Tamil Nadu   

Tool developed to assess micro finance institutes

MADURAI: A rating tool has been developed to strengthen micro finance institutes and make their operations transparent.

The tool, aimed at building the capacity of the 1000-odd micro finance institutions, has received recognition from the United Nations and has been posted on the website of ‘UN Solution Exchange.’

N. Jeyaseelan, a city-based micro finance consultant and employee of a public sector bank, has come out with the free tool that has 16 parameters for institutions.

“Nearly 800 of these institutions in the country are small-sized, and they cannot afford to pay a heavy amount for assessment by rating agencies. So, this model has been developed, and they can access it without any cost,” Dr. Jeyaseelan said on Sunday.

At a workshop held in New Delhi last month, he bagged the United Nations Solution Exchange Micro Finance Knowledge Promoter Award 2007 for his MFI Branch Rating Tool, which assesses performance through financial, institutional, social and environmental parameters, and which helps to spot out weak areas.

The tool also advocates people’s participation by giving the community a chance to work for the success of the institutes.

Why did he develop the tool? Every micro finance institution must have a de-risking mechanism in place as huge sums were lent to self-help groups and others. “They remain largely unregulated. Every branch must have its own rating, or else they run a risk of financial uncertainty. The simple tool can be used by non-technical staff also,” he said.

Micro finance institutes can download the tool content from http://topics.developmentgateway.org/micro finance/rc/Item Detail.do?itemID=1119225. The author can be reached through vijayjeyaseelan@ yahoo.co.in.

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