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Information Memorandum
Investment opportunity in a highly impactful Eastern India based Financial Institution
1
Table of Contents
1. Investment Highlights
2. Microfinance Sector: An Overview
3. Funding Landscape: MFI Sector
4. Regional Overview: Bihar, Jharkhand, Uttar Pradesh and Haryana
5. Corporate Highlights
6. Operational Snapshot
7. Social Impact
8. Growth Strategy
2
3
Saija Finance: Only MFI based out of Bihar, poised to be a leader in the region Saija has a strong history of creating impact in high need geographies
Strong growth
and impact
potential in
Microfinance
Eastern India
– High need
geographies
with lack of
quality MFIs
Strong
success story
so far
Visionary and
experienced
founders /
investors
Differentiated
model, well
adapted to
their focus
regions
Commitment
to
transparency
and corporate
governance
▪ MFI sector has shown
remarkable resilience
and growth over the last
few years
▪ Top MFIs have grown at
70% CAGR
▪ Saija‟s focus states
have an untapped
microfinance credit
demand of Rs 37,000
crs (US$ 6 bn)
▪ Potential to leverage
distribution strength to
launch new products like
home loan, 2-3 wheeler
loan which Saija is
already discussing with
partners
▪ Bihar, Jharkhand and UP
are three of the most
underserved states in India
▪ These states rank low on
financial inclusion - low
ATM penetration and
branch banking
penetration, low credit
deposit ratios
▪ With Bandhan and RGVN
and Utkarsh moving
towards banking, Saija is
the only one of the
quality MFI „s serving the
region of Eastern India
▪ Strong support from on
and offshore funders
▪ 2,51,569 Clients
▪ Rs. 375.08 crore portfolio
as of March 2018
▪ 80 Branches with
leadership position in
multiple districts
▪ Presence across 4 states
▪ Company has initiated the
process of direct
disbursement of loans to
customer‟s account
▪ Retained credit ratings in
spite of demonetization
impact.
▪ HR –Attrition amongst the
lowest in industry
▪ Strong support from
diverse lending institutions
▪ Professional management
with expertise in financial
services
▪ Promoter was founding
board member and
managing director of
Maharishi housing
development Finance
corporation which was
acquired by ICICI Bank
▪ Co promoter has a strong
background on human
resources
▪ Committed investors like
Accion, Pragati (IFC, CDC
funded) and SIDBI who are
leaders in financial inclusion
investing
▪ Existing investors had
infused additional growth
capital of Rs 35 Cr
▪ One of few MFIs with a
successful JLG
product focusing on
men – Saija Karobar
Rin (Small business
loan)
▪ Only MFI in India to
have partnered with
MUDRA Bank for
prepaid card
▪ Flexible group
composition and
quantum of loan to
enable greater
acquisition/ retention
of clients
▪ Internal audit: Monthly
branch audit and
quarterly corporate audit
reports given to board
▪ Regular client and
employee feedback via
satisfaction surveys
▪ Robust IT infra structure
to ensure prompt
reporting and data
availability at all levels
▪ Three highly
distinguished
independent directions
on board
15 Cr has already moved
Table of Contents
1. Investment Highlights
2. Microfinance Sector: An Overview
3. Funding Landscape: MFI Sector
4. Regional Overview: Bihar, Jharkhand,Uttar Pradesh and Haryana
5. Corporate Highlights
6. Operational Snapshot
7. Social Impact
8. Growth Strategy
4
Note :
*Source: MFIN Micrometer (March 2018)
NBFC-MFI sector in India is on a high growth trajectory India - One of the largest and most active MFI markets in the world
Growth in reach (FY17-18 –Q4FY17)
25 24 20
10077 9838
8060
0
10
20
30
40
'-
2,250
4,500
6,750
9,000
11,250
FY 17-18 Q3 FY 18 Q4 FY 17
Clients (Mn) Branches
▪ GLP grew by 50%, loan disbursement by 49% yoy
▪ Client base grew by 25%, branches by 25% yoy
▪ In FY17-18, NBFC-MFI received debt funding of Rs.20,695
Cr.
▪ 2.53 Cr. clients, 10,077 branches
▪ Rs. 48,094 Cr. Gross loan portfolio (GLP)
Growth
Metrics**
Portfolio trends (FY17-18 –Q4 FY17)
481 428
326
596
150 109
0
200
400
600
800
FY 17-18 Q3 FY 18 Q4 FY 17
GLP ( In INR Bn) Disbursement ( In INR Bn)
Sector Highlights
5
Saija GLP grew by approx. 50% from Q3FY 18 to Q4 FY 18
Pre Andhra Pradesh Crisis Andhra Pradesh Crisis Post Andhra Pradesh Crisis
▪ MFI‟s show exponential growth
▪ CAGR of 86% in loan portfolio outstanding
(2005-2009)
▪ CAGR of 96% in borrowers (2005-2009)
▪ Witness a flurry of Investments
▪ 25+ transactions with a US$295 mn in
primary investments in the microfinance
space since 2006
▪ Banks and financing institutions had a total
exposure to MFIs of US$ 2.45 bn as of
March 2009
▪ ESOP-linked management structures
▪ No regulatory framework governing lending
practices, pricing or operations
▪ Concentration of MFI lending in mainly two
states Andhra Pradesh and Tamil Nadu
▪ Regulatory Intervention
▪ Implementation of Malegam committee recommendations
▪ RBI recognized NBFC MFI as a separate category of
financial institutions
▪ Permits lending to MFIs as “priority sector”
▪ Unified code of conduct
▪ A unified code of conduct created by industry associations
Sa-Dhan and MFIN and key stakeholders to adopt best
practices and ensure client protection. They both have
been designated as SRO‟s for microfinance industry
▪ Establishment of credit bureau for microfinance
▪ MFIN has collaborated with Highmark and Equifax, to
establish a tracking system to share client data among
MFI‟s
▪ Aimed to improve credit risk management and adherence
to qualifying asset criteria by the RBI
▪ Microfinance Institutions Bill, 2012
▪ AP Ordinance
▪ In October 2010, the AP government
passed an Ordinance to regulate working of
MFIs in AP
▪ Ordinance triggered by political reasons
and instances of multiple borrowings in AP
▪ Key requirements under ordinance
▪ Registration of MFIs
▪ Prohibition on security for loans provided to
SHGs
▪ Prior approval for grant of further loans to
SHGs or their members
▪ Repayments to be made only by monthly
installments
▪ Excessive loan book expansion focus
leading to overlending and high interest
rates
▪ Coercive collection practices
▪ Recovery plummeted to 10% in AP from 99%
▪ Significant write-offs in loan portfolio
▪ Banks caution in lending to MFIs
▪ Crisis/CDR referral for MFIs - Spandana,
Share, Basix, Ashmitha, AML
▪ Structural changes in the industry
▪ Renewed investor interest
▪ Resurgence of bank funding
▪ Better control on multiple lending
…post structural reforms catalysed by AP crisis
I
M
P
A
C
T
6
Strong regulatory and facilitating changes providing tailwinds for growth…
Creation of NBFC MFIs and
RBI reforms ▪ RBI recognized NBFC MFI as a separate category of financial institutions
▪ Clear message from RBI that MFI are to be excluded from state jurisdiction, paving ground for
the microfinance 2012 bill in the parliament
Cap on spreads ▪ RBI has capped the spread between lending rates and cost of funds at 12%
▪ Processing Fee capped at 1%
▪ Opex optimization has achieved significant importance
▪ Perceived impact on industry RoAs
▪ To increase fee based income by offering more products
Multiple lending restrictions ▪ A borrower cannot be a member of more than 1 group
▪ Not more than 2 NBFC-MFIs can lend to same borrower
▪ Restricts the target market
▪ Entry barrier established
Easier access to debt
▪ On 19th December 2011, RBI allowed ECB for MFIs and NGOs engaged in
micro finance under Automatic Route
▪ In Feb 2011, RBI restricted direct priority sector lending benefits only to NBFC
– MFIs
▪ Resurgence of debt followed by equity in the industry
Credit bureaus functioning
better
▪ Credit bureaus are facing the pressure of performing better due diligence post
the crisis
▪ All MFIs have to be mandatorily members of Credit bureaus and report client level information
regularly
New pricing norms for NBFC
MFIs recently introduced
▪ Rates charged by MFIs to be the lower of cost of funds plus margin or 2.75x
average base rate of five largest commercial banks
▪ More transparency
▪ Direct linkage with market dynamics
NBFCs to act as BCs ▪ RBI has allowed NBFCs to become Business Correspondents for Banks ▪ Use the existing channel to provide liability-based products
▪ Increased Fee Income
Banking license ▪ In FY 11, RBI considered giving new banking license to private sector
players. NBFCs also participated
▪ RBI have granted scheduled commercial bank license to IDFC limited and Bandhan (first
MFI in the country )
Small finance bank
license
▪ Further to the declaration of Banking license RBI has decided to allow new
„small banks‟ in the private sector
▪ RBI has announced SFB licenses in Sept‟15 with 8 MFIs are in approval
▪ General positive motivation for the industry to adhere to best practices so as to be eligible for
a banking license
MUDRA bank
▪ MUDRA bank is set up under Pradhan Mantri MUDRA Yojana Scheme to
provide services to small entrepreneurs outside the service area of regular
banks
▪ It will function as a NBFC and will provide MFIs and NBFCs financial support
▪ Will also provide guidelines to MFIs and give them performance ratings
Key Highlights Impact Change
7
Saija is the first MFI to partner with IDBI Bank for offering low
interest MUDRA cards to its clients
…have resulted in strong growth across the MFI sector
Key Players
Total Loan Portfolio
(in Rs. Cr)
FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18
BFIL 4,320 4,110 1,806 2,359 3,113 4,171 7,677 9,150 12,594
Satin 169 229 319 578 1056 2,141 3,271 3,344 4,304
SONATA 56 83 102 182 346 595 1,027 1,035 1,376
SVCL 9 35 56 100 213 423 1,018 816 863
Arohan 98 90 54 90 190 384 658 1,015 2,171
Fusion 0.6 11 37 57 138 295 647 827 1,558
Saija 4.6 9.8 2.4 24.5 51.4 129.5 216 251 375
8
As compare to Q3 FY18 To Q4 FY18, there has been a increase of 23% in Gross loan portfolio of NBFC-MFIs
Saija has shown an impressive CAGR of 77% during this period, in spite of being operating in the most challenging geographies
Government remains focused on financial inclusion through Payment Bank and Small Finance Bank license
Recommendations of the “Committee on
Comprehensive Financial Services for Small
Business and Low Income Households”
Sufficient access to affordable formal credit
Universal Access to a Range of Deposit and Investment
Products at Reasonable Charges
Universal Access to a Range of Insurance and Risk
Management Products at Reasonable Charges
Ubiquitous Access to Payment Services and Deposit
Products at Reasonable Charges
Right to suitability of products and consumer protection
Universal Electronic Bank Account (UEBA) for all Indian
residents by 2016
Payment Banks
Limited range of products (like deposits &
remittances) but widespread network of access
points
Small Finance Banks (SFBs)
▪ Bring down the borrowing costs for MFIs so that the same could be passed on to the poor borrowers
▪ Savings Channel: Bring in the borrower into organized financial services through the savings product
▪ Micro-Banking: RBI would like to bring Banking sector‟s best practices into Microfinance
▪ Strong Investor Interest: Microfinance sector has managed to attract private capital from both mainstream and
impact investors; global Investors have shown interest in the Indian Banking sector
▪ Proven Success Model: Strong bounce-back by MFIs by growing rapidly despite the AP crisis
▪ Improved Direct Benefit Transfer access: Govt. has strong focus to cut subsidies by focusing on DBTs
▪ Deeper Financial Inclusion: Limited success of mainstream banks to undertake financial inclusion
▪ Unique Delivery Model: Microfinance has a distinct model to deliver boutique of financial services to poor and rural
population
Will provide a whole suite of basic banking
products with local focus and ability to serve
smaller customers
• 10 entities awarded SFB license in Sept 2015
• 8 of these are MFIs: Disha, Equitas, ESAF,
Janalakshmi, RGVN, Suryoday, Ujjivan, Utkarsh
• 11 entities got in principle approval in Aug 2015 - RIL,
Aditya Birla Nuvo, Paytm, Vodafone, Airtel, Dept. of
Posts, Cholamandalam, Tech Mahindra, NSDL, Fino
PayTech, Sun Pharma‟s Dilip Sanghvi
Source: RBI
9
Saija is well positioned to be a SFB, once RBI opens SFB licensing on tap !!
Trend of Impact on Industry
This charts depict the trends on PAR from Q1 FY 16-17
till Q4 FY 18. It is evident that the industry has regained
momentum from Sep 2017. Portfolio quality has
significantly.
Impact of Demonetization
10
Trend of impact on Company
Delinquency levels are well maintained compared to
the industry trend on account of considerable
collection measures deployed at each branch level.
The PAR % in Q3 FY18 and Q4 FY18 are declining
compared to the industry despite of significant
challenges faced by the company.
Bihar: The spurt post- demonetization
11
• Bihar has observed significant traction from
MFIs in the post-demonetization period. Bihar
grew Y-o-Y at a rate of 53% during FY17 as
against the industry growth of 25% in the same
period.
• The portfolio of the state increased from Rs
3,799cr in FY17 to Rs 4,677cr in FY18 registering
a growth of 23% YoY in FY18.
• Contrary to the industry trend, the portfolio
quality of the state has remained significantly
superior with PAR>30 at 1% as on Mar’18 as
against an industry PAR>30 of 3.64% which
reflects the quality of credit culture in the state
as well as a relative insulation from the events
plaguing the rest of the industry post
demonetisation - and Saija have strong portfolio
base in Bihar.
Table of Contents
1. Investment Highlights
2. Microfinance Sector: An Overview
3. Funding Landscape: MFI Sector
4. Regional Overview: Bihar, Jharkhand, Uttar Pradesh and Haryana
5. Corporate Highlights
6. Operational Snapshot
7. Social Impact
8. Growth Strategy
12
Date Company Investors Deal Value
(US$ mn)
Feb-11 Satin Creditcare Network ShoreCap II Limited, Danish Microfinance
Partners 8.9
Mar-11 Svasti Microfinance BlueOrchard 1.0
Apr-11 ESAF Microfinance Dia Vikas Capital 0.9
Apr-11 RGVN NE Microfinance Dia Vikas Capital 1.5
Jun-11 Utkarsh Microfinance IFC, Aavishkaar Goodwell, Norwegian
Microfinance Initiative 5.5
Jun-11 Janalakshmi Financial
Services Citi, Tree Line, Others 14.4
Aug-11 Bandhan IFC 27.4
Dec-11 Arman Financial Services Incofin 3.0
Feb-12 Ujjivan Financial Services Sequoia Capital India, FMO, Unitus,
Wolfensohn & Co., Lok Capital, IFIF 25.5
Jun-12 Saija Finance Accion International, Pragati Fund 4.5
Jun-12 Annapurna Microfinance Incofin 2.4
Jul-12 Janalakshmi Financial
Services
Citi, India Financial Inclusion Fund, GAWA
Microfinance Fund, Others 14.5
Aug-12 Ujjivan Financial Services Lok Capital NA
Sep-12 Sonata Finance Creation Investments, MSDF 11.2
Sep-12 Ujjivan Financial Services IFC, FMO 9.5
Sep-12 Arohan Financial Services IntelleCash 10.0
Oct-12 Suryoday Microfinance HDFC 1.3
Oct-12 Equitas IFC, MicroVentures, IFIF 26.0
Jan-13 Suryoday Microfinance Aavishkaar Goodwell & Lok Capital 3.8
Feb-13 Fusion Microfinance NMI, Incofin 4.5
Microfinance sector has attracted US$800 mn+ from private equity investors
Investment activity post AP crisis
Date Company Investors Deal Value (US$
mn)
Mar-13 Utkarsh Microfinance IFC, NMI, Aavishkaar Goodwell 4.5
Mar-13 Grameen Financial Creation Investments, Micro Ventures, Incofin 10.0
Mar-13 Satin Microfinance MicroVest, Shorecap II Ltd. & Danish
Microfinance Partners 10.9
Apr -13 Suryoday Microfinance IFC 2.78
Aug- 13 Janalakshmi Financial
Services
Citi, Morgan Stanley, Tata Capital, India
Financial Inclusion Fund, Others 56.6
Sep- 13 Swadhaar SIDBI 0.5
Sep- 13 Sahayog SIDBI 0.5
Oct- 13 Ananya WWB ISIS Fund and IDBI Bank 3
Oct-13 Arohan Financial Services Aavishkar Goodwell, MSDF, others 3.5
Mar-14 Annapurna Incofin, Belgian Investment Company 5.0
Apr-14 Satin Microfinance NMI 4.5
Jul-14 RGVN Microfinance OikoCredit, NMI, DVC 7.0
May-14 Equitas Lok Capital, Creation 13.6
Oct-14 Janalakshmi Financial
Services
Morgan Stanley, Tata Capital, Texas Pacific
Group 77.0
Nov-14 Equitas IFC, FMO, CDC, DEG, IFIF, Creation 53.0
Dec-14 Utkarsh Microfinance IFC, CDC, Aavishkaar Goodwell, Lok Capital,
NMI 21.0
Jan-15 Bandhan IFC,GIC 260.0
Jan-15 Ujjivan Financial Services IFC, CDC, CX Partners, Newquest 100.0
Mar-15 Annapurna Microfinance SIDBI 4.2
Mar-15 Arohan Financial Services Tano Capital 10.0
▪ Almost all MFIs got funded during this period from a variety of sources that includes equity, debt and NCD.
▪ More importantly the sector saw investment from mainstream private equity funds e.g. CVCI, Wolfensohn, Sequoia Capital, Morgan Stanley, Tata Capital, Alena Pvt Ltd,
Tano Capital, Texas Pacific Group, CX partners, Newquest; also from DFIs like BIO, IFC, FMO, GIC, Samridhi Fund, CDC and Proparco and strategic investors like
Manappuram Finance
13
Total debt funding in FY17-18 increased by 20% compared to
FY16-17, representing return of lenders confidence in growth
potential of the NBFC-MFIs sector.
Complemented by US$5 bn+ from debt funders
Variety of instruments utilized to raise funding by MFIs
Andhra Bank Bank of Baroda Bharatiya Mahila Bank Bank of Maharashtra Central Bank of India Corporation Bank Dena Bank IDBI Bank Indian Bank Indian Overseas Bank Oriental Bank of Commerce State Bank of India Bank of India State Bank of Patiala State Bank of Travancore Syndicate Bank UCO Bank Union Bank of India United Bank of India
Vijaya Bank
Allahabad Bank
State Bank of Mysore
Canara Bank
PSU Banks Private Banks NBFCs
Foreign Banks
NCDs
Axis Bank
Catholic Syrian Bank
City Union Bank
Development Credit Bank
Dhanalaxmi Bank
Federal Bank
HDFC Bank
IndusInd Bank
Karnataka Bank
Kotak Mahindra Bank
Lakshmi Vilas Bank
Ratnakar Bank
South Indian Bank
Yes Bank
ICICI Bank
ING Vysya Bank
Blue Orchard
Deutsche Bank
responsAbility
Triodos Symbiotics
Grey Ghost Ventures
FMO
Triple Jump
Oiko Credit
IFC
Microvest
Bank of America
Credit Agricole
First Rand Bank
HSBC
Standard Chartered
State Bank of Mauritius
Societe Generale
Deutsche Bank
MAS
Ananya
IFMR
Maanaveeya Holdings
Microventures
Reliance Capital
Mahindra Finance
Capital First
Tata Capital
ECBs
OPIC
World Business Capital
IFC
14
48 60
41
71
33
85
69
207
8 20
1 15
9 15
26
81
Q1 FY 17 Q2 FY 17 Q3 FY 17 Q4 FY 17 Q1 FY 18 Q2 FY 18 Q3 FY 18 FY 17-18
Debt Funding ( Inr Bn) Securitization ( Inr Bn)
Table of Contents
1. Investment Highlights
2. Microfinance Sector: An Overview
3. Funding Landscape: MFI Sector
4. Regional Overview: Bihar, Jharkhand, Uttar Pradesh and Haryana
5. Corporate Highlights
6. Operational Snapshot
7. Social Impact
8. Growth Strategy
15
Saija started its journey in Bihar, which has historically been underdeveloped Recently expanded to Eastern Uttar Pradesh and Jharkhand (East India)
Key indicators Bihar
State Capital ▪ Patna
Population ▪ 103 million
▪ 5th most populous state
Population Density ▪ 1,102 persons per sq km
Gross State Domestic Product
(GSDP)
▪ US$ 66 billion
▪ Ranked 14th out of 28 states
Economy
▪ 80% of state‟s population depends on agriculture
▪ GDP constitution: Primarily service oriented (73% of the economy of the
state), with agriculture coming in second (22%) and industry last (5%)
Key
indicators Jharkhand Uttar Pradesh Haryana Punjab
State Capital ▪ Ranchi ▪ Lucknow Chandigarh Chandigarh
Population ▪ 33 million
▪ 204 million
▪ Most populous
state
25.35 million 27.70 million
Population
Density
▪ 414 persons per
sq km
▪ 820 persons per
sq km
573 person per
square km
550 person per
square km
Gross State
Domestic
Product
(GSDP)
▪ US$ 43 billion
▪ Ranked 19th out
of 29 states
▪ US$ 230 billion
▪ Ranked 4rthout of
29 states
• US $ 110 Billion
• Ranked 13th out
of 29 states
• US $80 billion
• Ranked 14th
out of 29 states
16
Census of India, 2011
Brief overview of states Saija operates in
Uttar Pradesh
Jharkhand
Bihar
Haryana
17
Saija‟s focus states are home to one-third of India‟s rural population While more than two-thirds of India lives in rural areas, the proportion is much higher for Bihar, UP and
Jharkhand
Uttar Pradesh and Bihar are the two largest states in terms of rural population, and along with Jharkhand are home to
one third India‟s rural population
89%
78%
76%
68%
0% 23% 45% 68% 90% 113%
Himachal Pradesh
Bihar
Assam
Odisha
Meghalaya
Uttar Pradesh
Arunachal Pradesh
Chhattisgarh
Jharkhand
Rajasthan
Sikkim
Tripura
Jammu and Kashmir
Madhya Pradesh
Nagaland
Manipurβ
Uttarakhand
West Bengal
India
Haryana
Andaman and Nicobar…
Punjab
Karnataka
Telangana
%age of population
200 mn
103 mn
33 mn
336 mn
Saija is focused on states having 336 mn rural
population, one-third of total rural population residing
in India, which has low access to quality financial
services
Bihar lags behind its peers, ranking amongst the lowest 5 states by GDP/capita Uttar Pradesh and Jharkhand are also laggards
Despite good growth, state domestic product per capita continues to lag
behind the national average over the last decade
Link: IBEF Report on Bihar, August 2015
18
16%
3%
9%
7.9%
1.8%
3.3%
0% 5% 9% 14% 18%
Uttar Pradesh
Jharkhand
Bihar
Population as a %age of all states GSDP as a %age of all states
1389
755
1111
649
740
326
463
196
0 350 700 1050 1400 1750
India
Uttar Pradesh
Jharkhand
Bihar
2015 2005
CAGR
6%
9%
9%
13%
GSDP per Capita – Comparison versus national average GSDP by state – Comparison vis-à-vis state population
GSDP (Gross state domestic product), a measure of economic
activity, is disproportionately adversely skewed for Saija‟s focus
states
150
97.1903 74.4876
57.2325
'- 175 350 525 700
Goa
Delhi
Sikkim
Tamil Nadu
Punjab
Karnataka
Kerala
Haryana
Himachal Pradesh
Uttarakhand
Telangana
Maharashtra
Gujarat
Andhra Pradesh
Nagaland
Jammu and Kashmir
India
Arunachal Pradesh
Mizoram
Odisha
Tripura
Madhya Pradesh
Meghalaya
West Bengal
Rajasthan
Manipur
Chhattisgarh
Assam
Jharkhand
Uttar Pradesh
Bihar
19
Banking infrastructure in Bihar, Jharkhand and UP remains weak Low ATM and bank branch penetration
Bihar, Jharkhand and Uttar Pradesh are home to 28% of India‟s
population, but have access to only 13% of ATMs deployed
*ATMs per mn people
Bihar, Jharkhand and Uttar Pradesh are home to 28% of India‟s population,
but have access to only 19% of bank branches
99.9551
78.3226
73.7349
54.8723
0 125 250 375 500
Goa Himachal Pradesh
Andhra Pradesh Punjab
Delhi Sikkim Kerala
Uttarakhand Haryana
Andaman & Nicobar Islands Dadra & Nagar Haveli
Karnataka Mizoram
Tamil Nadu Jammu & Kashmir
GujaratIndia
Maharashtra Meghalaya
Tripura Odisha
Arunachal Pradesh Rajasthan
Chhattisgarh Jharkhand
Madhya Pradesh West Bengal
Uttar Pradesh Nagaland
Assam Bihar
Manipur
*Bank branches per mn people
This access is also largely driven
by public sector banks while
private sector banks, both
domestic and foreign, have not
focused on these regions for
opening new branches or ATMS
20
Consequently, these states rank low on financial inclusion metrics
Bihar, Jharkhand and UP are the lowest scoring states in India
on the CRISIL Inclusix, a financial inclusion index
Low (<25)
Below Average (25-40)
Above Average (40-55)
High (>55)
▪ CRISIL Inclusix is a composite measure of
financial inclusion. It is a relative scale (0-
100) comprising 3 parameters – Branch
Penetration, Deposit Penetration and Credit
Penetration for banking and MFIs.
▪ India national average = 50.1 (2013)
Bihar has the lowest credit per capita and deposit per capita amongst all
states, with UP and Jharkhand being substantially below national average
Credit – deposit ratio trails behind national averages as well
0. 17.5 35. 52.5 70.
Jharkhand
Bihar
Uttar Pradesh
India (Average)
Deposit per capita Credit per capita
‘000 INR
0% 20% 40% 60% 80% 100%
Jharkhand
Bihar
Uttar Pradesh
India (Average)
Bihar‟s, Jharkhand‟s and Uttar Pradesh‟s unemployment rates for youth are higher than the national average
Low economic activity has translated into unemployment Unemployment rates are the highest in Bihar amongst all states in India for the urban populace
▪ Of 12.9 million persons engaged across the Indian
industry, Bihar accounted for only 116,396 people i.e. less
than 1% with primary sectors like agriculture being the
highest employer
▪ Similarly, the 66th round of the National Sample Survey
Organization (NSSO) report puts the projection of
unemployed youth in Uttar Pradesh in the age group of 15-
35 at whopping 10 mn by the end of 2017
Link: The Wire: The Better Educated You Are in Bihar, the Likelier You Are to Be
Unemployed, Labour Ministry Data for 2014,
2.4 2.9 2.5
8.4
19.1
25.7
0.
7.5
15.
22.5
30.
Not literate Below Primary Primary Middle-Higher Secondary Diploma/Certificate Graduate and Above
Unemployment in Bihar by education level
21
4.7%
6.7%
7.7%
5.9% 5.5%
9.6%
6.5%
7.9%
4.9%
7.0% 7.4% 7.3%
0.0%
2.5%
5.0%
7.5%
10.0%
India Bihar Jharkhand Uttar Pradesh
Rural Urban Total
Educated and qualified young people are more likely to be unemployed in Bihar than youth who are illiterate or with low education
Consequently, social progress has been slow
Low literacy rates and high incidence of poverty
Bihar has the lowest literacy rate amongst all states in India More than 40% of Bihar, Jharkhand and UP struggles below poverty line
Census 2011
22
69%
67%
63%
74%
53% 60% 68% 75%
UP
Jharkhand
Bihar
India
0% 14% 28% 42% 56%
UP
Jharkhand
Bihar
India
Below Poverty Line Population - Total Below Poverty Line Population - Rural
Saija is focused on Bihar, Jharkhand and Uttar Pradesh – states with high need for microfinance - and is poised to be a leader in the region
Microfinance snapshot – UP*
No. of MFIs operating 18
Total credit - client outreach (in mn) 26
Total portfolio outstanding (in Rs. Cr) 4,804
Microfinance snapshot – Bihar*
No. of MFIs operating 27
Total credit - client outreach (in Lacs) 27
Total portfolio outstanding (in Rs. Cr) 4,677
Microfinance snapshot – Jharkhand*
No. of MFIs operating 15
Total credit - client outreach (in lacs) 8
Total portfolio outstanding (in Rs. Cr) 1,397
23
Saija is the first MFI based out of Bihar
▪ 2,51,569 Clients
▪ Rs. 375.08 Crore portfolio
▪ 80 Branches
▪ 4 States , 48 districts
▪ 806 Employees
Saija snapshot as of March‟18
*Data Source: MFIN Micrometer
Table of Contents
1. Investment Highlights
2. Microfinance Sector: An Overview
3. Funding Landscape: MFI Sector
4. Regional Overview: Bihar, Jharkhand, Uttar Pradesh and Haryana
5. Corporate Highlights
6. Operational Snapshot
7. Social Impact
8. Growth Strategy
24
25
Saija is the beacon of Eastern India built on foundation of execution, transparency and impact
Business
Overview
▪ Saija Finance Private Limited is first NBFC-MFI (Non Banking Finance Company – Micro Finance Institution) with its head office
in Patna (Bihar), and focused on Eastern India
▪ Key focus on highly underdeveloped states like Bihar, Jharkhand, Uttar Pradesh and Haryana
▪ Focuses on providing group loans for income generating activities, by the implementation of the Grameen model of the Joint-Liability
Group (JLG) lending method
Vision and
Mission
▪ Saija‟s vision is to be a value-driven company that creates significant social impact through high-quality microfinance and allied
services.
▪ Saija‟s mission is to “bring innovative and transparent microfinance to millions in urban and rural India. Our committed and skilled
team will provide customer-focused and efficient services to help our customers improve their quality of life.”
Core
Values
Transparency
▪ Trust
▪ Honesty
▪ Fair-Practices
▪ Non-Discrimination
Discipline
▪ Accountability
▪ Responsibility
▪ Professionalism
Excellence
▪ Creativity
▪ Innovation
▪ Continuous Learning
Social Responsibility
▪ Sensitivity
▪ Awareness
Regional
Focus
▪ Saija was formed with a focus on providing microfinance services to urban and rural poor, as well as micro and small businessmen, in the
underserved geographies of Central & Eastern India, starting with Bihar
▪ The geographic regions served by Saija are amongst the poorest in India and also are grossly underserved by formal financial institutions
*Including managed portfolio
26
…by building on internal competencies and ecosystem feedback
With Bandhan, the leading East India based microfinance institution becoming a bank, and RGVN and Utkarsh changing their focus
to SFBs, Saija faces limited competition in the region
▪ Entrepreneurship – Led by 2
professionals who are natives of
Bihar driven by a strong desire to
make an impact
▪ Employment generation – Entire
staff is from Bihar who would
otherwise have limited
opportunities to work in world
class organizations
▪ Livelihood creation – Saija was
the first MFI to have its head
office and focused operations in
Bihar.
▪ Transparency – IT driven
organization with strong systems
and processes
▪ Private equity capital – Equity from
2 global impact investors in a
geography where even government
support has been minimal
▪ Funding – Despite multiple options
available, lenders (banks and
NBFCs) have supported Saija
▪ Government partnership – MUDRA
selected Saija as its partner
amongst many larger peers
▪ Model institution for international
organization – Time and again
multiple international organizations
have visited Saija to understand a
model MFI
A strong foundation
Only institution to have emerged from
Bihar that has occupied national center
stage on a variety of aspects
Acknowledged and rewarded by
the ecosystem
An organization in, by and for
Eastern India
Saija has a history of creating strong social impact since its inception in 2007
Saija over the years has emerged as a strong value-based and systems-driven company with a high level of customer focus, strong
corporate governance and sound ethical practices
*Represents Indian financial year end =
March 31st
27
2009-12
2009 – Equity Investment by Accion
2009 - Expansion outside Patna, the state capital
2010 – 3 new branches opened
2012 – Equity infusion from Pragati Fund and Accion
2013*
30,833 clients
7 branches
Portfolio of Rs 25 crs
Saija is identified by SIDBI for support under their DFID sponsored PSIG (Poor State Inclusive Growth) Programme
SIDBI invests Rs 3 crs in the form of Optionally Convertible Preference Shares (OCPS)
2014*
47,758 clients
9 branches
Portfolio of Rs 51 crs
Expansion to state of
Jharkhand
Saija is graded MF2 by ICRA
which implies high sustainability of operations
2015*
109,158 clients
27 branches
Portfolio of Rs 122 crs
2016*
166,882 clients
49 branches
Portfolio of Rs 216 crs
2017*
2,13,502 clients
63 branches
Portfolio of Rs 251.40 crs
2018*
2,51,569 clients
80 branches
Successful equity infusion
of INR 15 Cr. form
ACCION.
SIDBI has reserved the
right to invest up to INR 7
cr. in equity within 12
months of the current
round by our investor
ACCION & Pragati.
Successful equity infusion
of INR 15 Cr. form
PRAGATI FUND
Founded by experienced professionals, with a history of successfully scaling businesses
S.R. Sinha (Chairman and Managing Director)
37+ years of experience in retail banking, housing finance and insurance ▪ An alumnus of FMS, Delhi University
▪ Founding MD, Maharishi Housing Development Finance, an NBFC, which became a very strong player in very early years of its operations with
one of the best growth rates in the housing finance sector and a 100% recovery record
▪ Under the leadership of Mr. Sinha in less than 4 years, asset under management increased from Rs 20 crs to Rs 100 crs. Subsequently the
portfolio of the company merged with ICICI Bank
▪ Mr. Sinha subsequently worked for Lord Krishna Bank, as Senior Vice President, Retail Assets and as Country Head – Cross Sell with Centurion
Bank of Punjab.
Rashmi Sinha (Whole Time Director)
35+ years of experience in the field of human resources and management education ▪ 18 years of experience with Steel Authority of India, the leading public sector steel giant, in the area of HR. Ms. Sinha also participated as a
member of the Core Team in turnaround strategies for SAIL. She was involved in implementation of a new HR Initiatives at SAIL involving revised
performance management systems, training and development initiatives and plant level study of various productivity parameters.
▪ Ms. Sinha has also been involved as a visiting and permanent faculty in reputed management institutes across Delhi. She has been conducting
successful workshops on leadership, interpersonal effectiveness, change management, effective communication and team work.
▪ She has a number of publications to her credit which have found place in reputed management journals.
▪ She is an Economics Graduate from Lady Shriram College, Delhi University and MBA from Faculty of Management Studies, Delhi University.
The founding team has more than 70 years of cumulative corporate experience, and is committed to making an impact in
high need geographies like Bihar
28
Supported by a strong management team
Atul Bhola (Senior Vice President & Financial Controller) Joined Saija in November 2017 and is currently heading the Finance department. He is a Chartered Certified Accountant (ACCA, U.K) and ACMA,
CGMA (CIMA, U.K). He has more than 14 years of experience in the field of Finance, Accounts, Taxation and Corporate Planning. His robust
experience spans across industries such as Financial Services, Construction and Food Retail. In the past he has worked with a larges NBFC of
Religare group with an approximate balance sheet size of INR 20,000 C and others such as Laing O‟Roureke(U.K based large constuction co.) and
Jubilant FoodWorks Limited (Domino‟s Pizza India).
Ms. Vasudha Goel – Sr. Vice President -Controller of Client Servicing
Joined Saija in February 2018. She is heading Operation, Commercial & Quality department. She holds a BA degree from Lady Shriram College,
Delhi University and a MBA from Amity University. She has over 19 years work experience in Retail Branch Banking. She worked her way up to a
Leadership role during her 19 years stint with HDFC Bank. Her core competencies include Team Management, Business expansion, Operations
and Compliance. She has worked across various levels to increase Branch expansion and Market share.
Ms. Jaya Jas Mittal – AVP Human Resource & Training
Joined SAIJA in May 2018 and is currently heading the Human Resource & Training Department. She has over 14 years of experience in HR
Operations. She has done her masters in HR & prior to joining Saija was associated with Weather Risk Management Services & Apollomunich as
Head HR. Her core competencies include Employee Relations, Environment Management, Performance Management System and executing the
same for enhancing the operational efficiency of the employees, Process stabilization, Recruitment, Policies and Procedures.
Rajnish Kumar (Deputy Vice President – Commercial, Bihar )
Joined Saija in September 2012. He is heading the Commercial Team (Business Head). He has an experience of 8 years in banking and micro-
finance sector and is an MBA with specialization in Marketing and Finance. Prior to Joining Saija he was with Satin Credit care Network limited
where he was looking after internal audit and risk management function of company. He has also worked with ICICI Bank with credit team of
Business Lending Group.
.
29
Professional team of 50 corporate staff, with experienced individuals heading key functions
Supported by a strong management team
MD Tofique Alam (AVP – Commercial)
Joined Saija in July 2016. He is heading the Commercial Team (Business Head). He has an experience of more than 4 years in Internal Audit and business
operations. He has done PGDM Finance from XISS. Prior to Joining Saija, he was with Samunnati Financial Intermediations and IFMR Rural channels where
he was looking after the internal audit. He has also worked with ICICI Securities as a relationship manager.
Thakur Manish Singh (AVP – IT)
Joined Saija in January 2011. He is an IT professional with an experience of over 8 years. Earlier employed with Xenitis Group Ltd, his core strengths are
managing IT infrastructure, Server and Network side Administration and developing business systems for organization with different verticals. He has
several global technical certifications from organizations like Red Hat, Microsoft and Cisco. He is a M. Tech in Computer Science and has done Master in
Computer Science from Karnataka University and has also done Post Graduate Diploma in IT Infrastructure Management from SMU.
Mr. Rakesh Bharati – AVP, Quality
Joined SAIJA in October 2017. He is heading the Quality department. He is an MBA from Pune University and has an experience of more than 8+ years in
Micro Finance Industry. Prior joining SAIJA, he has worked with Ujjivan Small finance bank in Customer service and Distribution team in various
geographical areas like Bangalore, Pune, Nagpur, Chhattisgarh.and New delhi.
Mr.NeerajSharma–SeniorManager-InternalAudit
Joined SAIJA in January 2018 and currently handling Risk & Internal Audit department. He has more than 9 year of experience in internal audit, Risk and
fraud investigations. He is AML/KYC certified from IIBF & completed his MBA from SMU. In past, He has worked with financial companies such as Religare
finvest limited and Fino paytech pvt ltd.
Mr. Vinod Chauhan
Joined Saija in February 2018 and is currently heading the Resource department. He is an MBA in Finance, from Entrepreneurship and Management
Processes International Business School, India and France. He has more than 9 Years of experience in the field of Corporate Finance, Treasury, Project
Finance ,Fund Raising and Financial Planning and Analysis. His robust experience spans across industries such as Banking, Airport Infrastructure, Oil &
Gas and IT. In the past he has worked with Bank of America (US based Bank) Yes Bank, GMR Airports Limited, SANMARG Projects Pvt. Ltd and ACS
Global Tech solutions Pvt Ltd (US Based IT Company).
30
Professional team of 50 corporate staff, with experienced individuals heading key functions
Leading investors in the impact investment ecosystem have given their support to Saija
▪ Setup in 2011, Pragati India
Fund is an India focused private
equity fund investing in small
and medium sized companies
with strong entrepreneurial and
management capabilities.
▪ Pragati partners with
businesses based out of North
& Central India that are looking
to grow, and works with them by
providing capital and
operational support.
▪ The fund has commitments
from Commonwealth
Development Corporation
(CDC, the investment arm of
the UK Government) and
International Finance
Corporation (IFC, the private
sector arm of the World Bank).
▪ As of date, the Pragati portfolio
has become a part of CDC‟s
India operations.
▪ Pragati had again invested
INR 15 cr. equity in FY 7-18.
▪ A global pioneer and leader in
microfinance, Accion was found in
1961 and has to-date helped build
63 microfinance institutions in 32
countries on four continents.
▪ As of March 2014 those institutions
were collectively serving 4.96
million people with microloans and
3.64 million people with savings
products.
▪ Apart from making equity infusion
in Saija, Accion also provides key
management talent support and
extensive high quality technical
assistance.
▪ They have also provided grant
support for strengthening the
company.
▪ With support from Credit Suisse,
Accion also provides free and
regular capacity building
interventions at Saija Finance.
▪ ACCION had again invested INR
15 cr. equity in FY17-18.
Accion
invested in
Saija in 2008 Pragati invested
in Saija in 2012
▪ SIDBI Foundation for Micro
Credit (SFMC) was launched by
the Bank in January 1999 for
channelizing funds to the poor
in line with the success of pilot
phase of Micro Credit Scheme.
▪ SFMC‟s mission is to create a
national network of strong,
viable and sustainable Micro
Finance Institutions (MFIs) from
the informal and formal financial
sector to provide micro finance
services to the poor, especially
women. In keeping with its
mission, SIDBI Foundation
identifies nurtures and develops
select potential MFIs as long
term partners and provides
credit support for their micro
credit initiatives.
▪ SIDBI has reserved the right
to invest up to INR 7 cr. in
equity within 12 months of
the current round by our
investor ACCION & Pragati.
SIDBI invested in Saija in 2013
31
3% 3%
40% 40%
9% 5%
Shareholding Pattern
Promoters
Accion Gateway LLC
Accion Africa Asia InvestmentCompany
Pragati India Fund Limited
Small Industrial Development Bankof India
Saija Management and EmployeeWelfare Trust
Successful Equity infusion of INR 30 Cr from existing Investors (ACCION and PRAGATI FUND)
High corporate governance with reputed independent directors
Ravi Shankar (Independent Director)
▪ Founder Director of Brickwork Ratings; Finance professional with 25+ years of experience
▪ Ex-MD, Asia-Pacific Risk Solutions Business, Standard and Poor’s and simultaneously Executive Director, CRISIL (heading the India Risk Solutions
Business); Ex-President & CEO, Polaris Retail Infotech Ltd.; CEO of Cholamandalam Cazenove Mutual Fund; Fund Manager & Vice President at Reliance
Mutual Fund; Chief Investment Officer of GIC Mutual Fund, etc.
Shaibal Gupta (Independent Director)
▪ Social scientist, Founder Member-Secretary of Asian Development Research Institute in Patna, Bihar; Director of Centre for Economic Policy and Public
Finance, set-up in ADRI by the Government of Bihar; Best known expert on the politics and economics of Bihar.
▪ He has held advisory positions in various committees. He was a director of the Andhra Bank until his term expired and Member Executive Committee,
National Literacy Mission (NLM) – India, Government of India, Ministry of HRD, New Delhi.
Vishwanath Prasad Singh (Independent Director)
▪ He has long exposure with international financial institutions including World Bank, Asian Development Bank, European Investment Bank, KFW, DEG,
FMO, Japan Development Bank and JABIC in the areas of co-financing of infrastructure projects and institutional development
Carlos Castello (Accion Nominee Director)
▪ Manages Root Capital‟s global program operations, including lending, risk management, and financial advisory services.
▪ He brings 25 years of experience at ACCION International, having served most recently as executive managing director of global programs. In this position,
he managed and coordinated ACCION‟s technical assistance and management services for more than 30 microfinance partner institutions in Africa, China,
India, and Latin America.
▪ Carlos holds an M.A. in economics and an M.S. in Foreign Service from Georgetown University as well as a B.A. in international administration from Union
College.
32
High corporate governance with reputed independent directors
Abhishek Agrawal (Accion Nominee Director)
▪ Currently heading Accion in India as Country Director
▪ Abhishek had been seconded to Swadhaar FinServe Pvt. Ltd. as CFO in 2010. Prior to joining the Swadhaar team, he was seconded by Accion to YES
Bank for microfinance division. Before joining ACCION, Abhishek worked for nearly 5 years with FINCA International, a global network of microfinance
institutions (MFIs).
Ashutosh Binayake Mahendra (Pragati Fund, Nominee Director)
▪ He has over fifteen years of experience in India across project finance, private equity and corporate finance. He also functions as CFO for UTI Capital
▪ He has strong infrastructure expertise and at UTI Capital he focuses on originating and evaluating equity investments, over-seeing the portfolio and creating
exit opportunities within the private equity business.
Bhanu Prakash Verma (SIDBI Nominee Director)
▪ Deputy General Manager in Small Industries Development Bank of India(SIDBI), having experience in development banking, promotion and financing of
MSMEs. SIDBI is an internally acclaimed financial institution. It provides financial and development assistance to micro, small and medium enterprises
towards creating sustainable business units.
33
Table of Contents
1. Investment Highlights
2. Microfinance Sector: An Overview
3. Funding Landscape: MFI Sector
4. Regional Overview: Bihar, Jharkhand, Uttar Pradesh and Haryana
5. Corporate Highlights
6. Operational Snapshot
7. Social Impact
8. Growth Strategy
34
35
Focus on income generating and high social impact products Saija has 3 main loan products currently and 3 three top up products
Saija has received support from USAID to further its Solar initiative and has tied up with Greenlight Planet to
finance solar products under the Saija Urja Rin
Ticket size
Tenor
Rate
End Use
Rs 5,000 to 100,000
• Up to Rs 30,000: 1 year tenure
• Rs 31000- Rs 1,00,000: 2 Years tenure
• Fortnightly/Monthly
24.7225% reducing per annum
For income generation, select consumption
needs like house repair, children‟s education
Saija Mahila Rin (SMR)
Only women borrowers
Rs 5,000 to 100,000
• Up to Rs 30,000: 1 year tenure
• Rs 31000- Rs 1,00,000: 2 Years tenure
• Fortnightly/Monthly
Provides financial assistance to women
Saija Karobar Rin (SKR)
Both men and women borrowers
Rs 1,899
13 fortnightly instalments
Business and select personal needs
Saija Urja Rin (SUR)
Loan for clean energy products
91.07% of portfolio 3.91% of portfolio
Products
Group Sizes JLG of 06 to 30 members JLG of 4– 6 members JLG
Innovative product as a part of
Solar Initiative ( 3.03 % of
portfolio)
24.7225% reducing per annum 24.7225% reducing per annum
Saija follows the Grameen Model, suitably modified to a workable Joint Liability Group model
36
Promotion Credit
Appraisal
Group
Formation CGT GRT Disbursement Group Meetings
▪ Compulsory Group Training (CGT):
Once the group is formed, the group is
given training on: (i) Products,
including insurance (ii) Policies and
procedures to be followed (iii) Group
guarantee concept (iv) Benefits of the
model
▪ CGT consists of 3 modules, each
comprising 1.5 hour long sessions (last
module is GRT)
▪ Group Recognition Test (GRT):
Once the training is completed, Saija
conducts a formal test to ensure that
all the members of the group are
aware of and understand the loan
concepts
▪ For a group to be eligible to receive a
loan from Saija, this test has to be
compulsorily passed
▪ 4-6 men/women
(SKR) or 6-30
women (SMR), who
live in the same area
and have known
each other for the
past 3-5 years form a
group
▪ The group is self-
made with support
from the Saija
Executive and
includes members
who are comfortable
but unrelated with
each other
▪ A clear Leader for the
group is also
identified
▪ Household survey is
performed
▪ Each SMR group has a
mandatory weekly or fortnightly
meeting.
▪ During these meetings, the
following takes place: (i)
Discussion of community issues
(ii) Communication of Saija
developments/changes if any (iii)
Collection of repayments
▪ For SKR, there are no group
meetings, the group leader
collects the repayment and
deposits it with Saija field staff
10-15 day process
▪ HighMark credit
appraisal for
▪ (i) Borrower should
not have more than
1 outstanding loan
from MFIs
▪ (ii) Borrower‟s
outstanding cannot
exceed Rs 100,000
▪ Promotion
meetings are
planned in
the
village/town
with ABM
leading the
effort.
▪ Usually
involves
meetings co-
lead by
important
persons in
the village
and also
door to door
canvassing
for people to
attend the
meeting
▪ Disbursement
happens at the
branch
Saija uses OMNI platform which has integrated credit and accounts functionality OMNI is a flexible, comprehensive software which allows Saija to manage core banking as well as accounts finalization on one platform
37
Implementation of Front End Technology Solution
38
.
Impact
Cost Benefit
Improved Quality
Better TAT
Paperless Sourcing – Credit back-office not required
Increased Productivity – Higher number of loans serviced by a
Field Officer
Higher Income per Field Officer
Almost Nil Data error
Pre-populated Disbursement Kit
Increase in Productivity, with a TAT of less than 5 days
Faster Funder Compliances / Audits
Faster Securitization Audits
Technology plays a critical role at Saija and is a vital element of the
innovation taking place to advance financial inclusion. Saija is
seeking a mobile solution where our Field officers will be able to
complete the loan application using a Mobile/Tablet device. Our
attempt is to apply client-focused technologies. The mobile / tablet
device will help Saija increase the productivity and efficiency of loan
officers in performing key tasks.
Implementation Plan
Phase-I
Jharkhand
Phase-II
Bihar
Phase-III
UP and Haryana
Saija Leveraging Technology Benefits
Saija places strong emphasis on responsible lending Various initiatives to ensure transparency in lending practices
▪ Saija is a „responsible lender‟ that ensures that best practices in consumer protection are followed throughout its products and services
▪ Saija‟s lending methodology places strong emphasis on establishing the customer‟s capacity to repay and avoiding over-
indebtedness.
▪ Capacity-based lending has been a trademark of Accion International and its partner institutions around the world and has been
successfully adopted by Saija.
▪ Multiple lending and over-indebtedness are becoming a concern in the Indian microfinance space, and various initiatives including the
adoption of a code of conduct for responsible lending and the creation of a credit bureau for microfinance institutions are underway.
▪ Saija takes various initiatives to ensure that customers are adequately supported and protected by doing the following:
▪ Adoption of the responsible lending principles of the SMART campaign, which is led by ACCION International‟s Center for Financial
Inclusion. The Client Protection Principles encompassed in the SMART campaign are as follows :
▪ Appropriate product design and delivery
▪ Prevention of over-indebtedness
▪ Transparency
▪ Responsible pricing
▪ Fair and respectful treatment of clients
▪ Privacy of client data
▪ Mechanisms for complaint resolution
▪ Adoption of a Code of Conduct derived from the Compliance with the Codes of Conduct of Microfinance Institutions Network (MFIN),
an association of Indian microfinance companies and Sa-Dhan, the Association of Community Development Financial Institutions.
▪ Information disclosure on loan features to forums such as MF Transparency
▪ Reporting social performance on the MIX (Microfinance Industry Exchange)
39
Private Banks
Saija has diversified its lender base, which now includes banks, NBFCs and DFIs
NBFCs DFIs and Impact focused lenders
Public Banks
40
41
…which is reflected in rating upgrades by external agencies
41
MFI grading = M2 upgraded from
MfR4 (CRISIL)
Rated high ( SP2+)in Social
Performance Assessment
Rated favourably on social
performance and responsible
financing grading (2014)
Loan Portfolio Audit and
Systems‟ evaluation conducted
stated “good management
systems and reasonable
control mechanism, which
has helped them to maintain
a good portfolio quality”
Rated as BBB-
Strong growth over the last few years, with improving profitability metrics
Portfolio (Rs crs)
42
5 10
2
25 51
122
216 251
375
0
50
100
150
200
250
300
350
400
2010 2011 2012 2013 2014 2015 2016 2017 2018
10x increase in
GLP over the last
4 years
Clients(‘000)
5
30
48
109
167
213
251
'-
50
100
150
200
250
300
2012 2013 2014 2015 2016 2017 2018
7x increase in
client base over
the last 4 years
Revenue and Profitability (Rs Crs)
▪ Steady increase in revenue and profitability
metrics over last few years
2.2 4.9
9.5
20.6
41.7
60.5 63.
-1.7
-0.4
1.1
1. 2.3
1.6
-4.7
-10
0
10
20
30
40
50
60
70
2012 2013 2014 2015 2016 2017 2018
Revenue PAT
SAIJA: SUCCESS FACTORS
43
• Saija created a “hybrid” model which balanced the need for energy officers to conduct product demonstrations and capacity building with the important role of loan officers in appraising loans
2. DEVELOP APPROPRIATE INCENTIVES FOR STAFF
• It is difficult to scale an energy finance program without the proper incentives. The incentive was crafted carefully and intelligently so that it does not result in “forced selling” or push marketing
3. HIRE THE RIGHT ENERGY TEAM LEADER
• Finding someone,, who understands what the company is trying to achieve, and knows how to convey that idea with enthusiasm is critical .
4. PILOT THE PROGRAM CAREFULLY
• Saija has learned that a carefully designed pilot phase that precedes scale-up is critical as it enables the MFI to learn from mistakes and better understand its new and unfamiliar business and also ensure that the model is right before committing to investment in expansion.
5. INVEST IN TRAINING
• Training staff so that they are confident at their job, problems are identified, tactics are honed, feedback provided and talent identified. Training is always an investment that pays off
1. CHOOSING THE RIGHT BUSINESS MODEL
44
Compliance and transparency are a fulcrum of the organization…
High focus on being a
compliant and transparent organization
Internal Audit: Monthly audit for all
branches and quarterly audit of corporate
functions by IA team which reports to the
board
Robust Operational Procedures: Well laid out
SOPs as well as a comprehensive IT system
which enables reporting for management decisions at a
fast pace
Independent Directors and
Board Supervision: Saija has 3 reputed
independent directors and 4 investor nominee
directors
Reputed Investors and Lenders: Over 20
investors and lenders have open access to
information in the company highlighting the
transparency in the system
Saija frequently hosts leading names in the
impact ecosystem providing them
with open access to its operations
45
…along with constant focus on initiatives to improve organisational efficiency
Saija boasts of High Retention levels with 39 employees in the company having completed more than 5 yrs and
71 employees having completed more than 3 Years when maximum recruitment (318 out of 450) has been done
only over the last two years.
HR initiatives
▪ Competitive remuneration and career progression offered to all employees, along with a transparent and strong work ethic (Whistle Blower
Policy, Staff Grievance Handling policy, Exit Interviews)
▪ Regular staff satisfaction surveys being conducted (Staff Satisfaction Survey Conducted in 2011, 2013 , 2015 and 2017)
▪ Partnership with Accion and SIDBI provides Saija staff global exposure and world class training
▪ Talent Retention Survey to understand the motivating factors of employees, analyze the gap areas and taken required measures
▪ Regular and detailed monthly Field Executive Productivity Study carried out to identify areas of weakness and work on them through focused
capacity building and counseling. A structured and periodic succession planning is carried out with emphasis on grooming and internal promotions
▪ Performance Management System Study Conducted by Towers Watson which involved review and suitable recommendations pertaining to
existing compensation, performance assessment and reward systems in the company
▪ HR Software on Employee Information Portal which strengthen the HR MIS and smoothen the departmental work
▪ Attrition rate is very low as compared to industry standards
▪ Empolyees having completed 10 years.
▪ Foreign Training Exposure to employees
SAIJA: Saija Energy Lending Program & it’s Initiatives
*Represents Indian financial year end =
March 31st
46
Saija wants to equip their clients with clean and green energy which
could help in improving their basic standard of living.
• Saija has got a huge client base , which is increasing rapidly.
• In addition to the credit support , Saija wants to offer non financial
support to the clients in areas of health ,education, energy,
environment and livelihood .
• We realise that energy is the most important and efficient parameter,
which can improve client’s life and catalyse all round development.
• Saija has initiated a Energy Lending Program to equip the energy poor
clients with basic and reliable source of lighting .
• Technical assistance is provided by USAID for our energy initiation.
• T.A. support to be provided by Blue Orchard w.e.f. June 2018.
• Debt support of $ 6.5 million ( by Blue Orchard and DWM.)
• Saija Finance has tied up with Green light
Planet , as technology partner ,for providing
good quality Solar lamps .
• Saija Finance has introduced a new financial
product termed as “Saija Urja Rin” (A loan
product for making the solar lamp affordable
to its huge and diverse client base ).
• As of April,18 we have covered more than
47 % of the total client base of 262154 with
over clean energy initiative.
Energy Lending Program Initiatives
47
SAIJA: Solar Stakeholders & Solar Product Portfolio
Product Companies Saija Finance tied up with Green light planet as technology partners for providing good quality solar products in Bihar, Jharkhand and U.P. Arc Finance Saija signed a MoU with Nexant in order to realise its vision of building/expanding renewal energy lending program. Arc finance which is a global organisation with many year of experience in supporting MFI’s develop clean energy lending program, will lead the delivery of all technical assistance for Saija.
US –AID USAID provides Technical Assistance to Saija for Solar energy solutions such as: - Selection of quality products and vendors - Regular scanning of market/customers - Capacity building - Implementing best practices
FUTURE THRUST AREAS IN CLEAN ENERGY
*Represents Indian financial year end =
March 31st
48
CLEAN ENERGY
DEVELOPING SOLAR
ENTREPRENEURS
FROM AMONGST
OUR CLIENTS
INDIVIDUAL ENERGY LOANS FOR HIGHER END SOLAR PRODUCTS,
SOLAR PUMPS, SOLAR GENERATORS, SOLAR INVERTORS
SOLAR MICRO GRID
Table of Contents
1. Investment Highlights
2. Microfinance Sector: An Overview
3. Funding Landscape: MFI Sector
4. Regional Overview: Bihar, Jharkhand, Uttar Pradesh and Haryana
5. Corporate Highlights
6. Operational Snapshot
7. Social Impact
8. Growth Strategy
49
MEDIA REPORTS
Mrs. Sinha had share her experiences at the Green Lending Event
organised by GLOBAL CLIMATE PARTNERSHIP FUND AND
RESPONSIBILITY, on 24 May 2018 at Phnom Penh hotel in
Cambodia organized by PRASAC, the leading financial institution
in Cambodia.
-The event was presided over by the representative of Ministry of
Environment, and participated by financial institutions,
international financiers, local and international NGOs, international
development partners, renewable energy/energy efficiency
technology providers, business associations, and small and
medium-sized enterprises (SMEs).
50
ACCESS ASSIST in association with the Government of Madhya
Pradesh, NABARD, SIDBI and DFID, has convened the Madhya
Pradesh Inclusive Finance Conference under the aegis of the Poorest
States Inclusive Growth (PSIG) Programme. The Conference aimed
to help create an eco-system where all efforts towards financial
inclusion add up and contribute an aggregate outcome. The
conference has designed appropriate panels on themes that will
attempt to understand roles of each stakeholder, identify impeding
and enabling factors, assess the value of different models understand
technology innovations, and focus on the enabling environment. More
importantly, the conference helped in highlighting the significant
accomplishments of the MP “Samruddhi” programme and seeks
convergence with other stakeholders to accomplish its goals.
“GREEN LENDING AND GREEN GROWTH” organized by Madhya Pradesh Inclusive Finance Conference PRASAC Conference
Well recognised in the impact ecosystem for being a visionary organisation serving an
underdeveloped region
▪ DFID is extending special assistance to Saija for microfinance and social
upliftment support to one lakh women at the bottom of the pyramid during a
5 year period. A nine member delegation of British Parliamentarians
accompanied by Mr. Sam Sharpe, then head of DFID in India, visited Saija.
▪ DFID, under PSIG Debt fund scheme, extended a financial assistance of a
term loan of Rs 250 Lakhs. Post the disbursement, British High
Commissioner to India, Sir James David Bevan along with DFID met Saija
clients and discussed the impact of support received to them.
51
SIDBI Chairman visited Saija office for feedback on the MUDRA
prepaid card model
Various reputed bodies have partnered with Saija to further its mission, and recognised
its impact
▪ Saija reports on a comprehensive Economic, Social and Governance ( ESG ) matrix to the Board.
▪ IFC has conducted a detailed feasibility study on Saija exposure to home improvement and home finance
▪ Saija was one of the only three entrepreneurs from Bihar which made it to the list of 67 finalists at the concluding
function of 2nd Bihar Innovation Forum (BIF)
▪ Recognized by CRISIL as one of the emerging MFIs in the report - “India‟s 25 Leading MFIs”
▪ “Skoch Order-of-Merit Award 2015” was bestowed on Saija for its exemplary work in the field of financial inclusion and
Technology Intervention
▪ Saija has been graded A in SIDBI sponsored Code of Conduct Assessment carried out by Access Assist
▪ Financial literacy training: SIDBI has engaged “Indian School of Microfinance for Women‟ as a Resource
Organization for implementing the pilot which aims to cover 60000 women clients of MFIs. Saija, with the support from
SIDBI, has conducted Financial Literacy (FL) Programme for approximately 14,000 client
▪ Selected to participate in Westpac‟s Ruby Connection Program for supporting women in business
▪ In 2015,Saija was selected as one of the MFIs for Technical Assistance support under USAID, PACE D program for
clean and sustainable energy
52
Collaboration with the Progress Out of Poverty Index initiative
Saija will be collaborating on the Progress out of Poverty Index, helping on data collection from its clients
The Progress out of Poverty Index (PPI) is a poverty measurement tool for organizations and businesses with a
mission to serve the poor
The PPI is statistically-sound, yet simple to use: the answers to 10
questions about a household‟s characteristics and asset ownership
are scored to compute the likelihood that the household is living
below the poverty line – or above it by only a narrow margin.
With the PPI, organizations can identify the clients, customers, or
employees who are most likely to be poor or are vulnerable to
poverty, enabling them to integrate objective poverty data into their
assessments and strategic decision-making.
• Insight into the funded organization‟s pro-poor approach
• Efficacy of a project in reaching out to the desired segment in the regional population
• Comparison between the concentration in portfolios for different investees/advisory clients
• Helps in tracking changes in poverty levels of clients over time
• Helps provide conviction in understanding the ability of a program/project to sustainably service the
poor
• Statistical relevance renders the PPI as good tool for monitoring and evaluation and can be used
along with other parameters relevant to the user
• Client level insights that helps showcase social return on investment/grants
• Poverty index will help in introducing new products related to energy access, water and sanitation
Poverty
measurement
benefits for
investors/donors
53
Key initiatives taken by Saija to ensure strong and healthy growth of company
54 54
The Progress out of Poverty Index (PPI) is a poverty measurement tool for organizations and businesses with a
mission to serve the poor Non-Financial Linkage projects undertaken by the Company
Promotion of
Solar products
under Energy
Efficiency
Initiative
• Conducted 3 Solar Ambassador Training for our clients and 5 Front line staff training in association
with Arc Finance(US-AID) for our branches in Bihar, Jharkhand and UP in April-August 2016.
• Piloting solar entrepreneurs for providing solar lamps to non-clients in the community that we
serve ( Support from US AID )
• During FY1718, the Company has sold 63,617 units of clean energy products and disbursed INR 16.47
Crores as energy loans.
• In the month of March‟18, the Company has sold 17,625 units of clean energy products which is the
highest as compared to any other month.
• As of March‟18 the portfolio outstanding for Solar products was INR 10.37 Crores.
Promotion of
Other other value
added products
• Conducted 3 Solar Ambassador Training for our clients and 5 Front line staff training in association
Successfully launched Saija Pankha Rin (SPR) in May 2016 in Deoria and Gorakhpur branches of UP.
• Initiated Pilot for introduction of new products such as mobile and water purifier.
In 2015,Saija was selected as one of the MFIs for Technical Assistance support under USAID, PACE D program for clean and
sustainable energy
Table of Contents
1. Investment Highlights
2. Microfinance Sector: An Overview
3. Funding Landscape: MFI Sector
4. Regional Overview: Bihar, Jharkhand, Uttar Pradesh and Haryana
5. Corporate Highlights
6. Operational Snapshot
7. Social Impact
8. Growth Strategy
55
On a strong growth path with plans of launching 180 new branches over the next 5 years
56
New branch opening guidelines Timelines and operational highlights
▪ Identification of village/urban colonies
▪ Once the village is identified, a staff member goes to the village
and collects some basic information about the village as below.
▪ Population in the village and the number of poor
households
▪ Sub section details of population (SCs, BCs, and STs etc.)
▪ Main economic activity of poor households and sources of
income
▪ Seasonal availability of work for poor (employment days)
and level of out-migration
▪ Land under agriculture (irrigated and non-irrigated)
▪ Sources of irrigation
▪ Political situation and names of important leaders
(Sarpanch, VAO, Political leaders)
▪ Presence of government schemes (like SHGs) or other
NGOs)
▪ Credit History and presence of other MFIs
Only after a thorough assessment of all these parameters,
Saija undertakes opening a new branch
2.0
5.0
6.0
8.0
11.0
42.0
47.0
72.0
99.0
135.0
80.0
60.0 70.0 70.0 70.0
0
45
90
135
180
FY
17(A
)
FY
18(E
)
FY
19(E
)
FY
20(E
)
FY
21(E
)
INR
Mn
Branch Operational Highlights
Disbursements/Branch GLP/Branch FEs/Branch
57
Saija has a successful business correspondent relationship with IDBI Bank which it has
leveraged further for MUDRA Bank partnership
▪ Saija is the only MFI in India to
have partnered with MUDRA bank
for prepaid cards
▪ Saija‟s role will be to identify
potential clients, collect KYC
information, completing
formalities as needed by IDBI
Bank
▪ Post disbursement, responsible
for recovery and other services
▪ Saija will share part of the risk
undertaken by IDBI Bank
Saija has entered into a tripartite agreement with MUDRA Bank and IDBI Bank, as a part of which Saija will help in
distribution of co-branded MUDRA Debit Cards
▪ MUDRA will provide refinance to IDBI
Bank against their average
outstanding in the card accounts of
the customer with IDBI Bank
▪ MUDRA will share part of the risk
undertaken by IDBI Bank
▪ IDBI Bank will become the
co-issuer of the MUDRA co-
branded debit card
▪ IDBI Bank has agreed to
provide the eligible
customers credit limit in the
form of working capital
facilities
▪ IDBI Bank will sanction
cash credit facility up to the
extent of 20% or more of
the sanctioned term loan
▪ This RuPay card can be used at ATMs and at Point of Sale (PoS) machines for merchants to buy raw materials
or good needed for their business
▪ Interest on used/withdrawn amount will be charged on a daily balance basis
Business
Correspondent
Operations
MUDRA Bank Partnership
On-lending finance for
Microfinance clients
58
…and will continue to launch new products in tie-up with reputed partners Saija is in advanced stages of discussion with various partners for new product lines
Current Products and Services Near Term Growth Plans Long Term Strategy
Microfinance JLG
Products (SKR, SMR)
SUR in partnership
with Greenlight Planet
Business
Correspondent with
IDBI Bank
MUDRA Card
Non – Microfinance
Products with partners
Small ticket housing
loans
2-3 wheeler finance
Small Finance Bank
Full service impact focused
financial services business with a
potential of listing in stock market
▪ Saija is well placed to be granted the
banking license for an SFB in the medium
term given
▪ RBI‟s focus on the region it operates in. In
the near term, Saija will continue to partner
with full service financial institutions to
provide non-MFI products needed by its
clientele.
▪ Focus on building new product portfolio
▪ Try to optimize the distribution channel by
cross selling non-microfinance products.
▪ Build an intelligent data warehouse that
captures key requirements of a client and
what Saija can offer
▪ Build on past success to consolidate
position in its target geographies
▪ Mine untapped geographies by
leveraging local knowledge
A study conducted by Deloitte stated
“Current operations of Saija fit well
within the ambit of the RBI guidelines
for an SFB license” Personal Loans and
Non Financial
Products
59
Key initiatives taken by Saija to ensure strong and healthy growth of company
Sl No Department Steps Taken
1 Strategy
Exploring co-lending model for expansion of loan book
Grant for mobile based front end technology
Implementation of progress out of poverty index (PPI)
Piloted Tele-calling to clients by Vindhya
Piloting of solar entrepreneurs, Monitoring of impact studies
Initiated Development of monitoring calendar and credit scoring system for groups
2 Resource Minimizing cost of borrowings
Tracking of covenants as per sanction letter
3 Risk Implementation of Risk Framework
4 Commercial Initiated Cashless disbursement through prepaid cards and bank account transfers
Collection through payment banks
5 Operations
Clients depositing at branch
Disbursement through accounts
Quality Improvement
Initiated Smart Campaign certification
60
Key initiatives taken by Saija to ensure strong and healthy growth of company
Sl No Department Steps Taken
6 IT Mobile based front end technology pilot with IFMR and eSthonos. Basis pilot we have selected IFMR
7 Robust HR &
Training
Recruitment Plans
Implementation of HR software
Human Resource Management Assessment
Employee Engagement activites
Performance Management System upgrade through Tower Watson
Training program (Saksham) for supervisors and field officers
Staff Satisfaction Survey and Exit interviews.
Regular Core Values Workshops and Capacity Building Activities
8 Internal Audit
A separate compliance follow up sheet to keep a track of compliance verification and pending status.
Incorporation of cash in transit, cash insurance limit etc. audit in the internal audit scope.
Introduction of branch wise list of high risk areas to be shared with management and state heads at the
completion of every branch audit cycle
We have engaged Shaishiv consultant who will conduct certain percentage of branch audit. The
process has been introduced to further strengthen the internal audit department
61
Thank you