Monitoring the Microfinance Processes Presented by: Nanda Ariani Raisa Maharani
Reason for a Process Aproach To achieve the objectives (both of economic & social) and to control the risk deriving from the operation activities.
MFIs’ Processes Governance proceses Strategic planning Operational planning Commercial policies Risk management policies Definition of organizational structure Definition of the internal control system Support processes Infrastructure Management Information technology Management Budgeting at Management Control Top Management Reporting Dislosure requirements Management Production Activity Process Credit Management Saving Mangement Collection & payment Management Trading on financial market Management Control Process I level control II level control III level Control
Traditional credit Process vs Microcredit Process Microcredit Process Traditional Credit Process Supporting & Training Activities evalutation Planning& management control Palnning & management control resolution Granting Out Payment Granting Monitoring Monitoring reevaluation Recovery Management Recovery Management Exit Strategy
Process-Related Risk Process risk is defined as the risk of loss resulting from inadequate or failed internal processes, people, and system.
The operational risks that mainly affect MFIs are:-Compliance risk-Interest conflict risk-Risk resulting inadequate or failed internal processes-Risk resulting from people-Risk resulting from the fraud of the top or middle management-Risk of theft and internal fraud or anauthorized activities-Reputational risk
Control TypologiesThe control components depend on the activities and processes that are carried out, as well as on the objectives, human and financial resources available.
The control typologies on the activities and on the human resources depend on the specific MFI, the control activity requires the use of different control instruments, are:> Operational Control> Inspection Controls > Management controls> Quality control > Reporting control
Incentive systemThe insentive system used by MFIs can provide positif contribution in order to achieve the productivity and sustainability goals.
The End Thank you for attention...