first micro finance bank ltd

Assignment – Management - 1 - MBA 1st – A (Group ‘A’)

ASSIGNMENTASSIGNMENT

MANAGEMENT

Organization

First Microfinance BankFirst Microfinance Bank

Submitted toMadam Nomeeta ZainabMadam Nomeeta Zainab

Submitted byGroup ‘A’Group ‘A’

MBA 1MBA 1stst – Section (A) – Section (A)

Department of Management SciencesDepartment of Management SciencesIslamia University BahawalpurIslamia University Bahawalpur

Rahim Yar Khan CampusRahim Yar Khan Campus

First MicroFinance Bank Ltd. Pakistan

بسم اللہ الرحمن الرحیم


Introduction of the Organization

The First Microfinance Bank Limited (FMFB) has been in operations for the last six years. The bank was incorporated as a public limited company under the Companies Ordinance, 1984 in November 2001 and commenced business in February 2002. FMFB operates under the Microfinance Institutions Ordinance, 2001. The current legal status of the institute is Non-Bank Financial Institution.

VISION

“To enable the disadvantaged population to build a sound and secure future with dignity and pride and not merely survive; alleviation of poverty through sustainable economic development.”

The main focus of the organization is to lend money to the deprived and ignored populations of the country so they can, not only secure their future but to live with dignity and pride. And the second thing is to reduce the poverty via sustained economic development in the country.



Mission Statements

The mission statements of the organization are as follows:

To help strengthen the entrepreneurial base of the economically disadvantaged population across the country in not only rural areas but also the major population centers.

To provide people the scope to expand their economic base, and over time to support diversification beyond traditional small enterprises.

The bank will endeavor to introduce good practices, ethical percepts and the highest standards of rectitude in the conduct of business and will remain respectful of the needs of the poorest segments of society.

The Bank aims to reach out those who are currently not able to receive adequate financial services, throughout the country, in rural as well as urban areas. The target audiences are the poor and underprivileged of Pakistan, especially women.

Elaboration:The mission of the organization is to provide adequate

financial services to the ignored or deprived population of the country in both rural and urban areas to help them to strengthen their business or to carry on economic activities. Not only provide them with finances but also support them over time until they establish themselves as enterprises. They will reach out to the poor of the country who are living under the poverty and especially women. And the institute will strive to follow good ethical practices of highest standards.



Strategic ObjectivesThe following are the strategic objectives of the organization.

Outreach:-

To fulfill multi-dimensional needs of the extreme and moderate poor population that is residing in Pakistan whether in urban or rural areas and particularly women.

The comparative table of outreach indicators in preceding years is as follows:

Indicators 2007 2006 2005Number of Personnel 1,045 527 258

Number of Active Borrowers 101,394 52,308 16,931Women Borrowers (%) 42.20% 32% 14.50%

Number of Savers 79,827 39,154 27,932

Elaboration:

The organization has been able to meet the increasing demand of the personnel working at their offices. The increase in number of people working is almost 100%. The same case is with the number of borrowers with the organization; their numbers has also doubled in past year. As per their Mission, they are increasing the number of women customers and successfully gained an increase of 12% in year 2007.

The number of people saving their money with the organization has also increased at rapid rate, which proves the availability of best facilities for the poor members of the society to save their hard earned incomes.



Sustainability:-

To cover the inflation-adjusted costs through revenues and to generate a modest surplus that can contribute to expanding the range of services and geographical coverage.

The comparative table of the financial position of the organization is as:

Indicators 2007 2006 2005Total Assets (in USD) 45,570,913 27,657,416 24,295,478Gross Loan (in USD) 19,830,549 10,989,933 6,068,138

Savings (in USD) 25,038,320 15,219,343 10,887,046Total Equity (in USD) 10,890,947 11,831,837 11,514,095

Elaboration:

There is 90% increase in the total Assets of the organization which is a rapid growth. The amount which is lent to the public is also doubled in the year 2007 and there is a distinctive increase in the savings and the total equity of the organization.These indicators show the sustained growth the organization and as per promise they are expanding their services from micro financing to Fund transfer services.



Impact:-

Through careful targeting, monitoring and evaluation; the bank works to maximize the impact on poor communities.

The comparative table of the impact on poor is as:

Indicators 2007 2006 2005Avg. Loan Bal. per Borrower (in USD) 196 210 358

Clients below poverty line 100% n/a n/aLoans below US $300 (%) 81% n/a n/a

Elaboration:

The table above shows the dedication of the bank towards the poor people of the country. Their 100% clientage is below poverty line which is a major target achieved. And their 81% loans are below US $300 that depicts the proper working of micro credit.

Transparency:-

To introduce good practices, ethical precepts and the highest standards of rectitude in the conduct of business.

The annual audit is conducted regularly and report is being issued to the keep the funds transparent. FMFB has won couple of transparency awards as well.

If we summarize, it states that the objectives of the organization are to fulfill the needs of the poor population around the country and expand the services and area of the organization through reasonable profit margin. And the target customers are poor and indigent people.



Conclusion:

During our visit to First MicroFinance Bank, We came to know that how practically the work is done in formal as well as informal environment. FMFB is now growing rapidly and achieving its targets on time. The management plays a vital role in conducting all sorts of operations. The organization is working efficiently and effectively.

They are committed to maintain long term customer relationship.

There employees are fully committed to their work. The bank is doing its best to provide maximum satisfaction

to the customers. They are striving to provide the maximum facilities to the

poor and deprived population of the area.



Suggestions:

While visiting the organization’s local office we have remarked following suggestions:

There should be more branches in district Rahim yar Khan which is basically agricultural area and there are lots of potential customers in shape of small farmers.

Management should take market surveys to get the latest information about the market trend, the demand and supply of the micro financing in the current market.

One thing that is strongly needed is promotional campaigns to aware the customers about the facilities provided. As the target population is less educated or no-educated so they have to adapt such methods which can be easily understandable by the target audience.

The debt to equity ratio of the organization is very high as 300% and they need to put special efforts to look after it. If a lot of debt is used to finance increased operations (high debt to equity), the company could potentially generate more earnings than it would have without this outside financing. However, the cost of this debt financing may outweigh the return that the company generates on the debt through investment and business activities and become too much for the company to handle. This can lead to bankruptcy, which would leave shareholders with nothing.



Culture of the Organization

1. Innovation:The organization seems to be very innovative. They have

taken many initiatives like introducing new services of funds transfer and demand drafts, pay orders etc…

2. Stability:The environment of the organization is mixed, formal as well

as informal. The staff is very cooperative and communication between manager and sub-ordinates is informal most of the time.

3. Orientation towards people:They encourage their employees and motivate them by

providing incentives.

4. Result Orientation:The main focus of the organization is on customer

satisfaction and provision of facilities to the poor population.


first micro finance bank ltd

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