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Apt Source follows the three tired approach suggested by CGAP
Tier I: A review of self reported portfolio and financial information at an MFIs head office, discussions with key managers, and review of credit policies and general documentation;
Tier II: A Multiple-day field visit by one or two analysts/auditors to number of MFI branches to carry out a qualitative assessment of extent to which MIS reports mirror the reality of repayment in the field office, the appropriates of credit policies and procedures and the extent to which loan officers abide by these policies, the existence of practices that tend to generate increased and unmeasured credit risk such as re-aging, refinancing, and the granting of parallel loans, and overall impressions about the quality of credit management at the MFI:
Tier III: A two or three week review by a team of local auditors who will evaluate asset quality on the basis of a review of information from loan fiels, accounting files and the loan tracking MIS, selected through a process of statistical sampling, that will allow them to make inferences, within acceptable levels of confidence and variance, about the risks related to make accounting practices and credit policy. The third tier will apply a new level of rigor to the analysis of total micro finance portfolio quality. This approach is grounded in generally accepted statistical approaches to sampling, with sample sizes selected to allow inferences made about the overall quality of the portfolio within known a confidence level and variance (upper bound)
Apt source conduct quality assessment of portfolio as follows..
- Conduct the Audit in accordance with CGAP guidelines
- Highlight Important Loan and financial ratios- Profitability, Efficiency, productivity, out reach and port folio quality and Capital and Liability Structure
Capital Structuring and valuation services for equity investment
Micro Finance Institutional growth is curbed by lack of equity Capital. Most of the MFIs lack knowledge and experience with private equity or hybrid instruments. At the same time they are attractive equity investment destinations given their unique proposition of social as well as economic returns. We therefore offer to help the MFI is to value their equity and negotiate with the investors. Apt Source advises MFIs on their capital Structure and helps them to align Capital Structure s with the institutional objectives; issues relating to the following are addressed
- Control
- Cost of Capital
- Leverage
- Maturity
- Fixed versus payments
- Seniority
- Currency
- Contingencies
APT Source has under taken capital structuring and valuation assignments in India.
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