Navigation

Delinquency Management and Financial Analysis

Language

English

Programs:

Boulder MFT

Description

Delinquency Management, Financial Analysis and Interest Rates Setting

 

Participants

MFI or Bank managers with a basic, general understanding of accounting principles. The course does not go into the details of accounting, rather it enables non accountants to understand how to interpret and read financial statements, pull out ratios that will indicate how the MFI is performing. Participants who are regulators may find it useful in understanding how to measure MFIs performance BUT not in how they should regulate, board members tend to find this course too technical.

 

Objectives

To provide participants with principle tools for understanding prospects for financial sustainability of MFIs through a comprehensive review of the following subtopics:

  • Delinquency Management
  • Interpretation of Financial Statements and Ratio Analysis
  • Interest Rates setting

Outline

Day 1: Introduction and first day of Delinquency module

Methods: Group work, exercises

  • Introduction to overall course goals and three modules:
    • What is delinquency?
    • Causes and control of delinquency
    • Costs of delinquency and default
    • Objectives for Delinquency Module:
    • Interpret common delinquency measurements correctly
    • Identify the principle causes, costs and ways to control delinquency.
  • * Methodology: Lecturettes, small group work, exercises

Day 2: Delinquency. Measuring delinquency and default*·          Methodology: Lecturette, brainstorming, individual or small group work on exercises

Day 3: Delinquency: Additional day for this topic

Day 4: Financial Analysis

  • Overview of financial statements; Formatting financial statements for MFIs; Introduction to ratios
  • Objective for Financial Analysis Module:
  • Understand and interpret financial statements
  • Calculate and interpret key financial analysis ratios
  • Methodology: Lecturette, individual and small group exercises

 Day 5: Financial Analysis

  • Inflation and subsidy adjustments; Efficiency indicators
  • Methodology: Lecturette, case study, calculation exercises individual or groups
  • Materials: Inflation and subsidy adjustments

Day 6: Financial Analysis: Profitability

  • Methodology: Lecturette, case study in small group discussion, calculation exercises individual or groups

Day 7: Interest Rates

  • Interest rate concepts; Setting sustainable interest rates (CGAP formula)
  • Objective for Interest Rate Module:
    • Understand different kinds of interest rates and interest charges
    • Understand the cost elements which must be covered by interest income
    • Compute theoretical yields (APRs) for given loan terms
    • Understand the practical and ethical issues associated with charging sustainable interest rates.
  • Methodology: Lecturette, interest rate calculation exercises

Day 8: Interest Rates

  • CGAP formula, Calculating effective interest rates Yield Gap, questions on interest rates
  • Methodology: lecturette, group exercises, calculate participants’ rates
  • Materials: CGAP Occasional Paper Types of interest rate/concepts.

Day 9: Debate/Discussion of Sustainability:

  • Interest rates and/or sustainability vs. depth of poverty
  • Discussion/Debate Method: Preparation for debate, setting the scene in plenary, small group work

Day 10: Wrap-Up and Evaluation

  • Methodology: Debate, general discussion Materials: As participants develop/request, handout of CGAP and other websites, reading list, microfinance gateway, etc.

 

Reading List Reference:

Microcredit Interest Rates