum Karnataka-AKMI 11 2 No ofdistrictshaving

Madhya Pradesh 20 exclusive district 4 forums 285 34 0 Maharashtra 23 5 the collectivethe in last the mile delivery. of service initiativeThe indicative works as primary the level of level that MFIN would for and stands like to promote. culturethe of cooperation mutuality and at field the initiative time at same the provides aplatform to build diverse state level socio The economic backgrounds. with geographies different in completely operandi practices/modus in appearing commonality/similarity trends as emerging in field the observes one as early stress signals in field. the captures It the North-East through adjoining districts covered district forums Composite DistrictForum No ofsmaller 63 2 119

Odisha 21 9

Punjab forums monitoredby No ofsmallerdistrict 0 3

Rajasthan MFIN 316 19 0

Tamil Nadu 29 4 Uttarakhand No ofdistrictforums monitored by State Associations 4 0

UP-UPMA 88 58 0 45 annual report 2014-15 Governance Events

SRO Round Table Conferences MFIN SRO Discussion on “Perspectives on Self-Regulation MFIN organised two SRO Workshops for Members in Indian Microfinance Industry” on the 10th and 20th of November at Kolkata and Bangalore respectively. The discussions centred A Panel Discussion was organised by MFIN on 8th on a) Surveillance and Evaluation, b) Customer December 2014 in association with Access Assist in Grievance Redressal c) Dispute Redressal and d) New Delhi on the sidelines of the Financial Inclusion Financial Literacy and Customer Education. It was Summit. The panelists consisted of Dr. K.P Krishnan, an internal focused workshop to bring Members up Mr. Vijay Mahajan, Mr. Samit Ghosh, Mr. Sanjay to speed on the role and functions of the SRO. Sinha and Mr. Alok Prasad. The discussions were moderated by Mr. Tamal Bandyopadhyay, Dy. Editor, Training of Trainers Workshop on LiveMint. The theme of the discussion was “Self- Credit Bureau Training Toolkit, Regulation in Indian Microfinance’. The “By-Invitation Mumbai, India Only” event had participation from a wide variety of stakeholders like banks, academicians, consulting MFIN and IFC partnered on a Campaign on firms, DFIs, multilateral agencies, MFIs etc. Financial Literacy Project for Credit Bureau Awareness. A Training of Trainers was organised MFIN Members’ Meet on Micro for the Members on 21st November in Mumbai. An Regulations and MUDRA information brochure on the Project was published Guidelines by MFIN. MFIN organised a Members’ Meet on industry MFIN Members’ Meet on Small relevant issues pertaining to changes in RBI Finance Bank Guidelines regulations on loan size and client income brackets in Bangalore. Discussions were also held regarding MFIN organised a Members’ Meet on the 7th the MUDRA and the overall financial inclusion of December 2014 in New Delhi to discuss the ecosystem in the country. modalities of the Small Finance Bank Guidelines. MFIN was a part of the larger discourse in shaping MFIN and ET Edge Financial up some of the important aspects of the guidelines Inclusion Summit as part of its advocacy efforts with RBI. Panelists from KPMG analysed the guidelines for the benefit MFIN in association with ET Edge organised the of all Members. “Financial Inclusion Summit” on the 26th of March 2015. MFIN was the knowledge partner for the event. Ratna Vishwanathan, Dy CEO, represented MFIN in the panel Self-Regulatory Practices in the Financial Sector. • • • • MFIN Participation in other Events and Forums around “Examining on theme the India Harvard Conference Maharashtra Pune, January 2015, College of Agricultural Banking, IFMR Action” 2015, and and Lead “Translating Research into Policy conference - IFMR-CAB Islamabad,Pakistan Unbanked”, November 2014, PMN, Asia’s“Banking South half billion Regional SAMN Conference monththe of September 2014 Microcredit Summit held in Mexico in participated Microcredit as apanelist at the Summit -CEO, MFIN • • • Maharashtra ship, Pune, 2015, February Resilience, Global KPMG Citizen Inclusion towards Disaster of FinancialPanel Impact on Maharashtra. Mumbai, 2015, February Assist, for afresh Access Outlook”, “Need Roundtable Microfinance on Bill: Maharashtra Pune, 2015, February CAB, and Inclusive Finance” Seminar, MCRIL “Risks in Indian Microfinance/ Delhi Microfinance Panel”,2015, January 47 annual report 2014-15 Governance

49 annual report 2014-15 Governance

account percent for 86 of portfolio. the 13-14.over FY Large NBFC- MFIs (GLP >5bn) 5 bn) registered percent of 63 highest the growth size Large bn. MFIS NBFC (GLP > 401.38 at Rs. percent (GLP) in 2014-15 total the and stood GLP grew at industry rate arobust growth The of 61 Gross1. Loan Portfolio (GLP) process. licenses balance the from and RBI the are under 452015, MFIN Members have received NBFC-MFI various regions in country. 31st on the March As MFIs have now fairly distributed across portfolios haveMembers now nationwide presence. NBFC- spread institutions. by these Many of MFIN the with as well RBI as by way of expansion in regional by way of registration as NBFC-MFIs by NBFCs was atransition year for Microfinanceboth Industry year of 10,553 2014-15 The network branches. has presence in 32 states/UTs through industry country,industry ofthe breadth and length clients in country. the Operating across the promoting financial inclusion among low income continuesindustry to play asignificant role in MFISNBFC demonstrates that microfinance the overview of microfinance the An operations of Industry Trends Gross Loan Portfolio (Rs fy 11-12

(all MFIs) 168.13

Total 174.07 248.02

401.38 fy 12-13

(GLP

fy 13-14 9.16 (GLP>Rs 1-5bn) 25.84

MFIs 21.62 30.32 fy 13-14 45.77 bn) (GLP>Rs 5bn) 139.59

MFIs 149.14 fy 14-15 212.35

346.44 51 annual report 2014-15 Industry Trends Clients (mn) 2. Clients

30.50 As of 31st March 2015, aggregate clients of NBFC 23.68 25.64 18.42 MFIS stood at over 3 crores – which is a growth of 20.66 19.89

16.93 16.46 29 percent over FY 13-14. Small size NBFC MFIS (GLP < 1 bn) registered the highest growth of 35 0.85 4.01 percent over FY 13-14. 3.27 3.16 2.51 0.63 0.45 0.46

Total MFIs MFIs MFIs (all MFIs) (GLPRs 1-5bn) (GLP>Rs 5 bn)

fy 11-12 fy 12-13 fy 13-14 fy 14-15 fy 14-15

3. Disbursed Loans AVG Loan Amount Disbursed Per Account (annual, Rs) During FY 13-14, the average loan amount 16,327 disbursed per account was Rs. 16,327 an increase of 16,289 16,368 15,474 15,032 14,359 14,249 14,119 14 percent over the previous fiscal year. This trend 13,758 12,618 12,631 12,757 12,011 11,897 11,829 was witnessed across all categories of institutions 10,819 - large, medium and small. The growth in disbursed loan size is also indicative of the higher loan size requirement by the microfinance clients to finance Total MFIs MFIs MFIs their enterprises. The inflation effect has also (all MFIs) (GLPRs 1-5bn) (GLP>Rs 5bn) contributed to this growth. fy 11-12 fy 12-13 fy 13-14 fy 14-15

During FY 14-15, MFIs disbursed over 33.43 mn loans worth Rs 545.91 bn. Compared to FY 13-14, number of loans disbursed grew by 37 percent and the loan amount disbursed by 55 percent. Amount Disbursed (annual bn) Rs 14-15. banks),the showing anincrease percent of 84 in FY 13-14 (79 bn percentin FY from 150.40 was Rs. Financial Institutions (FIs). corresponding The figure 78 percentbn, from rest banks from and the other MFISNBFC received total debt 276.82 funding Rs. by commercial 14-15, bank funding. During FY annual rateThe growth of microfinance was backed funders Demonstratesconfidence of Industry4. Funding– fy 11-12 (all MFIs)

Total 207.41 233.75 351.18 545.91 (GLP

MFIs 5.04 5.09 7.96 12.12 (GLP>Rs 1-5bn) fy 13-14

MFIs 26.12 26.33 37.43 55.07 (GLP>Rs 5bn) MFIs

fy 14-15 17.6 24 202.33 305.79 478.72 Loans Disbursed (annual, mn) Total Debt Funding (annual, bn) Rs fy 11-12 fy 11-12 (all MFIs) (all MFIs) 58.63 Total Total 17.43 100.11 18.32 150.40 24.46 276.82 33.43 (GLPRs 1-5bn) (GLP>Rs 1-5bn)

fy 13-14 6.23 fy 13-14 2.07 MFIs MFIs 10.20 1.87 17.45 2.42 31.92 3.38 (GLP>Rs 5bn) (GLP>Rs 5bn) 51.58 MFIs MFIs 14.90 fy 14-15 88.06 fy 14-15 16.03 129.01 21.46 236.81 29.25 53 annual report 2014-15 Industry Trends 5. Productivity - Increasing Client Per Loan Officer

The improvement in productivity indicators is 605

symbolic of increased operational efficiency. This 591 543 522 550 514 521 503 508 487 469 432 434 year the average clients per branch for NBFC MFIS 420 354 stood at 2,890, a growth of 19 percent over FY 14- 289 15. The per branch average GLP for NBFC-MFIs exhibited a similar increasing trend, a growth of over Total MFIs MFIs MFIs 49 percent over FY 14-15, at a figure of Rs. 38.03 (all MFIs) (GLPRs 1-5bn) (GLP>Rs 5 bn) bn. The average clients per loan officer stood at 591 fy 11-12 fy 12-13 fy 13-14 Q 3fy 14-15 fy 14-15 growth of 9 percent over FY 13-14.

Clients Per Branch GLP Per Loan Officer (Rs mn) 8.18 7.77 3,261 2,890 6.28 5.89 5.70 2,663 2,430 2,370 5.00 2,203 2,154 2,326 4.64 4.66 4.51 3.98 4.05 4.19 1,953 3.96 1,868 1,633 1,732 3.43 1,563 1,398 2.58 1,222 1,076 1.70

Total MFIs MFIs MFIs Total MFIs MFIs MFIs (all MFIs) (GLPRs 1-5bn) (GLP>Rs 5 bn) (all MFIs) (GLPRs 1-5bn) (GLP>Rs 5 bn)

fy 11-12 fy 12-13 fy 13-14 Q 3fy 14-15 fy 14-15 fy 11-12 fy 12-13 fy 13-14 Q 3fy 14-15 fy 14-15

GLP Per Branch (Rs mn) 44.05 38.03 28.44 25.52 21.35 21.48 19.67 19.18 17.92 16.81 15.41 14.08 16.62 13.24 8.93 6.34

Total MFIs MFIs MFIs (all MFIs) (GLPRs 1-5bn) (GLP>Rs 5 bn)

fy 11-12 fy 12-13 fy 13-14 Q 3fy 14-15 fy 14-15 59 percent of GLP Top five states, viz.Bengal, top West TamilKarnataka, MaharashtraNadu, Pradesh account Uttar for and percent 22 percent, percent at 28 east 20 is west south percent, and north 30 (GLP)*Portfolio of MFIs is more now evenly distributed across various regions in country. the Share of Pan –India Presence of NBFC-MFIS reflecting indicating quality.portfolio good remainedCDR) well under 1percent of GLP PARThe MFIS for NBFC (other than MFIs under quality of operations Portfolio6. Quality –Reflects State wise Distribution of GLP 5% 5% 6% MP Assam 4% 7% Bihar ( 31st March, 2015) 14% Odisha 9% UP 10% MH 15% WB KL 11% KA 14% TN Others fy 11-12 2.32% Par 30 Regional Distribution of GLP South 0.46%

22 % 0.26% 20 % ( 31st March, 2015) 0.25% fy 12-13 East

2.22% Par 90 0.39% 0.17% North fy 13-14

28 % 0.18% 30 %

2.04% Par 180 West 0.37%

fy 14-15 0.12% 0.12% 55 annual report 2014-15 Industry Trends Microfinance Plus initiatives by MFIN Members. below are some of the “Microfinance Plus.” Given is often referred to as socio-economic opportunities The added dimension of opportunities. economic and clients’ access financial, social committed in helping their are Members MFIN . 57 annual report 2014-15 Microfinance Plus Financial Literacy/ Education/ Awareness Building

Varam Capital Private Limited

Mobile Wallets – Transforming Customers Transaction Paradigm Varam strives to move beyond focusing on traditional financial services and build models that can change the landscape of financial intermediation by leveraging on insights and analytics of customer transaction behaviour. Varam has launched a pilot project of offering mobile wallets to its customers which shall encourage them in exploring the mobile wallet solution and the benefits that can be derived of it. This initiative will facilitate collection of loan installments, provide a convenient, affordable, flexible, reliable and portable solution to the customers to channel their electricity bills, utility payments, remittances etc. Customers can walk in to the nearest retailers, deposit small amounts of money in to their own wallets which will help in a systematic saving plan. They can then transact through digital money thereby creating a cash-less environment. literacy. literacy. more 56,624 than 1, clients were trained financial on of over borrowing. During year the 2014-15,effects liability, proper utilisation ill- and earned of money include management, money on jointof aspects the financial on depicting different aspects literacy. Some financial literacy. PictorialThe Kit has pages16 Training (CGT) for raising clients’ awareness on thatKit’ is being used during Group Compulsory Fusion has conceptualised formulated and a‘Pictorial FinancialLiteracy Programme Fusion trainings were imparted to 15,000 women. women. trainings were to imparted 15,000 livelihood activities like dairy agriculture. and The Women were encouraged to utilise loan the for also emphasised perils the on of over indebtedness. of saving, insurance,importance It life etc. need cycle building for targeted the rural womenthe on Chhattisgarh. main The thrust was awareness on Jharkhand, Madhya Maharashtra Pradesh, and acrossbranches states five Odisha,namely financial conducted Annapurna trainings in various Trainings Literacy Financial Annapurna 59 annual report 2014-15 Microfinance Plus Water and Sanitation

Adhikar Jeevan Dhara The project aims at creating low cost infrastructure of water connections and toilets for the rural households. The project has been initiated since April 2012 and is implemented in the districts of Cuttack, Khurdha, Puri, Jajpur, Balangir, Bargarh, Sonepur, Kalahandi, Nawarangapur, Rayagada, Malkangir, and Koraput districts in Odisha and Surat district in Gujarat.

Adhikar has also initiated a terafil water filter to deal with the problem of contamination due to iron and lead particles. Adhikar will be targeting 5500 safe water connections and 500 toilet constructions by February 2016 with 100 percent utilisation of this products. This will ensure that at least a total of 6000 number of households will have access to safe drinking water.

Besides this, Adhikar has been actively involved in providing its clients livelihood opportunities such as dairy management, social security through pension funds and financial literacy in terms of access to savings, loans and insurance products. Management women. approximately Committee benefitting 11,000 collaboration Ward with governance local School Sarpanch, Members, Block, i.e. In year the 2014-15, health awareness were atotal camps organised of 900 in discussed. organised children women and among to gauge their understanding levels topic the on towards toilet usage. discussion, Post various competitions like Drawing Quiz and were prevention control. and Participants were also encouraged for behavioural changes Information was shared with clients the various on water diseases borne their and causes, spread awareness villagers among of safe water importance the sanitation. and about People’s Forum (NGOarm of Annapurna) together acampaign with an objective to started Considering of safe water importance the sanitation and Microfinance Annapurna and Health Awareness Drive Annapurna clients. distribution diabetes of eye women health spectacles, and for detectionits camps camps in associationASAI with Lions International Swayam and initiated camps, eye-check-up Eye Check up Camps ASAI beings without any discriminations. Members. already directory The has more than 1000 created aplatform for all are who willing to donate save and precious blood lives of fellow initiative Directory Life Blood Muthoot The is dedicated to save initiative lives. The has 2014-15. surgicaland Company 350 has free surgeries The conducted etc. care expenses in FY patients their and families by providing travel accommodation, and medicines food fares, Campaign whichThe 2014, was launched in October comprehensive extended to support lipcleft surgeries to children. organisation launched ‘Smile the Please’ campaign to create awareness facilitate and free FincorpMuthoot in association with Operation Smile Indiamedical charity -anon-profit –Mission for Free to Lip PLEASE Surgery Children Cleft SMILE Muthoot India. are students using Approximately facilities. the 1,33,224 proper toilets, water facilities promoting and sanitation in 266 Government schools across of Bharat Swachh Ujjivan Campaign, part has authoritiesAs helped school in building Ujjivan 61 annual report 2014-15 Microfinance Plus

Go Green mind mandate the of Bharat Swachh the Abhiyan. specificallytargeted toilet construction keeping in Members participated in training. the training The masons was organised. SHG 18 masons 80 local and training with an objective to enhance skills of local Mason Training for Clients: Athree day mason women clients.than 100 of three trainings were organisedmore benefitting in Dhenkanal district 2014-15 of Odisha. In FY atotal making in Odapada the Hindul Block and Road villages with People’s Forum provided trainings candle on Candle Making Training: in Annapurna collaboration Skills Development Annapurna Development Training/Skills Livelihood run solar on charge back-up of power eight hours. such lights were during gifted lamps event. the The Deloittegifted solar lamps to girl Twenty students. Swayam and Deloitte with jointly International, ASAI Solar Lights to encourage green energy International ASAI 63 annual report 2014-15 Microfinance Plus Awards and Recognition

Annapurna Fusion

Awarded The NCEPD Mphasis Universal Fusion received ‘Best MFI Design Awards 2014: Annapurna was of the Year 2014 Award’ at awarded under Category C-Companies/ ‘Microfinance India Awards 2014’ organisation for its outstanding work instituted by ACCESS. in enabling inclusive microfinance for disabled. Fusion is featured in the list of India’s 25 leading MFIs published Rising to Dignity Award 2015: On the by CRISIL. occasion of Anti Leprosy Day 2015, Annapurna’s Baba Raghunath SHG of Khurda district received the “Rising to Dignity Award 2015” of Sasa kawa India Leprosy Foundation (SILF). The group was presented with a trophy and a cash prize of Rs.100,000. The SHG runs its own coir rope production unit. ESAF Microfinance

ESAF Microfinance was one among the three finalists shortlisted for European Microfinance Award 2014. Award received on 13th November 2014 at Luxembourg. The finalists were selected based on their efforts in contributing directly to improving the lives of the clients. ESAF’s clean energy for the poor initiative proved a decisive factor in the achievement.

The European Microfinance Award was launched in 2005 by the Luxembourg Ministry of Foreign and European Affairs – Directorate for Development Co- operation and Humanitarian Affairs. ESAF Microfinance

65 annual report 2014-15

other explanatory information. accounting policies and of significant a summary and ended, year the for statements flow Cash and ended, year the for accountExpenditure and Income the Marchatand as31, 2015, whichcompriseBalance the Sheet Society’) ‘the after ‘ of statements financial accompanying the audited have We Gurgaon |MayGurgaon 2015 21st, iii. of In Cash case the Flow Statement, Cash for the year flows Society Statementsended. of the Expenditure ofIncome excess and the account, of Income over Expenditure for year the that on ended date. the of case the In ii. and; 2015 31,March at as Society the of affairs of state the of Sheet, Balance the of case the In i. financialstatement fairgive and a true view in conformity withaccounting the principles generallyaccepted in India: In our opinion of ourto information and best the according and to explanations the given the to accounts, the us, Opinion audit our for basis a provide to appropriate opinion. and sufficient is obtained have we evidence audit the that believe We accounting estimates made by management, as well as evaluating overall the presentation of financial the statements. audit alsoAn includes evaluating appropriateness the of accounting policies reasonableness the used and of the presentation financial of the statements order in designto audit procedures that are appropriate in circumstances. the fair preparation and Society’s considersauditorinternal the controlrelevant the to riskassessments, those making In Aditor’sResponisibility the of misstatement material of risks the financialwhether statements, due fraudor to error. of assessment the including judgment, auditor’s the on depend selected procedures The statements. financial the disclosuresin and amounts the about evidence audit obtain to procedures reasonable obtain to audit performing audit involves materialfrom An the free misstatement. are financialstatements the whether about assurance perform and plan and requirements ethical with comply we that require Standards Those India(ICAI).of Accountants Chartered Instituteof the by Auditingissued Standards on the accordancewith in audit our conducted We audit. our on based statements financial these on opinion an express responsibilityto isOur error.or relevant to the preparation of the financialstatements that arefree from material misstatement,whether due tofraud Pradesh Andhra internalcontrol maintenanceof and with implementationdesign, the accordance responsibility includes This RegistrationAct. in Society statements financial these of preparation the for responsible is Management Management Responsibility for the Financial Statements AUDITORS’ REPORT TO THE GOVERNING BOARD OF (A Society registered Society (A underPradesh Andhra Societies Registration 2001) Act, Financials MICRO FINANCE INSTITUTIONS NETWORK [MFIN]MICRO NETWORK FINANCE INSTITUTIONS V. NAGARAJAN&CO., Chartered Accountants Chartered Micro Finance Institutions Network [MFIN]’ (herein Network Institutions Finance Micro ICAI Firm Reg No: 04879 N | M. No.: 019959 No.: N|M. Reg Firm 04879 No: ICAI For V. &CO., NAGARAJAN Chartered Accountants Chartered V. NAGARAJAN Partner 67 annual report 2014-15 MICRO FINANCE INSTITUTIONS NETWORK [MFIN]

Audited Financial Statements Am ount in R s .

Balance Sheet as at 31-Mar-15 31-Mar-14 Note No. I. SOURCES OF FUNDS Corpus Fund - General 1 208,23,240 508,23,240 Corpus Fund - SRO 2 300,00,000 – Reserves and surplus 3 24 0,17,289 226,59,172 Total 748,40,529 734,82,415

II. APPLICATION OF FUNDS

Fixed assets 4 Gross block 45,88,005 31,76,196 Less: Accumulated depreciation 20,92,437 16,87,774 Net block 24,95,568 14,88,422

Investments (Un-quoted) 5 104,52,002 95,56,021

Current assets, loans and advances a) Cash and bank balances 6 685,61,129 598,85,966 b) Loans and advances 7 20,81,436 44,68,278 Total [A] 706,42,565 643,54,244

Less: Current liabilities and provisions 8 87,49,606 19,16,280 Total [B] 87,49,606 19,16,280

Net Current assets [A-B] 618,92,959 624,37,965

Total 748,40,529 734,82,415

Significant Accounting Polices and Notes on Accounts 11 See accompanying notes referred to above form an integral part of these financial statements.

As per our report of even date for and on behalf of Board Members of for V. NAGARAJAN & Co., MICRO FINANCE INSTITUTIONS NETWORK Chartered Accountants Samit Ghosh (President) (V. NAGARAJAN) Partner ICAI Firm Regn No; 04879 N / M. No.: 019959 Alok Prasad V.S. Radha Krishnan (Chief Executive Officer) (Vice President) May 21st, 2015 | Gurgaon

Audited Financial Statements for the year Ended March 31, 2015 Total Income from Investments in Mutual Funds Rs. 5,21,986/- PreviousRs. 4,84,324/-) year Rs. Income from Investments in : Fixed Deposit’s (TDS income Other Total subscriptionAnnual (Associateship fees fee) Initial subscription fees (Associateship fee) (Associateship fees subscription Initial Annual subscription 2,04,283/-) (includes fees Rs. TDS: Balance Sheet at as Significant Accounting Polices and Notes on Accounts on Notes and Polices Accounting Significant Surplus and to Reserve transferred Surplus Conference, Board Meeting etc. Fees Professional/Consulting Human Resource cost : EXPENDITURE fees renewal Membership fees subscription Initial : REVENUE Statements Financial Audited MICRO FINANCE INSTITUTIONS NETWORK [MFIN] Advocacy/Communication charges Advocacy/Communication Travel/Conveyanceexpenses See accompanying notes referred accompanying See tostatements. above financial form these integral of an part Transfer to corpus fund APPROPRIATION: N e tCurrent Year Income Tax SLess: Provision Tax Income for u r Provision before Surplus Net Tax Income for p l u(Un-quoted) Investments s TotalDepreciation fixed on assets expenses Administrative of specialCo-Sponsorship with IFC study Note/Group No. G-20 G-12 G-18 G-19 G-9 10 11 11 9 4 For Year the Ended March 31, 2015 104,52,002 580,58,334 236,06,498 610,66,450 503,41,613 549,50,613 618,92,959 16,50,000 86,26,256 31,75,000 30,08,116 56,77,303 13,58,116 36,52,694 51,01,537 49,38,516 52,19,856 57,74,473 – 8,08,000 3,06,000 3,20,000 6,81,057 8,95,981 For Year the Ended March 31, 2014 Amount in Rs. Amount 386,38,928 440,38,191 152,28,799 418,29,059 375,61,928 624,37,965 15,10,000 48,43,242 35,63,687 95,56,021 89,03,325 03,00 30,37,90 22,09,133 23,27,076 74,29,969 3,70,000 5,56,021 8,55,375 4,82,927 ,7000 0 7,07,0 6,99,133 – – – 69 annual report 2014-15 As per our report of even date for and on behalf of Board Members of for V. NAGARAJAN & Co., MICRO FINANCE INSTITUTIONS NETWORK Chartered Accountants Samit Ghosh (President) (V. NAGARAJAN) Partner ICAI Firm Regn No; 04879 N / M. No.: 019959 Alok Prasad V.S. Radha Krishnan (Chief Executive Officer) (Vice President) May 21st, 2015 | Gurgaon

Audited Financial Statements for the year Ended March 31, 2015 Cash flow before extraordinary itembefore flow extraordinary Cash Payment made towards:- Cash Flow Statement May 21st, 2015 |Gurgaon receiptsCash against:- from Members (A) Cash Flow from Operating Activities Statements Financial Audited MICRO FINANCE INSTITUTIONS NETWORK [MFIN] Closing CashandEquivalents(asperNote6) (C) Cash Flow from Financing Activities: Investments: (B) Cash Flow from Investing Activities: (HDFC as Balance Bank onMarch 31) equivalents Cash and Cash Add: Opening ) (A)+(B)+(C equivalents Cash or in Cash Decrease Increase or Net flowfrom Financing cash Net Activities (C ) Income Tax Tax) Paid (Advance Fees Special Legal Fees/Lawyer Cashbefore flow extraordinary item Administrative expenses Administrative of SpecialCo-Sponsorship Study with IFC Conference, Board etc. Meeting, Travel/Conveyanceexpenses Fees Professional/Consulting Human resource Cost Advocacy/Communication charges Advocacy/Communication LegalCost Fees) SubscriptionAnnual (Associates fees Annual SubscriptionAnnual fees Renewal fees Initial subscription fees (Associate) fees subscription Initial fees subscription Initial in Fixed (Net Deposits Matured) HDFC of in Mutual HDFC Funds Investments on earned Interest/Dividend Purchase of Fixed Assets ICAI Firm Regn No; 04879 N / M. No.: 019959 No.: N/M. 04879 No; Regn Firm ICAI Net Cash flowOperatingfrom Cash Net Activities(A) Net Cash flowfrom Cash InvestingNet Activities (B) As per our report of even date report our per As for Chartered Accountants Chartered V. &Co., NAGARAJAN (V. NAGARAJAN) Partner

Audited Financial Statements year the for March 31, Ended 2015 MICRO NETWORK FINANCE INSTITUTIONS (Chief Executive Officer) Executive (Chief Samit Ghosh for Alok PrasadAlok For Year the Ended (President) and on behalf of Board Members of of Members Board behalf on and March 31, 2015 (135,00,000) (118,33,302) (214,30,943) (10,48,000) 504,62,330 (53,77,080) (48,15,326) (51,01,537) (56,24,113) (19,26,780) (43,29,516) (52,42,519) 64,56,222 64,56,222 26,75,000 54,15,845 (5,23,154) 35,93,477 8,08,000 3,20,000 3,06,000 – – – – – – 38,769

V.S. Krishnan Radha For Year the Ended (Vice President) (Vice March 31, 2014 Amount in Rs. Amount (152,28,799) (90,00,000) (28,02,258) (10,10,000) 3,79 0) (30,37,90 (61,01,067) (23,27,076) (37,27,486) (74,29,969) 90,00,000 41,25,000 32,43,438 54,15,845 23,05,361 31,10,484 (8,55,375) (1,63,740) 30,79,698 (7,74,337) (7,74,337) 3,70,000 3,70,000 6,97,000 – – – – – 71 annual report 2014-15

MICRO FINANCE INSTITUTIONS NETWORK [MFIN]

Audited Financial Statements Am ount in R s . For the Year Ended For the Year Ended Notes to Audited Financial Statements March 31, 2015 March 31, 2014 Grouping No. NOTE 1: CORPUS FUND - GENERAL Cash receipts from Members against:- Opening balance 508,23,240 508,23,240 Less: Transfer to SRO Fund (300,00,000) – Closing Balance 208,23,240 508,23,240 NOTE 2: CORPUS FUND - SRO

Opening balance – – Additions during the year 300,00,000 – Closing Balance 300,00,000

NOTE 3: RESERVES AND SURPLUS

Income and Expenditure Account Opening balance 226,59,172 219,60,039 Add: Surplus transferred from Income & 13,58,116 6,99,133 Expenditure A/c Total 240,17,289 226,59,172

NOTE 5: INVESTMENTS (UN-QUOTED) Investments: in HDFC Mutual Fund including dividend accured 104,52,002 95,56,021 104,52,002 95,56,021 NOTE 6: CASH AND BANK BALANCES Cash In Hand Balance with Scheduled banks – – - HDFC Bank G-1 38,769 54,15,846 Fixed Deposits with HDFC Bank G-2 660,00,000 525,00,000 Add: Interest accured on fixed deposits G-2 25,22,360 19,70,121 Total 685,61,129 598,85,966

NOTE 7: LOANS AND ADVANCES TDS recoverable 7,26,268 4,94,324 Security deposit against Rent G-5 4,11,060 6,36,619 Prepaid expenses 3,77,990 43,713 Supreme Court Fees Receivables – 3,75,000 Advance to vendors in cash or in kind G-6 10,170 18,98,147 Membership Renewal fee receivable G-7 – 10,000 Income Tax Refundable 5,948 2,142 Annual subscriptions receivable G-8 50,000 10,08,333 Annual Associate Fees G-8 5,00,000 – Total 20,81,436 44,68,278

NOTE 8: CURRENT LIABILITIES PROVISIONS AND A. Current LiabilitiesA. B. Provisions B. TradePayable Other Payables Other TaxService Payables Tax at sources Deduction Payables Provision for Tax (Net Tax): of Advance Total [A+B] Total [B] Total (A) Audited Financial Statements year the for March 31, Ended 2015 G-4 G-3 24,80,897 81,34,167 48,77,350 87,49,606 3,08,258 6,15,439 6,15,439 4,67,663 14,16,280 19,16,280 5,00,000 5,00,000 3,08,258 6,60,832 4,47,190 – 73 annual report 2014-15 MICRO FINANCE INSTITUTIONS NETWORK [MFIN]

Audited Financial Statements Amount in Rs. For the Year Ended For the Year Ended Notes to Audited Financial Statements March 31, 2015 March 31, 2014

NOTE 9: HUMAN RESOURCE COST Salary, Bonus and Allowance to employees G-10 218,53,917 148,07,856 Provision for leave encashment 3,90,214 – Provision for gratuity 7,13,138 – Insurance reimburesment 3,16,935 2,67,159 HR Studies/Employee Training expenses 3,32,294 1,53,784 Total 236,06,498 152,28,799 NOTE 10: PROFESSIONAL/CONSULTING FEES

Consultancy Fees to facilitators G-14 38,40,000 29,40,000 Professional charges Special projects G-15 33,74,104 20,05,795 Accounting services Charges 7,24,725 6,74,160 Professional charges- others 6,87,427 9,62,742 Total 86,26,256 65,82,697

NOTE 11: ADMINISTRATIVE EXPENSES

Office Rent G-16 17,47,528 17,07,592 Annual Report/Other Publications 12,20,464 3,36,261 Communication Expenses G-11 7,82,351 6,66,334 General Office Expenses 4,52,597 2,17,177 Repairs and maintenance G-12 4,53,830 1,79,906 Miscellaneous Expenses G-17 3,78,268 1,93,965 Office maintainance G-13 3,08,571 1,50,092 Statutory Audit Fee 1,57,304 1,12,360 Commission on rent 1,39,326 – Membership fee 37,064 – Total 56,77,303 35,63,687

As per our report of even date for and on behalf of Board Members of for V. NAGARAJAN & Co., MICRO FINANCE INSTITUTIONS NETWORK Chartered Accountants Samit Ghosh (President) (V. NAGARAJAN) Partner ICAI Firm Regn No; 04879 N / M. No.: 019959 Alok Prasad V.S. Radha Krishnan (Chief Executive Officer) (Vice President) May 21st, 2015 | Gurgaon NOTE 4: FIXED ASSETS Notes to Audited Financial Statements as at March 31, 2015 MICRO FINANCE INSTITUTIONS NETWORK [MFIN] TOTAL[A+B] Software [B] Software assets Intangible B. TOTAL[A] Vehicle Equipment Office Computers Fixtures and Furnitures Tangible ssets A. Description May 21st, 2015 |Gurgaon ICAI Firm Regn No; 04879 N / M. No.: 019959 No.: N/M. 04879 No; Regn Firm ICAI As per our report of even date report our per As for Chartered Accountants Chartered V. &Co., NAGARAJAN 1,609,293 3,131,718 3,176,196 April 01, April 601,041 (V. NAGARAJAN) 914,184 As on on As 2014 44,478 ,00 7,20 Partner 1,923,480 1,926,780 1,466,114 394,263 Additions 63,103 3,300 Gross block Gross - Deductions

457,092 514,971 514,971 57,879 - - - 4,588,005 4,540,227 1,923,206 1,609,293 31, 2015 31, 937,425 March As on on As 70,303 47,778 Audited Financial Statements year the for March 31, Ended 2015 1,650,865 1,687,774 01, 2014 01, 326,838 863,350 457,860 As on on As April 36,909 2,817 MICRO NETWORK FINANCE INSTITUTIONS 176,353 (Chief Executive Officer) Executive (Chief 681,057 193,125 298,970 For the the For 677,989 Year 3,068 Samit Ghosh 9,541 Alok PrasadAlok for Depreciation (President) and on behalf of Board Members of of Members Board behalf on and during the during Ded/Adj. Year 228,930 276,394 276,394 47,464

- - - 2,092,437 2,052,460 1,056,475 455,727 31, 2015 31, 527,900 March As on on As V.S. Krishnan Radha 12,358 39,977 (Vice President) (Vice 1,395,306 2,495,570 2,487,768 481,698 31, 2015 31, March 552,819 As on on As 57,945 7,802 Net block Net Amount in Rs. Amount 1,480,854 1,488,424 March 31, March 274,203 456,324 745,944 As on on As 2014 4,383 7,570 75 annual report 2014-15 MICRO FINANCE INSTITUTIONS NETWORK [MFIN]

NOTE 11 : SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2015

A) SIGNIFICANT ACCOUNTING POLICIES: 1) Basis of preparation of financial statements:

The Financial statements have been prepared to comply in all material respects of the accounting standards issued by the Institute of Chartered Accountants of India [ICAI]. The Statements have been prepared under the historical cost convention and on accrual basis, except stated otherwise. The accountings policies have been consistently applied by the society and except for the changes in accounting policy discussed more fully below, and are consistent with those used in the previous year.

2) Use of estimates :

The preparation of financial statements requires management to make certain estimates and assumptions that effects the amounts reported in the financial statements and notes there to. Difference between the actual and estimates are recognized in the period they materialize.

3) Cash flow reporting:

Cash flow statement has been prepared in accordance with AS-3 “Cash Flow Statement” issued by The Institute of Chartered Accountants of India (ICAI), under direct method.

4) Revenue recognition:

The main income of the society is from member’s contribution and membership fee.

4.1 Member’s annual contribution is recognized on accrual basis and as per Society’s bye laws. An amount as decided by the Board of Governing members from time to time is transferred to corpus fund and balance is recognized as income for meeting operating expenses of the Society. 4.2 Admission fee and initial subscription are directly recognized as income of the society when they are receivable. 4.3 Interest income on fixed deposits with banks is recognized on the basis of proportionate lapse of time as applied to the amount outstanding and rate applicable. 4.4 Dividend income is recognized when the right to receive payment is established by the balance sheet date.

5) Fixed assets:

5.1 All fixed assets have been shown at cost less accumulated depreciation. The cost comprises of purchase price and all incidental costs related to acquisition and installation. 5.2 Depreciation has been provided on assets based on written down value method at the rates appropriate for the useful life of the assets. Particulars as on Employees Cost [Others]Employees Cost De Chief Managerial Remuneration B) MICRO FINANCE INSTITUTIONS NETWORK [MFIN] puty puty 7) 6) 2) 1) NOTES TO ACCOUNTS: Ex Chief ec 7.1 Provision contingent and liabilities : 6.1 Valuation of Investments: Total COST : DETAILS RESOURCE HUMAN OF 1.4 1.3 1.2 1.1 MUTUALITY: AND ACTIVITIESNOTE THE SOCIETY ON THE OF utiv where reliable estimate of obligation the made. be cannot obligation apresent or obligation that will probably not require of resources outflow or of obligation. disclosure A of contingent liability is there when made, is apossible probably requires of resources an outflow and reliableestimate be amountmade of can the createsSociety aprovision where there is apresent obligation as aresult of event past that appreciation is accounted realized. for when are held to maturity withdrawn or before maturity), are provided while in accounts, the diminutionAny in value of in all respect investments, other than long term investments (which All investments are held are at and cost valued at market whichever price cost, or is lower. compliant with provisions the of law. ofin other appropriate income, respect taxable provision for taxation is has made and been 1961 Act, of Income tax the 12A liability tax no and is anticipated account on of this. However, Mutual Institution. Benefit In viewnothas society sought of above, the the any registrationu/s society, beingTrade a Association, is operating under “Principle the of as Mutuality” a and person/entity other than by way of subscription/contribution The from members. its has not society receivedThe any contribution by way of grant from otherwise or any of institutionscapacity engaged in microfinance, arewho members society. of the microfinance research conduct trainingdevelop and practices, and best so as strengthen the to relevantthe regulatory authorities regulating business the of microfinance, promoteto are of objectives activities society and to primary the liaiseThe work and in unison with membership moved to Associate the membership category. of 8institution’s (NBFC) not receiving RBI’s registration as NBFC- MFI’s have had their in addition2015 are has 33, 14 society the institutions joined account as Associates. On totalThe mainly number of members, Finance Companies, Non-Banking as March on 31, NBFC’s from Bank of Reserve India (RBI) vide letter dated: 16, 2014. June During year, the have received Society recognition Regulatory Organization” as “Self- (SRO) for at Hyderabad, Pradesh. Andhra Registration 2001 under Society the Act, Micro Finance Institutions [MFIN] Network is aSociety, registered 14, December on 2009 Ex e Offi ec utiv cer e O including allowances and benefits f f icer 31 -Mar -15-Mar 31 2,36,06,948 1,26,06,498 40,00,000 70,00,000 31 -Mar -14-Mar 31 Amount in Rs . in Rs Amount 1,52,28,799 65,75,001 77,50,573 9,03,225 77 annual report 2014-15 MICRO FINANCE INSTITUTIONS NETWORK [MFIN]

3) DETAILS OF AUDITOR’S REMUNERATION:

Amount in Rs . Particulars as on 31 -Mar -15 31 -Mar -14 Statutory Audit Fee 1,40,000 1,00,000 Applicable Service Tax 17,304 12,360 Total 1,57,304 1,12,3 60

4) LOANS AND ADVANCES - MEMBERSHIP RELATED:

Includes : Receivable of Rs. 5,50,000 from two their member against annual subscription fees, in which includes Rs. 5,00,000 towards Associate membership fees and Rs. 50,000 as normal membership fees from their members. Excludes: A sum of Rs. 10,000 for renewal fees is receivable from their one members (since ceased to be as membership category) relating to previous year and written off during the year.

5) Transfer to Self-Regulatory Organisation [SRO] Fund:

During the year, Rs. 3,00,00,000 has been transferred to Corpus-SRO (Self-Regulatory Organisation) Fund, from the existing Corpus Fund, as per the decision of governing board members in the board meeting held as on January 20th, 2014

6) Human Resource Cost includes:

l Rs. 390,214 being Provision for Leave encashment to employees as per the Contract with employees and; l Rs. 7,13,138 being the provision to meet the gratuity liability to the employees as per decision of the Governing Board. The provision has been made as per the actuarial valuation provided by Life Insurance Corporation of India, to create a Trust for meeting the liabilities and to be administered by its Group Gratuity Scheme, with effect from 1.4.2015.

7) Corresponding figures of the previous year have been regrouped wherever necessary to make them comparable with the figures of the current year.

As per our report of even date for and on behalf of Board Members of for V. NAGARAJAN & Co., MICRO FINANCE INSTITUTIONS NETWORK Chartered Accountants Samit Ghosh (President) (V. NAGARAJAN) Partner ICAI Firm Regn No; 04879 N / M. No.: 019959 Alok Prasad V.S. Radha Krishnan (Chief Executive Officer) (Vice President) May 21st, 2015 | Gurgaon

Audited Financial Statements for the year Ended March 31, 2015 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 no Sl Members of List

Muthoot MicrofinMuthoot Ltd Ltd Services Financial Margdarshak Ltd Finance Micro Madura Janalakshmi Ltd Financial Pvt Services Jagran MicrofinPrivate Ltd Ltd FinancialIDF Pvt Services Ltd FinancialGrameen Pvt Services Microfinance Ltd Future Financial Ltd Services Fusion Ltd MicrofinancePvt Ltd MicrofinancePvt and ESAF Investments Equitas Micro Ltd Finance India Pvt DishaLtd Pvt Microfin Chaitanya India Ltd Fin Credit Pvt Ltd MicrofinancePvt BSS Ltd Belstar Investment Finance and Pvt Ltd Bandhan Financial Pvt Services Ltd MicrofinancePvt Asirvad Ltd Arohan Financial Pvt Services Ltd Abishek Pvt Apex Ltd MicrofinanceAnnapurna Pvt MicrofinanceAgora India Ltd Adhikar Ltd MicrofinancePvt Institution Members 45 44 43 42 41 40 39 38 37 36 35 34 33 32 31 30 29 28 27 26 25 24 no Sl

Village Ltd Financial Pvt Services Ltd Varam Capital Pvt Utkarsh Ltd Micro Finance Pvt Ujjivan Financial Ltd Services Ltd Pvt Swadhaar FinServe Svatantra Ltd Pvt Microfin Ltd Pvt Finance Micro Suryoday Financial Ltd Spandana Sphoorty Ltd FinanceSonata Pvt MicrofinanceSKS Ltd ShikharLtd MicrofinancePvt Satin Creditcare Ltd Network Ltd Pvt Finserve Sambandh MicrofinanceSamasta Ltd Ltd Saija Finance Pvt Sahyog Microfinance Ltd S VCreditline Ltd Pvt East) Microfinance (North RGVN Ltd Ltd Pvt Services Financial Pahal Ltd Nirantara Pvt FinAccess Ltd Pvt Navachetana MicrofinServices Namra Finance Ltd Institution Members Annexure 1 Annexure 79 annual report 2014-15 Annexure 2 Board Attendance

Total 9 Meetings 5 Concalls 4

1 2 3 4 5 6 7 8 9 Sl Board Meeting Concall Concall Meeting Concall Meeting Concall Meeting Meeting Present Absent Attendance no member 8th July, 7th Aug, 25th Aug, 18th Oct, 7th Jan, 24th Jan, 16th 16th Apr, 30th Apr, (P) (A) 2015 2014 2014 2015 2014 2015 March 2015 2015 Bangalore 2015

Gurgaon Kochin Gurgaon Bangalore 1 Samit Ghosh President P P P P P P P P P 9 0 100% 2 V.S Vice P A A P P P P P P 7 2 78% Radhakrishn President 3 Anand Rao Director P A P P P P P P P 8 1 89% 4 K. Paul Director P A P P P P P P P 8 1 89% Thomas 5 Manoj K. Director P P P P P A P P P 8 1 89% Nambiar 6 R. Baskar Director P P P P A P P P P 8 1 89% Babu 7 Suresh Director P P P P P P P P P 9 0 100% Krishna 8 N.K Maini* Director A P A A A P P 3 4 43% 9 Rajat Director A P A A P P P P A 5 4 56% Kathuria 10 Sanjay Sinha Director A A A P P P P A P 5 4 56% 11 Vinay Baijal Director P P A P A P P P P 7 2 78% IRDA IIM IFC ICRIER IBA GoI GLP GIZ FY FPC FICCI ED EC DNBS DFS DFID DFI DBOD CRAR Cr COO CoC CMD CII CGM CFO CEO CDR CBEC CBDT CB CAB BCSBI BC APR AP AKMI AGM Abbreviations Insurance Regulatory Development Authority Indian Institute of Management International Finance Corporation Indian Council for Research International on Economic Relations Indian Banks’ Association Government of India Gross Loan Portfolio German Development Cooperation Financial Year Fair Code Practices Federation of Indian Chambers of Commerce Industry and DirectorExecutive Enforcement Committee Banking of Non Department Supervision of FinancialDepartment Services Development International for Department Institutions Finance Development of BankingDepartment Operations Development and Capital to Risk-Weighted Ratio Assets Crore Chief Operating Officer ofCode Conduct Chairman Managing and Director Confederation of Indian Industry Chief General Manager Chief Financial Officer Chief Officer Executive Corporate Restructuring Debt Central Board of Excise Customs and Central Board of Taxes Direct Credit Bureau College of Agricultural Banking Banking Standards and Codes Board of India Business Correspondent Annual Percentage Rate PradeshAndhra Association of Karnataka Microfinance Institutions Annual General Meeting Annexure 3 Annexure 81 annual report 2014-15 Governance IT Income Tax JLG Joint Liability Group KAMFI Kerala Association of Microfinance Institutions LIC Life Insurance Corporation M-CRIL Micro Credit Ratings International Limited MD Managing Director MFI Micro Finance Institutions MFIN Micro Finance Institutions Network MFT Microfinance Transparency MIS Management Information System MIX Microfinance Information Exchange Mn Million MoF Ministry of Finance NABARD National Bank for Agriculture and Rural Development NBFC-MFI Non Banking Finance Company - Micro finance Institutions NCD Non Convertible Debentures NGO Non Governmental Organisation NOF Net Owned Funds NPA Non Performing Assets PAR Portfolio at Risk PFRDA Pension Fund Regulatory and Development Authority PSB Public Sector Banks PSIG Poorest States Inclusive Growth Programme RBI Reserve Bank of India RRBs Regional Rural Banks SCB Scheduled Cooperative Banks SEBI Securities and Exchange Board of India SHG Self Help Group SIDBI Small Industries Development Bank of India SLBC State Level Bankers’ Committee SPTF Social Performance Task Force SRO Self-Regulatory Organisation TRAI Telecom and Regulatory Authority of India TSP Technical Service Provider UIDAI Unique Identification Authority of India VP Vice President New Concept Information Systems Pvt. Ltd. Micro Finance Institutions Network (MFIN) 705, Floor, Tower B, Millennium Plaza, Sushant Lok 1, Gurgaon 122002 +91 124 4212570 I +91 124 4212571 [email protected]