A good Management Information System (MIS) is the heart of any organization and this is true for MFIs as well. For e.g. MFIs may have capable and motivated staff, but if they lack systematized information, they will be unable to perform up to their potential. A sound MIS is the key to achieve sustainability as it helps in providing the right type of information in achieving sustainability. It helps in reducing default, optimal rotation of portfolio, establishing sustainable interest rates, improving operational efficiency, generating reports at various levels for various stakeholders and review the progress. (Box 1).
Common Shortcomings observed in the Information Management Practices: 1.) The basis formats are not comprehensive of them could be combined. 2) The flow and logistic aspects of transfer of information from Society to Federation to HQs and vice versa is not very efficient. 3) The reports produced by the MIS are not in line with the best practices information required. 4) There is no accurate aging analysis of all loans including the past due loans. At best, the aging analysis is approximate and there is no proper asset classification backed up by provisioning. 5) Clients are not classified as good, delinquent and defaulting borrowers based on (international best practices) criteria. 6) Credit history of the borrowers is not available. 7) Clear repayment schedules for borrowers at various levels do not exist. 8) Concise monitoring reports, tailored to the monitoring needs at various levels are not available. 9) There is no incorporation of the accrual system of accounting. 10) Status reports on repayments made by the intermediaries and HQs to semi -wholesalers and wholesalers is not tracked. 11) There is no integration of the network of federation and headquarters through a good and stable client- thin client- serverr mode. A good information to better monitor their portfolio and serve their clients, all while working with a growing number of clients. It can enable supervisors to better monitor the work under their responsibility, provide better guidance to their staff, and pinpoint the areas that most require their attention. And it can help executive managers to orchestrate the work of the entire organisation by allowing them to monitor the institution’s health through a set of well –chosen indicators and by informing critical operational and strategic decisions. As more and more microfinance institutions scale up their activities managers are becoming increasingly aware of the need to improve their information systems. For many institutions, methodological issues, staff development, and even financing are no longer the critical constraints to growth. Instead, the most pressing need is often a system to track the status of their portfolios in a timely and accurate manner. The reliability of such systems can make the difference between the success and failure of lending operations and therefore, of an institution. An information system that performs tolerably at a moderate volume of activity can collapse as it is fed more and more information. Manual systems may end up with huge backlogs of unprocessed data. Spreadsheet – based portfolio systems can become unwieldy as the Spreadsheet grows. An institution unprepared for rapid growth will eventually undermine the quality of its services and its financial health. But an institution that develops a system capable of producing accurate, timely, and comprehensive information on operations, especially on the loan portfolio, will strengthen is financial performance and expand its clients reach ( Box 2)
Usefulness of MIS An effective MIS would enable a MFI to achieve the twin goals of sustainability and outreach. This includes, among other things, the following: ∗ ∗ ∗ ∗ ∗ Help reduce default and prevent delinquency Optimize rotation of portfolio Help establish sustainable interest rates Leverage...