SANASA DEVELOPMENT BANK

MANAGE, Hyderabad

Introduction

Acronym for financial corporation in Sinhalese

Listed in Forbes top 50 MFI Listed third in Micro Finance Exchange

Institution USA It is largest member owned financial co-

operative SDBL is a limited liability company with a

license as a Specialized Bank from the Central Bank of Sri Lanka.

Has presence in every district in Sri Lanka

Structure of Sanasa Development Bank

Board of DirectorsCHAIRMAN

Organizational Structure

Organizational Structure contd..I. There are 13 Board of directors, out of these 8 are representatives of

Sanasa thrift and credit cooperative societies and remainder are nominated by elected directors.

II. Responsibility of directors includes the following:

Approving the strategic plan and guidance for the proper implementation

Monitoring performance of the management and evaluating the performance of CEO

Ensuring that proper accounting policies are adopted. Making periodic and timely report to stakeholders. Setting risk management policies and procedures.

Organisational Structure contd.. Board has formed four committees: Audit Committee – To review bank’s system of internal control in order to

safeguard the interest of shareholders and stakeholders.

Credit Committee - It is charged with undertaking regular reviews of bank’s credit policy with the object of maintaining a healthy credit portfolio.

Human Resource committee - Reviewing staff recruitment, retention, termination, remuneration and incentive policies.

Risk management committee - Assess all risk such as credit, market, liquidity, operational and strategic risks to the bank on a monthly basis through appropriate risk indicators and management information.

Lending Methodology

Lending methodology

•Regular savings•Fixed

savings •Compulsory

savings•Children’s

savings•Nonmembe

r savings

•Social obligation, Medical needs etc•Interest rates vary from 2-4% per month

REVENUE MODEL

Source Of Funds

Central bank of Sri Lanka CBSL , National Development Trust Fund & Other State Authorities committed for development issues

Grants & fund from Bank and FI abroad( Approximante 13 ): The Netherlands’s Rabo Bank, HIVOS (an NGO associated with Rabo Bank), Swiss Inter-Co-operation, the Canadian Co-operative

Association Australian Community Aid Abroad, GTZ, CORDAID, DEutsche Bank, ETIMOS, World Council Of Credit Unions, NTUC income &New Zeeland Buddhist Fund, Standard Chartered

Savings Shareholder Capital

Prime Lending Rate

 Average Weighted Prime Lending Rate    

End Week Weekly Monthly 6 months

27.11.2009 11.37 11.79 13.81

Savings Accounts rate

Savings Accounts:

4.5%  -                            Uttamavi Plus Savings Account  

4.5% -                             SDB Normal Savings Account

6% -                                 Sanasuma Pension Scheme

6% -                                 Upahara Savings Account

4.5%-6% -                       Lakdaru Minors Savings Account

4.5%-6% -                       Dashaka Savings Account

Fixed deposit rate

Fixed Deposits: Duration Rate

1.. Month        6% , 

3.. Months        7.5% 

6.. Months       8.5% 

12..Months        9.5% 

2.. Years         10.5% , 

3.. Years         11% , 

4.. Years         11.5% ,

5.. Years               12% -

Loan lending rate.

Loan / Lease Accounts:

15%- 20% -                                  Swarna Kirana Pawning15%-19% -                                   Sonduru Sewana Housing Loans17% -21% -                                  Sahantha Equipment Loan17% - 21% -                                 Consumer Durables Loan17%- 23% -                                  Suwa Diriya Health Staff Loan15% -19% -                                  Housing / Land Loans17% - 23% -                                 SDB Personal Loan17% - 23% -                                 SANASA Project LoanCashD+3% -                                 Cash Margin Loan7.5% - 17.75% -                           SANASA Leasing Facilities

Finance

2005 2006 2007 2008

As of date 2005-12-31 2006-12-31 2007-12-31 2008-12-31

Capital/asset ratio

8.57% 9.94% 9.75% 7.37%

Debt to equity ratio

10.66 9.06 9.26 12.57

Deposits to loans

— 101.95% 93.69% 95.37%

Deposits to total assets

— 75.18% 70.07% 72.75%

Gross loan portfolio to total assets

72.12% 73.74% 74.78% 76.29%

Source: Microfinance Information Exchange, Inc. (MIX)

Revenues

2005 2006 2007 2008

As of date 2005-12-31 2006-12-31 2007-12-31 2008-12-31

USD USD USD USD

Financial revenue/ assets

— 15.84% 16.72% 20.97%

Profit margin

13.98% 19.98% 12.63% 14.87%

Yield on gross portfolio (nominal)

— 17.84% 19.07% 23.05%

Yield on gross portfolio (real)

— 7.11% 2.79% 6.23%Source: Microfinance Information Exchange, Inc. (MIX)

Fitch Ratings has affirmed SDBL’s "BB" National Rating.

PRODUCTS ON OFFERPRODUCTS ON OFFER

MICROFINANCE SCHEMESMICROFINANCE SCHEMES

SUSAHANA TSUNAMI LOANSUSAHANA TSUNAMI LOAN - To assist Tsunami affected families

to restart sustainable micro enterprises.

NTDF TSUNAMI LOAN NTDF TSUNAMI LOAN - Helping the people of Tsunami affected

area.

ETIMOS TSUNAMI LOAN ETIMOS TSUNAMI LOAN - Restart/ expand income generating

projects and renovation of houses.

ATHWELA LOAN SCHEME ATHWELA LOAN SCHEME - Poverty alleviation loan program.

NIPUNATHA LOAN SCHEME NIPUNATHA LOAN SCHEME - For youth entrepreneurs who have

received training on skills development.

POWER FUNDS FOR THE POOR POWER FUNDS FOR THE POOR - Amortize the up-front capital

costs to electrify homes.

MICROFINANCE SCHEMESMICROFINANCE SCHEMES

UTTAMAVI PLUS SAVINGS ACCOUNT UTTAMAVI PLUS SAVINGS ACCOUNT - Fund to improve the

income of women with entrepreneurship skills.

SUSTAINABLE TOWNSHIP PROGRAM SUSTAINABLE TOWNSHIP PROGRAM - House exchange

program implemented by the Real Estate Exchange ( Pvt)

Limited ( REEL).

VIMUKHTI LOAN SCHEMEVIMUKHTI LOAN SCHEME - Micro enterprise development

programme for alleviation of poverty.

SATHUTU DIVIYA LOAN SCHEME SATHUTU DIVIYA LOAN SCHEME - To provide water and

sanitation facilities to SANASA member families.

REREDRERED - Loan scheme for village hydro power projects.

MREAPMREAP - Financial facilities to small entrepreneurs of rural &

farm agricultural families.

SREAP - Financial facilities to small entrepreneurs of rural &

farm families.

SAVIYA SCHEMESAVIYA SCHEME - Construct buildings/ purchase office

equipments/ buy land for SANASA societies / unions.

NCRCS SCHEMENCRCS SCHEME - Loan to cultivate paddy & other subsidiary

crops & to produce agricultural equipments.

KRUSHI DIRIYA LOANKRUSHI DIRIYA LOAN - To empower the small farmers by

providing access to agricultural inputs at an affordable cost.

MICROFINANCE SCHEMESMICROFINANCE SCHEMES

Risk Management by SDB

Credit Risk

The possibility of financial losses arising from bad loans, known as credit risk, is one of several different types of risks to which banks are exposed in today’s turbulent environment.

Loan tracking system,MIS. Staff skill improvement.

Rate Risk

Market fluctuations and possibilities of financial losses due to large unusual market movements, changing interest rates, stock prices, etc., are monitored daily by the Treasury Unit.

Product pricing and net interest income are also monitored daily by Treasury.

The setting of interest rates and the pricing and testing of new products fall under the responsibility of the Research & Development Department, with the co-operation of the Treasury Unit and Credit Department.

Operational Risk

This is defined as “ the risk of losses resulting from inadequate or failed internal processes, people and systems or from external events”.

The Basel II three-pillar system introduces totally new guidelines for the management of operational risk. The definition now covers the legal risk also.

Segregation of duties and delegation of authority limits,each set continuously supervised by the next higher authority and also by internal and external audit, are the main means used to control operational risk.

Liquidity Risk

The risk of not being able to meet the demand for deposit withdrawals, debt maturities and credit commitments due to the mismatch of assets and liabilities is known as liquidity risk.

The management of the liquidity risk is the responsibility of the Treasury Unit.

In order to ascertain this risk, the Unit daily updates the assets & liability position of the Bank to the CEO through the DGM.

The Bank maintains a healthy portfolio of Treasury bonds and bills to ensure repaid access to funds sufficient to honour the obligations of the Bank whenever necessary.

Reputational Risk

The greatest asset of the Bank, the one which determines its future, is the reputation it maintains within the industry.

The ultimate responsibility of maintaining a sound reputation lies on the hands of the corporate management team, though all employees and representatives of the Bank share the responsibility to contribute positively towards this reputation.

Thank you!