This is very good. I should add that useful info is often simple straightforward and easily replicable (of course useful advise is really not that easy to implement )
Hi Kabir,
I don't know if this is exactly what you had in mind, but I thought I'd share. I had the opportunity to help an MFI decrease PAR from 45% > 30 days to 2% > 30 days. Briefly what we did was:
1. Make it clear to staff that this was unacceptable
2. Stratify the loan portfolio in many different ways, looking for trends in why delinquency was so bad
a. By loan officer
b. By branch
c. By loan product
d. By activity
3. We took a look at the results and determined that certain branches and loan officers were the major contributing factors to the PAR being so high.
4. The best 5 performing loan officers were interviewed about what they were doing. "Caring about the client" appeared to be the one characteristic which was pulled out of the interview. Loan officers taught large groups of loan officers about this principle.
5. We looked at the lending methodology and reverted to a policy which didn't allow for "start-up" businesses and other loans which appeared more risky.
6. We created a cut-off date by which we were going to analyze the portfolio afresh. So one month from announcing the changes, loan officers were charged with making sure that the new loans which were disbursed were of high quality.
a. Loan officers knew that the "clean" portfolio was being analyzed every week by senior and middle management and the consultant (me)
b. Because we were operating under a smaller "clean" loan portfolio, a certain number of loan officers (about 25%) would need to be terminated, and eventually were terminated.
7. Simultaneously, the "old" portfolio was given attention on a couple of fronts
a. Loan officers were encouraged to recover what they could
b. "Collectors" were trained and went out in teams to try to recover some of the loans
i. Focusing on large balances with relatively short amount of delinquency
c. We pursued selling or factoring the portfolio but decided that the return was too little and the reputational damage might be too high.
8. Eventually some branches needed to be shut down and loan officers were terminated for policy violation. Some branch managers returned to loan officer duty. But over the long term, PAR has been maintained and the clean loan portfolio continues to grow.
I hope the formatting is maintained due to the outline nature of my response.
Later,
-howard
From: MicrofinancePractice@yahoogroups.com [mailto:MicrofinancePractice@yahoogroups.com]
Sent: Thursday, March 05, 2015 8:58 AM
To: MicrofinancePractice@yahoogroups.com
Subject: [MFP] MFI Restructuring
Hi, we will be pleased if anyone could assist with sample restructuring plan for a failed MFI or a success story of an MFI that came back from red to blue. Thanks
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Posted by: "Naate Masangazira" <naateherbert@yahoo.com>
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