Capacity building in MSE lending
After a brief introduction to cashflow-based MSE-lending at the end of China Development Bank’s China Microfinance Project (CMFP) in the first half of 2008, Guilin Bank continued to operate and further develop its MSE-lending business. Having relied on its own experience and capacities for around three years, in October 2011 Guilin Bank contracted IPC in a three-year framework consulting agreement to assess, reposition, strengthen and further develop the Bank’s MSE-lending operations in an increasingly competitive and fast changing regional market. The framework was structured in three consecutive 12-month assignments with uninterrupted, on-location advice by a team of IPC consultants throughout each assignment.
The main activities during the first year focused on the assessment of existing MSE-lending operations with the aim of establishing a tailored institutional strengthening and consolidation programme. Special focus was placed on a review of the MSE-lending technology, operational and credit risk control and management, classroom and on-the-job training capacities, MSE-lending procedures, and organizational structure.
Following the successful re-orientation and consolidation of the MSE-lending approach and with a strengthened institutional setup, IPC assisted the Bank in the second year to re-assess its market position in the context of increasing competition and subsequent over-indebtedness of MSE-clients.
Here, IPC focused on strengthening MIS reporting in the Bank, implemented a systematic approach to portfolio analysis and management, subsequently improved supervisory capacity in marketing and risk control in selected branches, and launched new MSE-lending products according to insights from improved market intelligence.
During the third year of the assignment, IPC focused its efforts using a co-managing approach in the business development unit and the training unit in order to carry the momentum of continued market expansion and penetration, and advance the consolidation process through additional strengthening the bank’s classroom and on-the-job training capacities for MSE-lending. Throughout the entire assignment, IPC continued to strengthen MSE department capacity in internal control / credit control with an emphasis on process and compliance audits.