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GREEN BANK OF CARAGA, INC. TREES Loan Program. DESIGNING EFFICIENT ORGANIZATIONS FOR MICROFINANCE OPERATIONS: The Experience of Green Bank of Caraga. OBJECTIVES. Share with other participating bank’s the following: GBC’s experiences in Organizing & Managing its microfinance operations - PowerPoint PPT Presentation
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DESIGNING EFFICIENT ORGANIZATIONS FOR
MICROFINANCE OPERATIONS:
The Experience of Green Bank of Caraga
GREEN BANK OF CARAGA, INC.GREEN BANK OF CARAGA, INC. TREESTREES Loan Program Loan Program
OBJECTIVES
Share with other participating bank’s the following:
GBC’s experiences in Organizing & Managing its microfinance operations
The Approach used by the bank in expanding its MF operations
The Organization & Management before and after the expansion of its MF operations
AGENDA
Organization & Management Structure at the start-up phase of its MF Operations
When & How GBC expanded its MF Operations
Changes in the Organization & Management Lessons Learned
BEFORE GBC STARTED ITS MF OPERATIONS
There was no proper accountability of loan accounts
Good MIS was not in place Collection was very lax Restructuring of past due loans was
rampant
BEFORE GBC STARTED ITS MF OPERATIONS
Regular loans were mostly collateralized Loan amount was based on value of collateral Cash flow was not analyzed Credit & Background Investigation was very
insufficient Some branches had very high past due ratio
BOD
President
VP - Operation
Branch Manager
Cashier Bookkeeper Loan Officer
Teller Loan Staff Loan Clerk
GREEN BANK OF CARAGA, INC.GREEN BANK OF CARAGA, INC. TREESTREES Loan Program Loan Program
Audit
MIS
Organizational Structure Before MF Operations StartedOrganizational Structure Before MF Operations Started
START OF GBC’s MF OPERATIONS
Signed up with MABS in February 2000 TREES product pilot-tested in Bayugan branch Initially hired 5 MF Account Officers and one full-
time MF Supervisor In the pilot branch, the MFU reported directly to
the Branch Manager Proper accountability of loan accounts was
implemented
BOD
President
VP - Operation
AreaManager
BM
Audit
MIS Treasury HRDMarketingAccounting
CashierLoan
OfficerBookkeeper
MF Supervisor
Account Officers
GREEN BANK OF CARAGA, INC.GREEN BANK OF CARAGA, INC. TREESTREES Loan Program Loan Program
Organizational Structure At Start-up PhaseOrganizational Structure At Start-up Phase
GREEN BANK OF CARAGA, INC.GREEN BANK OF CARAGA, INC. TREESTREES Loan Program Loan Program
Scaling – up of TREES OperationsScaling – up of TREES Operations
Product review &Revisions ( after 3 mos)
Roll-out to 4 branches
Scaling – upMerger w/ Alegria Bank
- Green bank branchesGreen bank branches (Butuan,Nasipit, San Franz, Magallanes)(Butuan,Nasipit, San Franz, Magallanes)
Product Review andStrategic Planning
- 5 Branches Alegria bank- 5 Branches Alegria bank
- MF Department created at Head OfficeMF Department created at Head Office- Product Manager hiredProduct Manager hired- Performance-based incentive scheme introduced- Performance-based incentive scheme introduced
- Fine tuning policies and procedures- Fine tuning policies and procedures
Geographic Expansion
Jul ‘00Jul ‘00
Jul-Sep’ ooJul-Sep’ oo
Jan’ 01Jan’ 01
Jan‘01Jan‘01
Feb’ 01Feb’ 01
- Expansion to new areas (sub-offices)Expansion to new areas (sub-offices)
BOD
President
VP - Operation
AreaManager
BM
Audit
MIS Treasury HRDMarketingAccounting
CashierLoan
OfficerBookkeeper
MF Supervisor
Account Officers
GREEN BANK OF CARAGA, INC.GREEN BANK OF CARAGA, INC. TREESTREES Loan Program Loan Program
Organizational Structure Initial Phase of Organizational Structure Initial Phase of Program ExpansionProgram Expansion
Product Mgr
Critical Changes in the O & M Structure At Initial Phase of Program Expansion • MF Department was created at the Head Office to oversee the expansion of TREES operation bank-wide
• A TREES Product Manager was hired
• The three existing TREES Supervisors were required to report directly to the TREES Product Manager
•The TREES Product Manager was also made directly responsible for implementation of all TREES activities and attainment of targets
•The Branch Managers’ role became secondary
Why Was It Necessary to Create A Special O & M Structure for MF During the Initial Phase of Expansion?
• Many of the officers and staff of the bank were not familiar with the methodology and “culture” of microfinance
• Some members of top and middle management were not yet fully convinced that microfinance is not risky, even if it is non-collateralized
CHALLENGES MET AT EXPANSION PHASE
Expansion was too fast Inadequate training of AOs Negative Attitude of Branch Managers Supervision of AOs at the branches Internal Controls MIS problems Deterioration of portfolio quality
GREEN BANK OF CARAGA, INC.GREEN BANK OF CARAGA, INC. TREESTREES Loan Program Loan Program
Scaling – up TREES OperationsScaling – up TREES Operations
Additional Staff & Training
Update MIS
Strategic Planning
- Update MIS deficiencies.Update MIS deficiencies.- Roll out new MIS bank wideRoll out new MIS bank wide
Review Org. Structure
- Consolidation of existing operationConsolidation of existing operation- Expand in new areasExpand in new areas
- Conflict in making decisions between the PM & BM- Conflict in making decisions between the PM & BM
- Develop in-house training capability- Develop in-house training capability
Implementation of newO & M Structure
Mar ‘01Mar ‘01
Jul-Sep’ 01Jul-Sep’ 01
Oct’ 01Oct’ 01
Nov-Dec‘01Nov-Dec‘01
Dec’ 01Dec’ 01- Head office as support functionHead office as support function- Branch as line functionBranch as line function
Feb 02Feb 02Hiring & training of Area
Supervisors
- Area Supervisors based at Head OfficeArea Supervisors based at Head Office- Supervisors at branch office replaces by Lead AOsSupervisors at branch office replaces by Lead AOs
ACCOUNT ASSISTANT
PRESIDENT
MFU PRODUCT MANAGER
AREA MANAGER
BRANCH MANAGER
ACCOUNT OFFICER
AREA SUPERVISOR
VP - OPERATIONS
GREEN BANK OF CARAGA, INC.GREEN BANK OF CARAGA, INC. TREESTREES Loan Program Loan Program
Expanded Structure of the MFU Expanded Structure of the MFU
LEAD AO
PRESENT STRUCTURE OF MFU Direct supervision of TREES operation in the branches were
given to the Branch Managers Functions of MF Department at the Head Office now limited
to planning, monitoring, training, audit, trouble-shooting, product development, and review of TREES field operations
Area Supervisors were hired to assist the Product Manager in training, on-the job coaching, audit, and trouble-shooting
Role of branch-level TREES Supervisors before, now is given to Lead AOs
LEVELS OF SUPERVISION
Product Manager directly reports to the President Area Supervisors report to the Product Manager Lead AOs are under the Branch Managers, but are
also supervised by the Area Supervisors on matters related to the TREES implementation
Implementation of TREES product at the branches is directly supervised by the Branch Managers
WHY WERE THESE CHANGES NECESSARY?
Because of rapid expansion, the MF Department at Head Office had difficulty supervising field operations on day-to-day basis
Branch Managers are the best persons to supervise the AOs on a day-to-day basis
When Branch Managers are made responsible for the TREES targets in their own branch, they become more committed in supervising field operations
Branch Managers, however, cannot devote full-time to supervising TREES operations, so that Lead AOs are necessary
Area Supervisors are needed to help the Lead AOs deal with their more difficult tasks (PAR), and to ensure no short-cut in procedures
Effects of Changing the Banks’ O & M StructureEffects of Changing the Banks’ O & M Structure• Decentralization of authority
• More focused supervision
• Better implementation of policies & procedures
• More committed middle management
• Improved loan portfolio quality
• Cost effective
• Standardization of Policies and Procedures
• Clearer flow of communication
GREEN BANK OF CARAGA, INC.GREEN BANK OF CARAGA, INC. TREESTREES Loan Program Loan Program
GREEN BANK OF CARAGA, INC.GREEN BANK OF CARAGA, INC. TREESTREES Loan Program Loan Program
Lessons LearnedLessons Learned Some resistance within the organization can be Some resistance within the organization can be expected when introducing a new product and cultureexpected when introducing a new product and culture At the start, it may be necessary to create a special At the start, it may be necessary to create a special unit to implement these new product and cultureunit to implement these new product and culture However, there will be problems within the However, there will be problems within the organization if the new product and culture are not organization if the new product and culture are not integrated in the mainstream operationintegrated in the mainstream operation Changing the attitude of the organization towards Changing the attitude of the organization towards the new product and culture can take time. The best the new product and culture can take time. The best way is to show them that it works.way is to show them that it works.
People are more committed and supportive to People are more committed and supportive to implement the new product and culture if they are given implement the new product and culture if they are given direct responsibility for the product’s successdirect responsibility for the product’s success
Decentralization of authority can improve efficiency in Decentralization of authority can improve efficiency in service delivery service delivery
Staff should be rewarded well to sustain their Staff should be rewarded well to sustain their motivation and productivitymotivation and productivityProper training and close supervision of Account Proper training and close supervision of Account Officers are critical in sustaining good portfolio qualityOfficers are critical in sustaining good portfolio qualityAll employees of the bank should be made aware of the All employees of the bank should be made aware of the benefits ofbenefits of the the new product to get their full the the new product to get their full commitment and supportcommitment and support
Lessons LearnedLessons Learned