Financed by the Nordic Microfinance Initiative, IPC was contracted to support the North East Small Finance Bank (NESFB), based in Guwahati, India. NESFB planned to scale up operations by introducing SME lending following significant growth and success in building a microloan portfolio. Effectively delivering SME finance could add value to NESFB as a bank, as well as promote regional economic development, allowing successful NESFB microloan clients to access more sophisticated financial services. Additionally, the provision of effective SME finance could bring positive externalities to regional micro businesses increasing prospects for supplying and sub-contracting, ultimately contributing to job creation in the region.

During the assignment, IPC experts provided comprehensive advisory services to enable NESFB to begin to build a healthy SME portfolio. Specifically, IPC experts implemented the following tasks:

• conducted an initial institutional analysis of NESFB encompassing organisational structure, HR, MIS, credit risk assessment mechanisms, marketing and portfolio quality

• engaged in market research in the service areas of NESFB with the objective of understanding the target segment
• analysed relevant weaknesses or gaps in NESFB and recommended steps for improvement in an institutional analysis report for the bank
• drafted a market research report to analyse client segments, as well as demand for and supply of MSME products in the service areas of NESFB
• adapted/developed strategy, policy and procedures for a MSME credit methodology
• designed and adapted products for the MSME target group
• deployed a heuristic credit scoring tool for MSME lending
• deployed a credit monitoring tool which provides disaggregated data and concentration analysis on the MSME portfolio
• developed MSME process and procedure-related training materials
• provided classroom training in MSME-lending approaches for 148 staff
• provided thorough on-the-job training and mentoring for a pilot team of 9 staff including loan officers and head office staff