1. MFI Social Performance The point of view of a microfinance investment company  Aditya Bhandari  Invesment Manager - Advisor  Microfinance India Summit  New Delhi, 15 November 2010

2. slide 2 Click to edit Master title style What is “Social”? Poverty eradication or something more??? A Holistic approach: Social Performance includes several dimensions of a MFI

3. slide 3 Click to edit Master title style  Measuring its mission  Clear promotion of its mission and Vision  MFI conducts social scoring 1. Mission and Vision 2. Outreach and Access 3. Quality of Customer Service 4. Human Resources 5. Environment and CSR Dimensions  Growth in Number of clients & expectations  Does not request mandatory savings as collateral  Accessibility of services: No unnecessary barriers  Client drop out measurement  Products & service offer and adequacy  Transparency of the information  Customer protection Principles (Collection, complaints)  Quality of capacity building (new/existing staff)  Staff compensation  Staff retention measurement, labor climate  Non discrimination of staff  Use & scope of exclusion lists  Linkages with Non financial services  Support to community activities Incofin Social and Environmental Performance Indicators

4. slide 4 Click to edit Master title style Incofin ECHOS© Weight 10% 25% 30% 20% 15% When do we consider social performance? Investment decision process (due diligence) Monitoring our investments (annual visits) Reporting to our investors and to the community 1. Mission and Vision 2. Outreach and Access 3. Quality of Customer Service 4. Human Resources 5. Environment and CSR Dimensions Grade Ranges 91-100Excellent Performance 81-90Very Good Performance 71-80Good Performance 55-70Fair Performance < 50Refusal

5. slide 5 Click to edit Master title style Distribution of Incofin IM’s Pool of Funds according to ECHOS© Fair Performance 35 MFIs Fair Performance 35 MFIs Very Good Performance 10 MFIs Very Good Performance 10 MFIs Excellent Performance 1 MFIs Excellent Performance 1 MFIs Low Performance 2 MFIs Low Performance 2 MFIs Good Performance 14 MFIs Good Performance 14 MFIs

6. The link between Financial and Social Performance: Trade–off or not?

7. slide 7 Click to edit Master title style WHAT DO YOU THINK?

8. slide 8 Click to edit Master title style Positive correlation between Incofin IM’s two scores (Echos© and CRS) at 5% significance level (0,23 is the Pearson correlation coefficient) Correlation between Financial and Social/Environmental performance

9. slide 9 Click to edit Master title style Why such a relationship? Appropriate HR Management is good for FP & SP Higher Outreach is good for SP & FP Better Customer Service is good for FP & SP Easier Access to customer enhance SP & FP

10. Contact Aditya Bhandari Investment Manager - Advisor Incofin Investment Management aditya.bhandari@incofin.be +91 9940658276