Improve products service/quality

Increase the efficiency of loan process to be more convenient:

Weekly Meetings & Monitoring need to go
o Considering that Amartha have state that there has been a relatively
clean record and have experienced high repayment rates
o These people live each day at a time and need to be able to run their
business. They cannot afford to spend 1 day a week losing out on
potential profit for a meeting that could be held once every 3 or so
months. Amartha need to trust their clients more
o No more weekly meetings, rather implement a system where meetings
are based upon good behaviour and the ability to consistently pay of
the loan.
o Instead: A meeting for the first month, then 3 rd, 7th, 12th pending the
clients ability to meet their payments
3 Days of training need to go
o Training can only occur after a loan has been approved, not before?
Otherwise if the loan is unsuccessful, 3 potential working days have
been lost
Time
o It takes far too long for a loan to be approved
o Joining an Amartha loan group can take up to a month and obtaining a
microfinance loan takes an average of one week. That is 5 weeks to
get a loan whereas loan sharks can provide funds within a day:
o It is worthwhile considering this model from: Swadhaars Individual
Lending Process:
Tailor products to suit the needs of specific business sectors
Identify a suitable methodology to implement a preliminary
credit scoring model for better client selection
Use standardized margins and household expenses for clients
capacity evaluation
Using key business indicators to track clients business growth
across cycles

 Convenience:
o Considering many impoverished people find It difficult to leave market
areas to arrange a time for loans, Amartha should follow in the
footsteps of Bank Rakyat Indonesia (BRI).
o Like BRI, Amartha needs to set up portable outlets such as travelling
vans that can create greater accessibility for clients (in either rural or
urban market districts)
o This establishes a relationship between the markets and traders with
the officers and as a result, it will be easier to attract more borrowers.
o For example, the number of clients has increased from 218 in 2009 to
617 in 2010, and 1304 at the end of 2011.
Bureaucracy: Unnecessary level of the branch & division managers
Reduce the number of branch managers and cut out the division managers.
o Currently, Amartha has a cliental list of 6763 and yet employs far too
many Branch and Division Managers.
o For every 3,000 clients 1 branch manager is needed. Ergo, as we only
have 6763 cliental, Amartha only needs to employ 3 branch managers
o This means getting rid of 1 branch manager, 13 branch managers, 3
area managers
o As Amartha is a relatively small business, that has 1 area manager
(upon the assumption that these cuts are made) than division
managers are not necessary. Rather, the single area manager can
report directly to head office in an attempt to curtail the inefficiency as
a result from bureaucracy.
o As Amartha grows in Indonesia and establishes more clients then it its
worth revisiting the old model. However, until then, it is worth making
the changes listed above.

 Above is the structural organization of MBK Venture, one of the largest

microfinance companies in Indonesia with 554,916 borrowers
o They have roughly 81X as many clients as we currently have and only
have 8 area mangers (yellow highlights).
o At Amartha, we currently have 4 area managers with not even half as
many clients as MBK Ventura
o Amartha is clearly over compensating at the top end and needs to
reduce the number of managers
Education program for prospective/new borrowers to learn how to
properly run business.
Team up with universities to educate and train students in financial and
business management:

o What cash flow is, how it works

o The Cons of using shark loans or ghost borrowing
o How to run a business etc.?
Set up centres to educated high school students
o Follow the Grameen Koota education centres in rural areas of Idonesia,
o Rather than educating primary and pre-school students about finances,
perhaps educate older high school students? Links to the University
section?
o The Grameen Kootas staff identified villages with low access to quality
education
o Using technology and video based coaching lowers the cost of
education whilst simultaneously providing a quality learning
environment.

Financial Literacy Programs that have been successful in India:

Uncontrolled growth leading to excessive lending to low income clients in
India (2010-11)
o Wide spread defaults
Financial Literacy Program was introduced:
Two Pronged scheme resolved the fundamental issues of over
borrowing/lending and helped Ujjivan to provide responsible financial services
to clients
o Sankalp (The Resolution), high impact film that created awareness on
issues relating to over-borrowing and ghost lending
Shown to 600,000 customers and was extremely successful
15 minute illustrative stories about excessive borrowing and
ghost lending based on real life stories
Begins by depicting a happy family, a family friend convinces
them to take a loan on his behalf to hep start a business, the
family does so in exchange for commission. The friend turns out
to be gambler and absconds with the loan amount leaving the
family penniless and unable to repay the loan
o The Dishka (Aim & Purpose) Program, a follow up financial literacy
training program comprising of five modules
Piloted among 372 Ujjivan customers very successful
Conducted on a voluntary basis for customers
Programs include Training Kits that have been developed by
Parinaam Foundation
Improves customers numerical skills through a calculator,
provides an understanding of household cash flows using a
financial diary and helps them gauge debt servicing capacity

The Five modules:

Occurs over 5 weeks
1. Why Financial Planning? AN introduction to the program and
the importance of financial planning through a role playing
activity, screening of sankalp and a detailed discussion on
the Credit Buereau
2. How to Plan my Finances? Basics of financial planning,
understanding the importance of and how to tackle cash flow
through a case study. Customers older children are
encouraged to come for this module so they can learn the
basics of financial literacy and also help their mothers keep
the financial diary.
3. How to Save? Emphasises the importance of savings through
a case study; overview of various saving options with pros
and cons for each, an interactive saving assignment using a
calculator how aspirational goods and services can be
obtained through incremental savings instead of loans. Given
Savings boxes
4. Borrowings; the choices of where customers through case
study, overview of the options of borrowing, learning to fill in
their loan information into financial diary so they understand
the terms and conditions of the loans they take.
5. I am now a Rupee Rani! Calculating their finances for the
whole month, verbal test for the customers on key learnings
over the past 4 weeks, graduation etc etc
It is definitely worth using real life examples as a means to highlight to
borrowers that this same situation could happen to you
o Simple numerical, calculator skills and the ability to create your own
diary need to be taught in order to educate the population.
o By investing in these sorts of programs, Amartha are already securing
potential clients.
o