SPANDANA – Innovative

Financial Solutions for the

Poor

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 AGENDA

Global Microfinance Industry

Micro-Finance India Story

Spandana Story

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 GLOBAL MICROFINANCE INDUSTRY

– 25% annual CAGR

– Rapid development in some

– Asset Under Management- regions seeing some over-

$32 Billion Dollars indebtedness
– Asian MFIs see corporate
governance, technology and
staffing as key issues
– Specifically in India, political
interference is seen as a
major concern

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 AGENDA

Global Microfinance Industry

Micro-Finance India Story

Spandana Story

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 INDIAN MICROFINANCE INDUSTRY
• More than ~ 135Mn households in India not yet serviced by financial
players
• Potential credit demand of ~ INR 1,650 Bn (30K per poor household)
Industry
Overview • Large players will continue to grow at a fast pace
• Indian market is the largest microfinance market in the world
• Indian Microfinance in a 2 Decade Story

Current Microcredit Opportunity in India Rs Bn

Potential Credit Demand

Potential Micro-credit estimated in the range of INR
1,650*
Demand 1,650 Bn (USD 37 Bn) to INR
2,314^ 2,314 Bn (USD 51 Bn)

Current Micro-credit
255
Disbursement

• Estimated to cover only about 10% of poor

Statistics
• 7 Indian MFIs in the Global Forbes top 50 MFI
• Most efficient in terms of operating costs
• Estimated requirements are over $50 billion
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 INDIAN MICROFINANCE INDUSTRY
• Dominated by the NBFC model
• Top MFIs in terms of member size and portfolio size are all NBFC
• SHG under Govt. patronage is a significant player

Recent Trend • Grameen - Hybrid models increasingly relevant

• Lending is at about 12 – 15% pa flat

• Far cheaper than moneylenders and even credit cards
• Costlier than the average rates paid by
MFI Growth – Borrowers and Outstanding Loan Portfolio

75 69.1 16

14.2 12
50
37.1
8
22.3 7.9
25
11.4 4
3.6 4.9
1.0 2.3
0 0
2004 2005 2006 2007 2008
Loan Portfolio ( Rs Bn) (LHS) Number of Borrowers (MM) (RHS)
Source Inverting the pyramid, 2008, Intellecap

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INDIAN MICROFINANCE INDUSTRY

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 AGENDA

Global Microfinance Industry

Micro-Finance India Story

Spandana Story

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 SPANDANA STORY

PROFITABILITY

INCORPORATION Highest in the Industry

1998 OPERATION
COST
Lowest in the Industry

Global Ranking
Indian Ranking
6th Largest – Outreach 07
Second Largest

ROE/ROA CRISIL Rating

Highest in the Industry Highest : A-/Stable

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 Key Mile Stone

Oct 2009
1998 2005 2006 2007 2008 2009

Outreach AP – 1 Karnataka Tamil Orissa, MH, Rajasthan Jharkhand Gujarat

State – 2 States Nadu – 3 Chhattisgar and MP – & Goa – – 11
States h – 6 States 8 States 10 States States

PE Infusion First Round Second Third

PE – JM Round Round of
Financial Equity Equity –
and LOK Infusion – Tamaseak
Capital Valiant Holding
Capital (Under
Partners Process)
PAT 2.6 Crores 21 Crores 94 Crores

AUM 289 Crores 391 Crores 731 Crores 1868 2431

Crores Crores

Post Post External

Registered Conversion Equity
as a to NBFC Funding
Society 2 Yr CAGR 2 Yr CAGR
in Loan in Loan
Book: 28% 10 Book: 117%
 SPANDANA – Growth Story “ Financial”

4 Yr PAT CAGR (05-09) : 59% 4 Yr Revenue CAGR (05-09) : 82%

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 SPANDANA – Growth Story “ Operation”

Operational Highlights October 2009 March 2009 March 2008 March 2007

Presence in States 10 8 8 6

No. of Branches 1,188 944 435 295

No. of Clients (000) 3,384 2,543 1,240 916

Loan O/s. (Rs Cr.) 2,432 1,868 731 425

Total Staff 8,405 6,373 3,024 1911

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SPANDANA – Growth Story “ Operation”
18,683

2,432
7,313
2,892 3,916
2,388 1,189
916
722
386

FY05 FY06 FY07 FY08 FY09

Gross Loans Outstanding (Rs MM)
 SPANDANA – “Reach”
Rajasthan Chhattisgarh Jharkhan
d

Madhya Pradesh

Orissa

Maharashtra

Andhra Pradesh

Karnataka Tamil Nadu OUTREACH - SSFL

Goa TOTAL STATE : 10 STATES

NUMBER OF VILLAGES : 55,382

NUMBER OF DISTRICTS : 167

NUMBER OF CLIENTS : 3,384,531

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 SPANDANA – SOCIAL Initiatives

FLOOD RELIEF
 Basic amenities to the best of our abilities to flood affected
victims

SCHOLARSHIPS
 Monetary support to students to complete higher education

SAFE DRINKING WATER

 Tie up with HUL to supply water purifiers in rural areas

ALTERNATE SOURCES OF ENERGY

 Tie up with Intelizon to supply solar lanterns

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 SPANDANA – Departments

HR Management
External Finance

Administration
Treasury

Training
IT

Field Operation
MIS

Accounts Corporate Communication

Audit
New Business Initiatives

Corporate Affairs ( Legal)

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 Key Milestone of SSFL
Operational Highlights August 2009 March 2009 March 2008

Presence in States 10 8 8

No. of Branches 1,150 944 435

No. of Centers 112,377 90,221 47,693

No. of Groups 363,326 265,650 125,883

Active Borrowers (000) 3,005 2,432 1,189

Loan O/s. (Rs Cr.) 2,388 1,868 731

Total Staff 7,981 6,373 3,024

Total Credit Assistants 5,648 4,556 2,223

Introduction

 Spandana was founded in 1997 by Ms

Padmaja Reddy. A chance encounter with a
rag picker prompted Ms Reddy to start
microfinance in the urban slums of Guntur.
Since then Spandana’s microfinance
programme has grown tremendously and the
organisation is now one of the largest and
most rapidly growing MFIs in India. Spandana
is one of the most efficiently run MFIs in the
world.
 Spandana has achieved this remarkable distinction in
a short span of just under a decade since its
inception in 1998. This has been possible on account
of its highly focused and clearly structured
operations.Spandana has continued to successfully
manage growth with operations now spanning 8
States Andhra Pradesh, Karnataka, Tamil Nadu,
Orissa, Maharashtra, Chhattisgarh, Madhyapradesh
and Rajasthan. It now boasts of a client base that
constitutes almost 1.5% of the BPL (Below Poverty
Line) population of India.
BOARD OF DIRECTORS
Mission
 To be the leading service provider,
creating market driven & equitable
solutions for segments not optimally
served.
  This will be achieved through a culture of
client focus, innovation, efficiency,
transparency and excellence for the
benefit of all stakeholders.
VISION
 We endeavour to serve our clients by addressing their
complete credit needs so as to bring in significant
impact in their living standards. Besides financial
intermediation, we would be focusing on sub sector
intervention such as dairy development since about
90% of our rural clients have invested their loan
amounts on this activity. We retain our core values of
professional rigor, efficacy and excellence and remain
a client responsive organisation by being humble and
receptive to their needs.
PRODUCTS
 General Loans
Meant for daily wage women labourers and petty
traders for Income generation and consumption
purpose with a loan size of between Rs. 2,000 and
Rs. 20,000
 Small Business Loan
Meant for small business people with daily cash
flow with a loan size of between Rs. 4,000 and Rs.
20,000
 Micro Enterprise LoanMeant for SMEs and
salaried people with a loan size of between Rs.
25,000 and Rs. 200,000
PRODUCTS
 Agri Family LoanMeant for small and marginal
farmers with a loan size of between Rs. 5,000
and Rs. 30,000
 Dairy LoanMeant for milk collection agents and
milk producers with a loan size of between Rs.
10,000 and Rs. 100,000
 Farm Equipment LoanMeant mainly to cater to
the needs of Small and Marginal Farmers with a
loan size between Rs.50,000 and Rs.350,000
AREA OF OPERATIONS
PROJECTS
Educational and recreational
programs for School dropouts
 Objective:
Facilitate programmes aimed at procuring rights
of children with a special focus on  health, education,
recreation and protection
 Achievements:
 More than 500 children out of school have been
helped to attened fomal Schools.
 5 working children have been rescued from child
labour and are being provided with long term support
for education
 More than 500 child labourers & Street Children are
being helped to go school through our Residential
and Non-Residential bridge campus.
 More than 500 children going to school have been
helped to get through exams with remedical
education support offered by Spandana. 

 Future Direction:
Reach out to more than 10,000 children over a
period of 5 years with support in the areas of
Education, Recreation, Health, Shelter, Food &
Clothing through community based intervention and
institutional services as situation demands.
Awareness Generation Activities

 Objective:
Educate masses on issues related to health,
legal, environmental and social aspects of human
life in order to create an enabling atmosphere for
individuals.
 Achievements:
1500 people from 20 communities were reached
out with the message on HIV / AIDS, Cancer and
Tuberculosis. The extension outreach wing has
identified 50 positive cases under HIV and
carrying out referral services in collaboration with
various organisations.
 Future Directions:
 To organize workshops and camps on
health and legal issues for focused
groups.
 To start vermin compost and paper
recycling units.
 To intensify Legal Awareness
progammes. in the community.
Self Help Programs for Women

 Objective:
Create opportunities to marginalized women to
identify suitable vocations, impart trainings and
establish micro enterprise units through thrift and
credit programme.

 Achievements:
 100 Women from 12 Self Help Groups were helped to
receive revolving fund to the tune of Rs.1,25,00/- from
various government run schemes to start income
generation units.
 500 women are part of the self help programme
promoted by Spandana.
 Future Directions:
 Aiming to form a Mutually aided co-operative
thrift society which would be mutually
beneficial to women in establishing micro
enterprise units and income generation
programmes for more needy families living in
poverty.
 Identify and establish more IGP units for needy
women.
 Enroll more number of women in the thrift
credit programme for larger benefit.
Programs for Young People
 Objective:
Facilitate programmes aimed at empowerment
through business / income generation / skill up-
gradation, awareness and recreation for youth.
 Achievement:
Started in the year 2005, the Career Counseling
and Job Placement desk for youth has given
opportunities for 40 young men and women to
take up suitable vocation and successfully placed
in jobs in corporate offices  with a salary between 
Rs.2,000/- to Rs.6,000/- per month.
 Future Directions:
 To impart skill development programmes for
young girls who are economically weak.
 Start micro enterprise units  in their
neighborhood so as to realise their financial
needs and help them market their products.
 Imparting life skills.
Peace Initiative Programs
 Objective:
Promote peace, harmony and social justice through
programmes aimed at sensitisation and awareness.
 Achievement:
The peace and conflict resolution project has created
better relationships among people living in
communities manifested with religion based conflict.
The project covers most sensitive slums in urban
southern Hyderabad city of  Andhra Pradesh.
 Future Directions:
To expand these activities and link them up with
micro finance and formation of youth clubs
Entrepreneurship Training and Development

 250 young girls and women have undergone

capacity building programmes for skill
enhancement in Embroidery, beautician
course, food processing and hand
embroidery work apart from gaining
knowledge on business and marketing skills.
Service to the Senior Citizens
 Services to the Senior Citizens:
 5 Senior Citizens who have been deserted by their
families have been helped with food, shelter and clothing
at our senior citizen's home.
 Future Directions:
 To expand activities for care and support to women,
young girls and children in distress in terms of rescue
operations in collaboration with organisations working for
women and children’s rights.
 To reach out to the senior citizens in need through
emotional care and counseling, health, food and shelter in
a larger way.
 Start a job placement help line for  women in need of jobs
with a motive to provide them with safe and secure work
place.
Loan Products
1. General Loan
> Group based lending
> 5 to 10 women are formed into joint liability groups
> Loan is for income generation and debt relief
> Weekly repayment
> Tenure: 50 weeks (for loans above Rs.10,000- 60 to 75
weeks op-tion is given)
> Loan Size: Rs.2,000 to 15,000
> Clients: Daily wage laborers both skilled and unskilled
and only women
> Interest Rate: 15% diminishing and 2.5% upfront fees
2. Small Business Loan
> Group based and individual lending (80% group and 20% indi-
vidual lending)
> 5 to 10 women or men having small business are formed into
joint liability groups
> Loan is for business expansion and working capital
> Daily repayment other than Sunday
> Loan Size: Rs.2,000 to 20,000
> Tenure: 100 days or 200 days or 300 days
> Clients: Small business people with daily cash flow both men
and women
> Interest rate: 14% flat with no fees
3. Micro Enterprise Loan
> Individual Lending
> Guarantee: PDCs and Co Obligant guarantee
> Should have a sizeable business/ salary/
rental income
> Monthly Repayment
> Loan Size: Rs.25,000 to Rs.200,000
> Clients: SME owners, Salaried Employees etc
both men and women
> Interest Rate: 18% diminishing and 2%
upfront fees
4. Agri Family Loan
> Group based lending
> 4 to 6 small and marginal farmers are formed into joint liability groups
[both men and women]
> Loan is for agriculture and allied activities;
> Flexible repayment. Interest payable monthly
> Tenure: One year
> Loan Size: Rs.5,000 to 30,000-
> Clients: small and marginal farmers with land holding of 1 to 10 acres
[both men and women]
> Interest rate: 15% diminishing and 2% upfront fees
5. Dairy Loan
> Loan is given to Milk Collection Agents and
Milk Producers both men and women
> Individual Lending:
> Guarantee: The Dairy Owner who buys milk
> Loan tenor: 1 year
> Loan repayment frequency: once in fifteen
days
> Loan Size: Rs.10,000 to 1,00,000-
> Interest Rate: 12% diminishing
Thank You!