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2007 ARDY’s Microfinance Plan

Time:2009-05-17 14:38:38From:ARDY Writer:Webmaster (Translated by Jenni Click:
  

January 2007

        I.            Work Goals

According to the Association’s development since September 2004; the financial conditions from the previous year; internal management & ability; and, provincial and municipal suggestions, the following are our main work goals for 2007:

·         Effective and strict control on credit risk

·         Reduce management costs

·         Expand the credit scale

·         Further improve the staff’s professionalism and management capacity

·         Successfully implement the suggestions from the China Banking Regulatory Commission about expanding village financial institutions in our experimental areas

·         Work hard to develop the branches into financial institutions that can provide local farmers with real financial services

·         Register the farmer’s organizations as village credit unions

·         Enhance the Association to become a social organization that coordinates local economic development and provides integrated services

The following are the microfinance indicators for ARDY in 2007:

Item

Zhouhe

Yongle

Shuangsheng

Fuxin

Biquan

Jincheng

Sanhe/Daying

Total

Number of Loans

54

486

266

506

214

196

656

2853

Value of Loans Given Out (ten thousand RMB)

214

196

116

253

88

98

115

1080

Loan Surplus (ten thousand RMB)

107.26

102.78

69.71

122.78

40.71

64.11

58.60

565.95

Credit Risk

<3%

<3%

<3%

<3%

<3%

<3%

<3%

<3%

Self-financing Rate

>150%

>150%

>150%

>150%

>150%

>150%

100%

>150%

Interest Income (ten thousand RMB)

14.01

13.20

8.91

14.52

5.48

7.02

4.96

68.10

Loan Principal Recovery (ten thousand RMB)

194.02

176.38

116.71

210.62

81.10

77.68

61.98

918.49

Estimated costs (RMB)

6.48

6.33

5.14

5.76

2.36

4.12

4.85

35.04

Planned Loans (ten thousand RMB)

10

12

6

35

7

16

62

148

Profits Recovered (RMB)

8906

6915

11803.2

 

2500

 

 

30124.2

Savings (ten thousand RMB)

18

20

16

18

8

10

10

100

Loan Amount Growth Rate

35%

100%

25%

100%

55%

80%

 

106%

 

      II.            Main Work Content

1.       Merge and restructure smaller branches. Wupeng branch will be fully incorporated into Yongle branch and Biquan branch into Jincheng branch. In addition, we will make our preparations to expand to Rixin.

2.       Once Hong Kong’s “Falaishi” project gets launched, a new branch will be created. Ensure the completion of tasks in Daying and Sanhe.

3.        According to the status of each branch’s business development and market conditions, there are appropriate personnel adjustments to ensure the staff works at their highest efficiency.

4.       In accordance to the problems and development conditions in Shuangsheng Branch, business development is focused on Shuangsheng and Zhishan villages after reducing the number of staff workers. Re-issuing loans in Fuxin’s and Xinzheng’s is not allowed. The number of loans can be appropriately increased, but the total value of the loans must be within 700,000 RMB. In addition, 70% of loans granted annually must be under 5000 RMB.

5.       Strict implementation of the Association’s 2007 “Microfinance Operation and Management Methods.” Vigorously increase the number of farmer clients. Successfully carry out loan distribution and recovery.

6.       Perform well in the branches’ daily management and publicity work. Strengthen risk control and enhance loan quality.

7.       Actively encourage clients to make deposits in the Association

 

    III.            2007 Basis for Work Objectives

The “Suggestions from China Banking Regulatory Commission on the Reorientation of Banking Financial Institutions in Rural Areas to Better Support Socialism” quickly accelerates the development of the Association to become a catalyst for banking financial institutions.

Microfinance work, including data management, sample surveying, work summary and case analysis, previous to 2007 will be this year’s (2007’s) most important foundation.

The microfinance development in 2006 had good results, but there were still many weaknesses. When approving loans, there was a bias towards business clients, and farmers were overlooked. Some branches had their financial business reduce in size due to a decrease in the number of clients while an increase in loan amounts. Some branch staff members took up other part-time jobs. This year we plan to obtain suitable ratio of clients to loan amounts.

In 2006, through everyone’s dedication, ARDY’s microfinance has steadily improved. Strict supervision on credit has been effective. The services, loan distribution, interest income, etc. have all met the standards made in the beginning of the year. In addition, loan risk and late payments ratios have decreased 0.49 and 0.18 percent respectively. The quality of the loans has been enhanced. Furthermore, the branches now are able to be responsible for profits and losses.

The work plan for 2007 is conjectured to follow the same model and a collection of suggestions from the staff members.

    IV.            Distribution of Workload

According to each branch’s business development, clientele, management, etc., the branch will plan out its monthly accounting, determine the focus for each work phase, verify the staff members’ responsibilities, and turn in a detailed work plan for every month.

      V.            Security Measures and Work Requirements

1.       Loan distribution and recovery must follow strictly to the regulations in the Association’s 2007 “Microfinance Management Method.”

2.       After the expiration of each loan, the branch must once again verify the client’s business activities and credit rating. The customer’s information must also be re-filled (The names, sex, ages, and relationships of all the members in the client’s family should be written on the back side or in the empty spaces on the questionnaire.) Afterwards, the branch can confirm the maximum loan amount for the client and whether s/he can take out another loan.

3.       All loans must be repaid in 15-day installments.

4.       Clients involved in business cannot have loans that exceed 9000 RMB; for farmers involved in plant cultivation, animal breeding, or processing factories, their loans cannot exceed 3000 RMB. Clients given successive loans must have a total loan value lower than those limits stated in the credit policy. (Business: 5000 RMB; Farmer: 10,000 RMB)

5.       All loan applications must be reported in advance; loans are not given to those who do not apply early on. 

6.       Requirements for branches to borrow capital from the Association:

                                                               i.      Loan amounts need to decrease from the previous month within the framework

                                                             ii.      Complete provided deposit tasks

                                                            iii.      Estimate the demand for loans

7.        Loan management must adhere to the Association’s operation

8.       At the end of a work day, staff members need to enter all credit information according to the “Microfinance Software Usage” into the system.

9.       Branches report the demand for capital to the headquarters

10.   Loan risk control:

                                                               i.      Every month, the loan risk must not exceed 5%. When the loan risk in a branch exceeds 3%, the branch must take the following measures:

1.       Immediately visit the client and understand the reason for the late repayment

2.       Find a solution after understanding the client’s situation

3.       Design a plan to hasten the repayments; this plan will be in next month’s workload

4.       Cautiously examine before approving loans. Make sure to reduce the amount of loans given

                                                             ii.      When the loan risk exceeds 5%, there should be high warning. Besides completing the tasks stated above, the branch must also:

1.       Terminate the branch’s right to approve loans

2.       Immediately report to the Association’s management committee; Secretary General decides whether to continue to give loans

3.       For the next month, the branch’s focus is on risk control, mainly concentrating on urging repayments and managing loan recoveries

                                                            iii.      At the end of the year, any risky loans (at risk for more than 120 days) will no longer enter next year’s loan risk assessment. In replacement, the mission to urge for repayments will be divided over the year with seasonal evaluations.

11.   Daily and monthly reports on credit, finance, and management.

                                                               i.      Before the end of each work day, each branch conveys all financial data and management information to the headquarters along with any daily reports.

                                                             ii.      Within every month’s first 3 days, branch directors must turn in a monthly report on their management and accounting with any necessary forms and materials.

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