QA - Rating

Rating System - GRADES

Welcome

QA - Rating

Outline

• Rating system evolution • Rating concept & methodology G R A D E S• Rating system development process• Rating process• Other information about Rating• Rating other activities

QA - Rating

Rating Concept & Methodology

QA - Rating

Rating.. the concept

Rating Standard

Assessment

Gap Analysis

Capacity Building

BenchmarkingPer

formance

QA - Rating

Objectives:• To assess Credit Worthiness• To assess Self Management, Financial Viability

and long-term Sustainability• To identify Gaps for planning Capacity Building

inputs • Benchmarking for promotion of Best Practices • Generating awareness for Self-Assessment

Focus: SMFIs and SHPIs (NGOs, Special Projects etc.)

Rating

QA - Rating

Rating Process

Request for assessment and LoU

ClientSadhikaratha Foundation

Collection of Information,Preliminary Analysis and Debriefing

Data Analysis Approval

Committee

Final Report to Client (Dissemination of rating

findings/publication)

Monitoring and follow up

Assign QA team to Conduct Assessment

Draft Report to Client

QA - Rating

Rating System Development

QA - Rating

GIRAFE (PlaNet Finance)

PEARLS

(WOCCU)

Micro Rate

The Philippine Coalition

for Micro-finance

Standards

CAMEL(ACCION)

Rating System

M-CRIL

Review of Tools

QA - Rating

• Review of tools used by DRDAs, DHAN, MYRADA, BASIX, OUTREACH, DPIP, NABARD, CARE, etc

• Identify the Key Variables

• Decided relative weights of variables

• Preliminary Tool Prepared

Review of various SHG Tool

QA - Rating

Ratomg system development processS# Stage of QA development

Year 2002

Jan Feb Mar Apr May Jun Jul AugDe

c   

1 Review of Literature                  

2 MoU with M-CRIL                  

3 QA system developed                  

4Field Testing - I of Rating System                  

5Revision of the Rating system                  

6Field Testing - II of Rating System                  

7 Meeting with NABARD                  

8 State Level Consultation                  

9 District Level workshops                  

10Meeting with MF team,

SERP                  

11 GRADES developed                  

12 Pilot Testing                  

QA - Rating

G R A D E S 2.0 Weightage

  Category Marks

Weight

G Governance 80 16%

R Resources 30 6%

A Asset Quality 50 10%

D Design and Implementation of Systems 50 10%

E Efficiency and profitability 60 12%

SServices to Constituents or SHGs 30 6%

SHG Performance 200 40%

  Overall Total 500 100%

QA - Rating

Governance– Quality of Board– Understanding of the board members

• Vision, Mission and Goals • Performance level of the member

SHGs/VOs• Functioning of the Organisation• Role & Responsibility of Board

– EC/ Board Meeting– Decision making process (including staff

recruitment)– Selection of Board– Accountability & Legal Compliance– Member Satisfaction

Key Areas in Federation Assessment

QA - Rating

Resources – Human Resources

• Competence in work (theoretical concepts) • Roles and responsibilities performed• % of women in total staff and % of local staff • Long pending advances with staff (> 3

weeks)– Financial resources

• Total funds available per member SHG• Idle funds • Repayment rate of External Loans• Capital Adequacy (Net Worth/Risk Weighted

Assets)

Key Areas in Federation Assessment

QA - Rating

Asset Quality – Loan Distribution (outstanding) in terms of

SHGs– Loan Adjustment/Rescheduling– Recovery rate of o/s loans (as on date)– Portfolio At Risk > 90 days– Portfolio At Risk >180 days– Arrears Rate > 90 days

Key Areas in Federation Assessment...

QA - Rating

Design and implementation of systems

– Accounting system• Regular updating of records & books• Accuracy of recording (correctness)

– MIS– Internal Control Mechanism

Key Areas in Federation Assessment...

QA - Rating

Efficiency and Profitability– Efficiency– Staff Efficiency (related SHG operations)

• SHGs per staff (all SHGs/ all full time staff)• Total Outstanding Portfolio/Total staff

annual salary– Operating Efficiency (Operating Cost Ratio)– Profitability

• Yeild on portfolio/Annualise percentage rate• Operational Self Sufficiency (OSS)• Financial Self Sufficiency (FSS)

Key Areas in Federation Assessment...

QA - Rating

Services to constituents or SHGs– Financial Services

• Regular Savings• Loans• Insurance

– Non- Financial Services• Bank Linkage• Training to SHGs/VOs - leaders, members, staff• Monitoring of SHG/VO performance• Annual Grading of SHGs• Auditing of SHGs' accounts

– Development initiatives

Key Areas in Federation Assessment...

QA - Rating

SHGs Performance

– Homogeneity– Regularity – savings, meetings – Book keeping– Participation– Awareness level– Repayment patterns– Group norms– Democratic functioning – Transparency in operations – Social empowerment – Financial performance

Key Areas in SHG Assessment...

QA - Rating

Grading Scale Score Grade Description

>90% A+++ Worth emulation, very high level of Self-Governance and excellent quality of operations

85.1% - 90% A++ Worth emulation, high level of Self-Governance and excellent quality of operations

80.1% - 85% A+ Emulation with modification, high level of Self-Governance and good quality of operations

75.1% - 80% A Emulation with modification, reasonably high level of Self-Governance and good quality of operations

70.1% - 75% A- Reasonably high level of Self-Governance and good quality of operations

65.1% - 70% B+ Moderate level of Self-Governance and good quality of operations

60.1% - 65% B Moderate level of Self-Governance and moderate quality of operations

55.1% - 60% B-Needs Capacity Building (CB) assistance to improve level of Self-Governance and quality of operations

50.1% - 55% C+ Needs substantial CB assistance to improve level of Self-Governance and quality of operations

<50% C Needs substantial inputs – Low level of Self-Governance and poor quality of operations

QA - Rating

Rating Process

QA - Rating

Level of Effort for Rating of an federation

ActivityPerson Days

Preparatory Work 1

Field Travel & Data Collection 6

Data Analysis & Draft Report Preparation 4

Feed-back from clients/ Approval Committee

1

Finalization 2

Total 14

Assessment always done by a 2-member professional team

QA - Rating

Triangulation of DataPromoter

Promoter

NGOsSamakyaSamakya

SHG

SH

G

mem

bers

mem

bersStaffStaff

(Representatives)

(Representatives)

Feder

atio

n

Feder

atio

n

Execu

tive

Execu

tive

Com

mitt

ee

Com

mitt

ee

QA - Rating

Tool / systems developmentName of the Tool/System

Status Description

G R A D E SRevised and being used

For assessing SMFIs (SHG and Grameen Model federations) who are engaged in financial intermediation

Coop R A T EFinalised to be shared with the CDF

For assessing Cooperate model of federations (who would not receive the outside borrowing)

Rapid Assessment Tool (RAT)

Finalised and is being used in some Dists.

Rapid rating of SHG federation performance by field staff with minimum training, to know status of their own promoted federations

Commitment Tool (for SHGs with disability members)

Finalized, shared with Commitment NGOs

To assess the performance of SHGs which have disability (incl. SHG and Disability related indicators)

Social Intermediation Tool (SIT)

In progress (Proto-type tool finalized)

For assessing of SMFIs who are engaging social intermediation

Self Assessment Tool (SAT)

In progress(indicators finalized)

Self assessment of SHG federation by Board themselves on periodical basis

SHG RatingDeveloped shared with MAVIM

For assessing the performance SHGs

Data Base Draft version finalizedTo create data base for Quality Assessment done by team

QA - Rating

• Rating system for SMFIs is needed• Consolidation presentation leads to action plan Where ever NGO is there significant improvement in

federation after Rating (some follow up) Follow-up support is must, hence need to be packaged

for all future Ratings • Flexibility to spend more time in field if necessary • Split in qualitative indicators, no scope for subjectivity

and bias in Grades-2.0• Board members presence while making a presentation

of consolidated findings is useful • Action plan workshops post Rating, to be included for

all Self Help Promoting Institutions (SHPIs)

Lessons learnt

QA - Rating

• Report writing to include local jargon/dialect and reduced technical jargons

• Gaps in data entry/collection taking lot of time during preparation of consolidated presentations

• Reports to be reached to all levels – promoter, staff and federation

• Improvement in report writing with specific implement-able recommendations, rather than making broad suggestions.

• Information about Rating dates to be given to Federations

• Regular and periodical Impact Studies and follow-up visits

• Regular monitoring/post follow-up with Action Taken Reports

• Share of fee to be borne by Federation for the Federation to own the rating

Lessons learnt

QA - Rating

External Complex of rating for different federationsDoing Rating and Follow-up by Rating teamMeeting the demand for RatingNo significant demand from FIsAvailability : Data (FSs, loan schedule) and concern staffCredibility for GRADESClient acceptance

Internal Retention quality staff and availability competent staffData integrity, database management (incl. tracking the impact)

Integration of Rating & Capacity Building 

Issues/Concerns/Challenges

QA - Rating

Rating System is not…

• a Self Assessment Tool

• an Impact Study

• a Guarantee of future performance

• considering Level of Operations

• considering Local Socio-economic conditions

QA - Rating

Thank You