The Present Challenge The Microfinance industry has seen turbulent times, since the Andhra Pradesh crisis of Oct’10. The Malegam Committee had made its proposals to the RBI in Jan’11 The Reserve Bank of India, as per its Monetary Policy Statement , has decided to regulate the Microfinance sector as a separate category. Bank credit to MFIs shall be eligible as priority sector advance subject to the new definition of “qualifying assets”. Pricing guidelines and caps on margin and interest rate have also been specified.

The Way Forward Restructure the Products offered - to fall within RBI’s definition of “qualifying assets” Initiate requisite organizational capacity building exercises so as to enable CTL conform to the guidelines for MFIs to be included in the regulatory framework Build on branding, by offering a comprehensive set of services, either directly or through strategic alliances with NGOs, Section 25 companies etc.

Proposed changes in Product The company will adhere to the new interest rate of 26% There will be five schemes of Rs 10000, 15000, 20000, 25000, for first cycle loan All schemes except Rs will require 4 cheques for re payments Tenure for & loans shall be 52 weeks & for loan amounts > tenure shall be 104 weeks Renewals for all schemes possible after 20 weeks

Capacity Building Exercises The following will need to be addressed – - Equity Infusion - New Branch roll-out - Systems - Corporate Governance - Risk Structures

Comprehensive Services Capital Trust plans to move forward in its commitment to its clients by emphasizing on financial literacy and skill building. It shall work with NGOs, Section 25 companies operating in its locales and also through Vishwas Credit and Livelihood Program, to ensure that its clients receive a variety of financial services, including SHG linkages. As part of Corporate Social Responsibility, it is proposed that 10% of the profit is contributed to building the corpus of Vishwas

(in ` MN) Particular A A (E) (P) (P) (P) (P) (P) Number of Branches Number of Active Client Client per Branch Number of Loan Officer Portfolio Outstanding as on 31st March Loan Disbursement Cumulative Loan Disbursed Profit Per Year Fund Requirement: Debt Equity Future Projections Cont.

Ratio Analysis A A (E) (P) (P) (P) (P) (P) Average Outstanding Balance Portfolio at Risk0.00%0.64%0.91% Average Portfolio Per Loan Officer Operating Cost Ratio53.29%38.20%34.13%6.23%4.17%3.62%3.07%2.61% Total Cost Ratio72.71%43.23%48.93%20.45%22.77%21.02%19.65%19.00% Operating Self Sufficiency Ratio25.48%104.09%106.81%127.62%114.86%111.77%108.96%117.57% Portfolio Yield12.29%37.04%44.04%13.43%14.75%15.04%13.53%14.65% Return on Assets-12.85%1.52%2.10%1.95%1.73%1.74%1.18%2.33% Return on Equity-17.69%2.94%5.59%18.83%19.45%23.31%22.64%28.26% Debt Equity Ratio CAR172.36%57.85%44.67%16.85%21.03%18.29%15.25%17.10%

Vishwas Credit and Livelihood Program

Section 25 not-for-profit entity Livelihood support services provided to the marginalised community in the areas where Capital Trust is operating. Facilitate financial services at competitive terms Operates at the grass root levels with the regular staff and volunteers. Revenues from the Corpus, donations, consulting and fees

Areas of activity Business Correspondent for Banks - SHG Model Business Facilitator for delivering financial services on fee basis –Insurance –Savings –Remittances –Pension etc Livelihood and Skill Building - Vocational Training Provide and facilitate medical and medicinal requirments for the community Work with the women groups on their health and nutritonal issues in collaboration with orgainsations working for women and girl children