Individual LendingChallenges in Scaling Up

Individual Lending (IL) started with open market customers as a separate line of business & org structure

Individual Lending – A Brief history

Stopped open market operations because of poor portfolio quality problems.

Started converting Group Loan customers in 3rd Cycle

IL loans offered in branches when they completed 2 years of operations

Andhra Crisis struck industry

IL business slowed down

Steps taken to streamline IL process like formation IL credit team change reporting structure of IL team members

IL sales team merged with branch group lending team

WWB’s Assistance in Scaling Up

IL Product features and process changed to reduce TAT, increase business

IL field process automation underway

The Ujjivan IL Project The Context:

o The Indian Microfinance Crisis required a deliberately cautious approach to business: Ujjivan could not scale up IL business.

o Post the crisis, ramp up of Individual Lending (IL) became a priority

o The constraints in scaling up IL- lack of traditional collateral, financial documents & trained manpower

Project Aim:

o To optimize Ujjivan’s IL product, methodology and delivery to effectively target and serve Ujjivan’s client base while minimizing portfolio risk.

o To scale up the IL business so that its contribution to the overall business rises manifold and becomes equal to that of Group Lending (GL) in next 3 years

Institutional Diagnostic Institutional Diagnostic: the outcomeso Shift from the ‘GL+’ approach and fresh perspective of looking at IL as a scalable

businesso Change in organizational structure and delineation of IL & GL hierarchies

Existing Recommended

The IL Core Teams

The IL core teams are responsible for overall IL business scale up in the respective regions. They facilitate the initiatives and plan as well as take actions to bring about the transformations for success and growth of the IL business

Strategy & Product Designo Product redesign:

Existing Recommended

Cycle based loan limits Appraisal based loan limits

Appraisal formats were weak Lean & Strong Appraisal Formats

Declaration based information gathering Cross Verification of collected information

Weak guarantor norms Stronger guarantor norms

o Sector Studies:• Studied 4 clusters (Jaipur- Shellac Bangles, Jaipur- Beauty Parlours, Bangalore-

Provision Stores & Powerloom Silk Weaving)

o Recommended Launch of Open Market IL Products- Open Market Business Loan & Open Market Livestock Loan- being launched now.

IL Hub= 1 PM(IL)+ up to 6 LO(Up to 5 branches)

IL Hub= 1 PM(IL)+ up to 6 LO(Up to 5 branches)

The Pilot To be completed in Feb ‘14

Credit OfficerCredit Officer

IL Credit ManagerIL Credit Manager

Head-CreditHead-Credit

Hubs have been set up

Process flow of the loans will change with independent credit underwriting prior to sanctioning

Testing of new products, processes, technology interventions, Call centres

Ongoing Activities Financial Literacy & Marketing Material Developmento Review of existing marketing material (undertaken) and development of new marketing

material (ongoing)o Discussions on marketing strategy (ongoing)

Staff Capacity Building & Training of Trainerso Development of training content and training of (some of the) trainerso Periodic review of training programs, including content (ongoing)

Exposure Visits - Learning from the peerso Exposure to different aspects of individual lending in renowned institutions

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