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I Students’ Name : Chandan Batsayan, Indrajit Kumar, Mousom Mitra, Naveen Kumar
II Organisation : Grameen Koota, Avalahalli, Banglore
III Reporting Officer : Suresh K.K, COO, Grameen Koota
IV Faculty Guide : Prof. S. K. Mitra
V Project Title : Organisational Understanding Component

Grameen Koota is one of the oldest micro finance institutions in the Karnataka. It started its
operation in May 1999 and now it operates in five district of Karnataka viz. Banglore rural,
Tumkur, Chitradurga, Hasan, and Mandya. It provides its products and services to more than
23000 people of rural Karnataka with the help of 118 field and head office staff.
The objective was to understand the structure and functioning of Grameen Koota
The methodology of the study included interviews with department heads and interactions
with field officers at Head Office and Branch of GK. Secondary data were collected and
analysed from records available at Head Office and Branch.
The scope of the study was limited to the Head Office and some of the Branch which was
covered during our field visit.
The learning’s: The organisation provided us with the opportunity to study not only its
operations at the head office level, but also with field level exposure. It helped us in
understanding the processes and activities being undertaken by the organisation. This gave us
the broader understandings of micro finance operations as a whole. It also enabled us to
understand the linkages that the organisation has with the external and internal environment.
The HR exercises conducted within the organisation helped us in understanding the role and
responsibility of the job that is expected out of an individual and as a team.


We are grateful to the Institute of Rural Management Anand (IRMA) for having

provided us with the opportunity to conduct this study. We also thank our faculty guide Prof.

S. K. Mitra for his guidance.

We express our gratitude to Ms. Vinatha M. Reddy, the Chief Executive Officer of

Grameen Koota, Mr Suresh K K., the Chief Operating Officer of Grameen Koota (and our

reporting officer) for their valuable inputs.

We would also like to thank the head-office staff and field staff (Area Manager,

Branch Managers and Kendra Managers) of Grameen Koota for their inputs, support and co-

operation without which this study could not have been completed in the present form.

Chandan Batsayan (25068)

Indrajit Kumar (25017)
Mousom Mitra (25078)
Naveen Kumar Mallik (25029)

Table of Contents
EXECUTIVE SUMMARY............................................................................................ii
I Students’ Name : Chandan Batsayan, Indrajit Kumar, Mousom Mitra, Naveen
Kumar ..........................................................................................................................ii
II Organisation : Grameen Koota, Avalahalli, Banglore .........................................ii
1.2 Brief History of the Organisation.........................................................................5

Chapter - 1


1.1 Preliminary Information

Name: Grameen Koota

Address: Head Office at, Avalahalli, Anjanapura Post,
Telephone: (91) 080- 28436237

1.2 Brief History of the Organisation

Grameen Koota aims at serving the poor women by delivering timely credit to them.
With these loans the women harness their own skills and natural business acumen to
transform their family’s economic status.

Grameen Koota was visualized in 1997 based on a book “Gives us Credit” by Alex
Counts, giving an account of the impact of micro-credit on the lives of the poor in
Bangladesh and USA. Highly inspirational stories of large numbers of people rising
above the poverty line through the use of micro-credit, motivated the Trustees of T.
Muniswamappa Trust to replicate a similar program for the benefit of the poor in the
surrounding villages of Avalahalli. Grameen Koota started operations from 30th May
1999, with the help of seed capital funding from Grameen Trust, Bangladesh to
initiate a Grameen Bank Replication Program.

Although micro finance programme started in 1976 in Bangladesh and NABARD

started providing credit to poor through Self Help Group (SHG). But still
microfinance programme was not familiar with the financial institutions and people.
So it got difficulty in mobilizing funds to provide credit. But from the inception it
never keep waiting members for loan due to scarcity of fund. At initial stage even it
happened that some time organization took loan from moneylender to meet the credit
need of the organization. Now the organization is receiving positive change in the
environment for microfinance. At the beginning Grameen was behind the financial

institutions and funders now financial institutions are behind the organization to
provide them funds for credit. From other end more and more people joining Grameen
Koota to access the credit and develop themselves to join the mainstream life.


We envision building a Micro-finance institution, which will eventually be owned,
managed and used by the poor women.


Our mission is to help poor women in rural areas and urban slums with micro-credit,
to work themselves and thereby their families out of poverty. To constantly deliver
need based financial services in a cost-effective manner and to become financially
sustainable Micro-Finance Institution for the poor.

There are countless people in the world and so in India, who do not have money to
meet their basic requirement. The true development will happen only when these
people will come under the mainstream of life. To achieve this there is a urgent need
of credit but nationalize and private bank are not able to serve their needs. This is
where the ambiguity of the term micro credit starts. The objective of micro finance is
not commercial lending in a rural background, but to reach out to sections of society
who are unable (not incapable) to engage in an economic activity, help them by giving
credit and other inputs to earn returns and build assets, at the same time encouraging
the habit of savings.


2.1 Objective of Study

The primary objective of the study is to understand the structure, culture, strategy and
functioning of the organisation. How it reacts with the external and internal

2.2 Methodology
The methodology adopted for the study included interviews and discussions with
officials of Grameen Koota Head Office staff. We also visited some of the branches of
Grameen Koota. We also had access to secondary data in the form of office records,
reports, organisational profile, and perspective plan document.

Chapter 3

To assess organisational growth a framework is developed by Larry E. Greiner called

Five Phase of Growth. According to this framework the five phases are Creativity,
Direction, Delegation, Coordination and Collaboration.
Creativity: this is the first stage of organisation’s evolution. At this stage founders
devotes their energies toward the development of the organisation and its products.
Communication at this stage is informal. After that a stage comes when a crisis of
leadership comes because due to growth founders do not have the skill to go further.
Then it goes to next phase.
Direction: At this stage organisation acquire strong leadership and will to go further.
Under this strong leadership organisation go through formalization and develop
accounting, budgeting, and other system. Further at this stage a crisis come as lower
level manager try to gather power and autonomy to take decision independently.
When this crisis comes to an end the organisation enter into next phase.

Delegation: This is the stage when lower level manager gets autonomy in decision
making at unit level and upper level managers devote their energy to long run
strategic planning. Here crisis come when lower level manager enjoy autonomy and
upper level manager feel that it may go out of control. So the upper level managers
want to go for centralization. But at this stage coordination is favourable step.
Coordination: At this phase organisation reviews, evaluates and controls line staff and
support staff to facilitate coordination among them. But it develops red tapism in the
Collaboration: This is the phase of interpersonal collaboration. Organisation tries to
solve red tape crisis by developing task force and other group devices.

If we look at the organisational growth of Grameen Koota on the five phase of growth
frame work developed by Larry E. Greiner this organisation is some where between
direction and delegation phase. It has good leadership who can direct organisation to
achieve its goal. So it achieved the second phase of growth. But still the lower level
managers do not have autonomy to take decision by their own. They are abide by the
rules and regulations of the organisation and instruction of their seniors. Organisation
is going through the autonomy crisis which shows that it is in between direction and

Chapter 4
4. Understanding organisation through MC Kinsey’s 7-S Framework
MC Kinsey’s 7-S Framework
This framework comes in handy for studying organisation in growth stage because it
stresses that the organisations ability to change is not only connected with the
organisation structure. The process of adaptability needs to be understood keeping in
mind the complex web of relationships that exist between the strategy, structure, style,
staff, skills and shared values of an organisation. Theses in other words are known as
7-S of an organisation.
The 7-S framework suggests that there are several factors influence the organisation’s
ability to change according to the needs of the environment. The aforesaid variables
are interconnected and significant changes cannot be achieved without making
changes in all the variables at the same time. An illustration of the 7-S framework can
be seen in graph.


Struct Syste
ure ms




Graph 1: Framework designed by McKinsey Co.Ltd
The framework comes useful mainly on three aspects, namely
 It can be used for internal analysis
 It can be used to understand the strategic characteristics of an organisation
 This framework can be used as a tool for determining the “do-ability” of
strategies for an organisation
However this framework has also some drawbacks attached to it, they are primarily as
 Focuses on the internal fit of an organisation
 At times it fails to capture the external influences on the organisation

Now within this 7-S framework there are some “Hard-S” and “Soft-S”. The
categorisation is based on the fact that some S’s focuses on the rational and factual
aspects of the organisation and thus are said to be hard, while some focus on the
social and interpersonal behaviour of the organisation and are hence called soft.
Hard – S
 Strategy – This focuses on the plan of action to maintain competitive
advantage over the competitors.
 Systems – It measures the actions which accommodate the execution of the
daily activities
 Structure – It focuses on the way the organisation is structured or in other
words the reporting structure and flow of organisation within the organisation.

Soft – S
 Style – It tries to analyse the style of operation of the organisation and
leadership style of the organisation.
 Shared Values – The main emphasis lies on the Grameen Koota’s culture,
work ethics and overall goal of the organisation.
 Staff – The use of the variable is used to measure the capabilities of the staff
that are employed in Grameen Koota.
 Skill – The aim of this variable is to measure the core competencies of the
organisation as well as the staff of Grameen Koota.

4.1. Strategy
Analysis of the strategy of the organisation focuses on the analysis of external as well
as the internal environment, competition, customer needs, and one’s own strengths
and weaknesses, leading to a plan or course of action that determines the allocation of
a firm’s scarce resources, over time, to reach identified goals.
The analysis of environment for GK says that there are mainly two areas where GK
needs to put its focus on. One is from the client point of view; we find that the socio-
economic needs of the members are increasing day by day. On one side the demand
for credit is increasing with the growth and outreach of the organisation. On this count
the organisation has shown adaptability by increasing the average loan size per client
from five thousand rupees to seven thousand rupees. The second area where there is
threat for the organisation is from the MFI regulations that are supposed to be put in
place. However the major threat for the organisation comes from the perceptible
threat of MFI’s and SHG-Bank Linkage. The strength and the weaknesses of the
organisation can be viewed by means of SWOT analysis as presented in table 1.

Strengths Weaknesses

 Good repayment rate.  High operating expense

 No dearth of funds  High degree of centralization
 Experience in Micro Finance  Dropouts
 Credit Discipline  Lower employee productivity
 Good execution at field level  Negative returns on assets

Opportunities Threats

 Huge untapped potential (3.6  Presence of other competitors

million poor house holds in in this field
Karnataka )  Government supported
 Capability of expansion subsidized loan products
 Regulations

The distinctive advantage for the organisation which can also be categorised as the
key success factors can be summarised as
 Delivery Mechanism of the programme (Based on Grameen Bank)
 Outreach and client base of the organisation
 Network

No. of Members

Number of Members



5000 3570
582 1258
Mar 2000 Mar 2001 Mar 2002 Mar 2003 Mar 2004 Mar 2005
Progress through the years

The success of the delivery mechanism can be ascertained from the growth in number
of members across the years with a CAGR of 161.12 percent. Presently (as on 30 th
June 2005) GK has a membership base of 23,691 members of which 18,644 are its
active borrowers.

Number of Branches

16 14
Number of Branches

8 7
6 5
4 2
2 1
Mar 2000 Mar 2001 Mar 2002 Mar 2003 Mar 2004 Mar 2005
Progress across the years

The network and outreach of GK has also increased considerably over the years. This
can be viewed from the increase in number of branches across the years. With the
present growth strategy GK has shown a CAGR of 69.52 percent in the case of
branches. Presently (as on 30th June 2005) GK is operating in five districts of
Karnataka and has eighteen fully functional branches.

4.1.1 SWOT Analysis


Good repayment rate: Right from the beginning GK has maintained an excellent
repayment rate of 100 %. This good repayment rate enables GK in increasing the loan
amount especially income generating loans. A good repayment in GK is because of its
strict policies regarding the payment schedules and peer pressure inside the group.
GK gives loan to group not individual and if any one defaults whole group is held
responsible. Collective responsibility fund is created to make up the defaulted
amount. In GK this excellent repayment rate has proved always as strength for the

No dearth of funds: For any organization managing the financial requirements is

always important. GK too takes funds from various organizations. These funds are
then used further for lending purposes. One of the strengths of GK is that it has built a
good relationship with various lending organizations and can take the loan amount
without much hassle.
Experience in Microfinance: GK is among the first movers in the field of
microfinance in Karnataka. Over the times it has increased its client base up to
23000. This experience is strength of GK and it gives a competitive advantage over
any new player in this field.
Credit Discipline: GK has never failed in disbursing loan to its client on the scheduled
date. This has built a good brand name and reputation of the organisation in client’s
Good execution at field level operation: During our field visit we rarely encountered
anyone who was not impressed by the punctuality of staffs. The meeting time and

schedule is religiously followed by the staffs. It shows good work done by the staffs
especially at ground level; certainly this is strength of the organization.

High operating cost: One of the major weaknesses of GK is its relatively high
operating expense. If we compare the operating expense of GK with the prescribed
industry norms we will find its operating cost to be higher, which is certainly a
weakness for the organization as a whole.

High degree of centralization: We found degree of centralization to be bit higher in

GK. All the decision processes are highly centered towards the head office. Branch
offices are given lesser autonomy. In the head office too the all the decision making
power is highly centered in the hand of C.E.O. and C.O.O.

Dropouts: Dropout is an emerging challenge for GK. Over the years the dropout is
showing an increasing trend. In some branches it has reached to an alarming figure of
35%. The dropout problem gives birth to other problems like incomplete group and
low productivity of the staffs. Handling this problem is crucial for the organization as
it badly affects the financial viability of GK.

Lower employee productivity: We also came to a conclusion that the productivity per
staff is a bit lower in GK. The main reason for this low productivity of the staff is its
Lower scale of operation: GK presently operates with a low scale of operation. It has
the capability of expansion further. The low scale of operation increases the overhead
cost of the products offered by GK.

Huge untapped potential:
There are 3.6 million poor households in Karnataka. Majority of them are not covered
by any types of microfinance programmes (MFIs as well as SHG bank linkages). If
we consider average annual credit requirement as 5000 per family then about 1800
crores amount of money is needed every year. This is huge sum of money and shows

the untapped market of Karnataka. GK having sufficient degree of experience in this
field can avail this opportunity.

Capability of expansion:
GK has all the capabilities necessary for expansion. Presently it is in growth stage
and can expand up to higher level of operations. Once the higher scale is achieved the
staff productivity will also improve.


Presence of other competitors in this field:

In Karnataka though there is a huge possibility of growth in microfinance market,
number of players (MFIs) is increasing gradually. GK recently has lost some of its
clients to its new competitor. To retain its client base and gain new members it is
important for the organization to keep its eye over its competitors

Government supported subsidized loan products:

Government of Karnataka has launched a state sponsored programme called Stree-
Shakti. In this programme subsidized loan is provided to the members. There are
various other benefits like rebate and provisions of training in this programme . Many
of the GK members have joined Stree-Shakti programme.

Government has so far not taken any regulatory actions regarding MFI. However,
there is a good chance that in future it may decide to make a regulatory body in this
regard. Nothing can be said about the working process of that regulatory body. It may
not necessarily match the modus-operandi of GK.

4.2 Structure
The objective of studying the structure of the organisation is to find the salient
features of the organisation chart (i.e., functional, decentralised). Alternatively, the
intention of the study is to find a description of how the separate entities of the
organisation are tied together and also find out the patterns of status and control.

From the organogram we find that at the head office level the there is high level of
centralisation, with the Chief Operating Officer having the control over the
functioning of the organisation. Moreover we find that there exists a stark difference
in the degree of formalisation at the head office and at the branch level.


By studying the flow of information within the organisation, we find that all the
information flows through the Head Office (HO). However with growth there will be
need for decentralisation and hence independent autonomous units should be
promoted. This is in consonance with the vision of the organisation which says
“promotion of a micro finance organisation owned and managed by poor women”.

4.3 Staff:
Employees in GK can be classified as Management staffs and Field staffs.
Management staffs are further divided into three parts senior, middile and junior.
Followings are the positions which come under these categories
Senior Management:
1. Chief Executive Officer- CEO is entrusted with the responsibility of
supervising the whole activities undertaken by GK.She is directly involved in
developing new policies, methodologies and systems. She gets assisted by the

2. Chief Operating Officer- He is responsible for effective and efficient
operations being undertaken by GK. His role is significant in programme
implementation and employees performance.

Middle Management:
1. Programme officer (P&M): The job requirements of this employee is to
prepare the proposals and make all the relevant reports pertaining to planning
and strategy
2. Programme Officer (Internal Audit): This person has been entrusted with all
the auditings of GK operations and financial activities which includes the
cross checking of branch activities in accordance with the operation manuel.
3. Manger (Administration): He/ she has to take care of all the activities related
to office management.
4. Manager (MIS): This employee is responsible for all managerial activities
which involves information system. He/ she has to plan about the system
requirements and the need for training to be given to the staffs.
5. Programme officer (Field): His job is to ensure smooth field activities and
look for new branches where GK can start its operation.
6. Divisional Manager: This employee acts as an intermediate link between the
planning and implementation. His inputs give the scope for further

Junior Management:
There are two layer of staffs here one is Branch manager and another Kendra manger.
Branch manager has to ensure smooth operation of daily activities whereas KM is
responsible for smooth Kendra Functioning.
At the branch level Trainees come under this category of staff. At the headoffice level
Personal assistants belong to this category.

4.3.1 Recruitment and Training of Staffs:

Recruitments of staff fall under the job description of CEO and COO. For the
recruitments of field staffs applications are invited from the interested candidates

through an advertisement in the local newspaper. After the initial screening of
application an interview is conducted at the head office which is followed by the
declaration of final list of selected candidates. These successful candidates undergo
training at the headquarter. Thereafter they are posted at the respective branches as
trainees on probation.
For middle management post GK has started recruiting the person from the reputed
institutes like IRMA, REC Warangal etc.
GK staffs are subjected to the process of programmed learning too.
General observations:
Young Work force: The work force in GK is young and enthusiastic one. Most of the
field staffs are in their twenties. We came across middle aged staffs only at the head
office. For having such a young pool of employee a part of it can be attributed to the
age of organization itself, which is six years old.
Socialization: Staffs here in GK gets socialized soon after joining the organization.
nice work environment prevailed in the organization help them get into the process
Role Clarity: Staffs at GK are pretty clear about their individual job requirements.
During an HR session we came across that few staffs are not able to understand the
organizational goal. Hence in order to align both the goals GK need to take these
people through sensitization process.
Need for skilled workforce: GK is trying to scale up its operation, which will demand
more skills to sustain the growth. Therefore it should try to bring in some more people
having professional expertise in the field of micro finance

4.4 System:
When we look at any organization from the system perspectives it actually tells us
about the set of interrelated and interdependent parts arranged in a manner that brings
unified whole. Every system is charecterised by two diverse forces: differentiation
and integration. In the context of GK we have the personel and departments which
have been given different responsibilities. Yet in order to achieve the super ordinate
goal these different personel and departments need to integrate themselves.
When we see the system in the context of its interaction with the environment we can
categorise them as: open system and closed system.

The open system recognizes the dynamic interaction of the organisation with the
environment. It constantly interacts with the environment and adjust itself to the
conditions prevailed out side it. If we consider GK as a system which ih an MFI , all
the activities and establishments which can affect this industry constitute an
environment for it. More precisely, the clients, formal and informal banking system,
Govt. regulations are all parts of the environment in which GK operates. It is
imperative for it to see any change in the environment closely and scrutinize them in
order to remain responsive to those changes. During the two months study , we have
found that GK promptly interacts with the environment. It keeps a good track of
variables which can have bearings on its operation. To make this happen it has placed
following sub systems in place
4.4.1 Financial planning and control system:
GK has a reasonable financial planning system. At the organization level, GK uses
Microfin software to plan its expansion and the subsequent funds requirements.
Accordingly, it approaches multiple funding agencies for its fund requirements.
Internally, the cash planning at the branches is done on quarterly basis, based on
overall growth target of organization. However, head office is informed of cash
situation and the demand for cash for next week, as part of the weekly report. The
branches, based on the number of loan applications and the repayment schedules
estimate demand for cash for the next week. Based on these weekly reports, head
office makes arrangements.

4.4.2 Internal audit system:

The internal control system of organisation is consists of three auditors team, who are
responsible to Chief Operating Officer. The team spends around two days in each
branch, where it goes through branch records and also visits 3-4 Kendras. At the
branch, auditing team verifies actual cash, daily cash registers, vouchers, collection
sheets, day books, general ledgers, branch recovery and disbursement register and
other subsidiary registers. It also goes through the monthly weekly reports submitted
by the branch offices. The internal auditing team also verifies whether the procedures
are being properly followed or not.
It goes through salary incentive register to verify the number of centres promoted by
staff to cross-check it against the incentives claimed. The team also verifies whether
proper selection criteria of housing index are being followed in selection of members.

For internal audits, the auditors have proper printed formats to be filled is, which is
adequate. The reports of internal auditing are submitted directly to the CEO and the
COO. The audited branch is also provided with a complaint report in case of any
discrepancy. The follow up is done through these reports in the subsequent auditing

4.4.3 Tracking system for overdues

GK has almost no overdues left till date, which is largely because of the good
overdues tracking system. At the branch level, information regarding demand for each
individual and consolidated demand for centre is maintained. During the collection
day, any difference gets reflected in the collection sheet. Any arrear information in
any centre is provided to the head office in the weekly reports. However, the
organisation has zero
tolerance policy, which has resulted in no-overdue situation. In case, any client is not
able to pay on a particular day, the centre pays on her behalf. Further, Collective
Responsibility Fund (CRF)/Kendra fund is maintained through token contribution
from each member regularly, which is used in case of defaults.

4.4.4 Accounting System:

The accounting system of GK is good. The branches are completely decentralised

head office and maintain their own accounts. All branches prepare financial
statements like balance sheet and income statement on monthly basis and submit it to
the head office, while receipt and payment statement is submitted to head office on
weekly basis as part of the weekly reports. Head office also prepares all financial
statements on monthly basis by consolidating the branch information. Branches
maintain required vouchers; daily cash transactions are recorded in cash register after
verification with the collection sheet. Daybooks for the overall daily transactions are
also maintained. The accountant consolidates the collection sheets from all Kendras
on daily basis.

4.4.6 Management Information System
In GK the MIS system is well managed. Records and reports are kept in a
standardized from in all the branches as well as in the head office. A fixed format is
followed in all the reports. All the branches are supposed to maintain the profile of the
members and daily transactions. Initially it is recorded in the collection sheets and
latter it is entered into the Group master register.
information about the groups is consolidated in Kendra master register. Apart from
the consolidated information, individual information regarding loan amount,
repayment and amount due is recorded in individual loan ledgers. Loan disbursement
information such as name of client, amount disbursed, date and purpose of loan is
recorded in loan disbursement register.
Information regarding savings of members and withdrawals are maintained in other
set of registers. Separate registers are maintained for group fund and voluntary
savings. Apart from these records, branches also maintain subsidiary registers for
recording information like outreach, dropouts and loan utilisation by clients. The
Branches maintain the data related to the dropouts here there is some scope of
The weekly reports, are sent to the head office. These reports contain
information regarding members, kendras, villages, new members, dropouts, loans
disbursed and savings. In addition to this, the reports also contain accounting
Here wee see that MIS covers all vital information. One problem regarding this
system was that because of the multiple records maintaining there arises some amount
of duplication of information, even at the group level; multiple passbooks are
maintained for loans and savings. This forces the staffs to work more with the data
without much gain. It also indirectly increases the operating costs of the organization.

However computerization in the branches has certainly improved the flow of the
information both from the Head office to the branches and from branches to the head

4.5 Style:
Organisational style is evident through the patterns of actions taken by top
management over a period of time. We have found following patterns which is quite

evident from day to day activities.GK management decided to follow Gramen Bank
model of operation.
Under which, women are organised into 5-member groups and up to 8 such
groups form a centre – the management unit for the organisation. A well-defined
process of group identification, formation and regularisation is followed. An initial
survey is conducted for the selection of the village.
Systematic training programme called the Compulsory Group Training (CGT) is
provided to the new members. The Area Manager/Branch Manager conducts a final
Group Recognition Test (GRT) to re-evaluate the eligibility of the formed groups. The
groups that pass the GRT are formalised as Grameen Koota groups. All the members
are issued identity cards, with the photograph of the member duly stamped by the
branch, against the subscription fees of Rs100, payable over the next four.

Adherence to the schedule :

During the stuy period we happened to travel to the branches. What special thing we
found over there was the discipline of field staffs regarding the Kendra meetings.
They use to visit branches as early as 5 am in the morning and rarely get for the
scheduled meeting.
Upward Flow of Information: In GK there is a flow of information takes place during
all the working days. Branch manager apprises area mangers about the daily operation
who in turn informs divisional managers about the activities. And the divisional
manager conveys it to the COO. In this way 180 degree information gets completed.
This enables Grameen Koota to be better informed everyday.

Stake Holders
• Members: As organisation is working for the destitute of the rural Karnataka
and urban slums so they are the main beneficiary. In the six year of the
organisation it has increase its member base of 23,691 women in five district
of Karnataka. Organisation has target to provide it services to at least 10 per
cent of BPL people of Karnataka.
• Donors and Funders: As the organisation is still in expansion phase so it
operating expenses greater than operating income. So it needs some revenue
donation to meet it expenses. Several donor agencies have extended it hands
towards the organisation to help it in achieving its target. Following are the

donor agencies who provided grants and donations to the organisation in the
last six year.
Grants & Donations Amount (Rs.)
CGAP, USA 23,46,875
Grameen Foundation, USA 28,77,363
Grameen Foundation, Australia 2,39,500
India Development Service, USA 9,56,750
SIDBI, Banglore 11,80,000
ICICI Bank 15,00,000
Others Donations (Foreign) 3,14,281
Others Donations (Local) 1,96,720
Total 96,11,489
Table 1: Donor Agencies and Amount donated to Grameen Koota(as on 31st
March 2005)
• Financial Institutions: Grameen Koota has linked it up with leading national
and foreign banks to meet the credit requirement of the members. Following
are the list of Financial Institutions and their contribution of lending money to
Grameen Koota.
On lending funds Amount
HDFC Ltd. Banglore 53,07541
FWWB, Ahmedabad 1,82,34,706
UTI Bank, Banglore 1,04,99,998
SIDBI, Banglore 34,66,668
ING Vysya, Banglore 46,42,850
ABN AMRO Bank, Mumbai 50,00,000
ICICI Bank Mumbai 1,26,24,840
Total 5,97,76,603
Table 2: List of Funders with their contribution in lending money through
Grameen Koota (as on 31st March 2005)
• Management: Management of the organisation is in the hands of governing
body which consists of board of trustee, members of governing body Chief
Executive Officer (CEO) and Chief Operating Officer ( COO). As Grameen
Koota is a wing of T. Munniswamappa Trust so the Trustees of the
organization is same as the Trust. Following are the details of Governing Body
and present member of Governing Board.

Governing Body
List of Trustees

Name Designation

1. Sri. J.Srinivas Reddy Chairman
2. Sri. J.Surendra Reddy Trustee
3. Smt. Lalitha S Reddy Trustee
4. Smt. Renuka S Reddy Trustee
5. Sri. Venkatram Reddy Trustee
6. Sri. Jayaram Reddy Trustee
7. Sri. S.Prathap Reddy Trustee
8. Smt. Vinatha M Reddy Managing Trustee
9. Smt. Vijitha Subbaiah Trustee

TABLE 3:List of Trusty Members


Name Address Position

1.Smt. Vijitha Subbaiah Bangalore Trustee Member
2.Sri. Jayaram Reddy Bangalore Trustee Member
3.Sri Gopal Reddy AR Kanakapura, Bangalore Dt Staff Member
4.Sri. Raghavendra HP Channapatana, Bangalore Dt Staff Member
5.Kum. Sabeerabhi Avalahalli, Bangalore South TQ
6.Smt. Galalakshamma Gudipalya, Bangalore South TQ
7.Smt. Narasamma Naganayakanahalli, Bangalore South TQ
8.Smt. Jayasheelamma Thigalarahosahalli, Kanakapura TQ
9.Smt. Shanta Kumari Ramanagar TQ
10.Smt. Sandhya Siddarth Bangalore, Expert Member
11.Smt. Kathyani Chamara Bangalore,
TABLE 4:List of Members of Governing Board

• Operation and Field staffs: Operational and field staffs are also equally
stakeholders for the organisation. Not only because they the employee of this
organisation but also because they are working for a cause and this hard labour
needs some intrinsic values to reach to the poorest of the poor. Grameen Koota
has 90 field level staff and 45 head office staff who work tirelessly to achieve
the social and financial goal. The total employee strength of the organization is
153, which include some trainee and other staffs.
4.6 Shared Values:
• Enable poor women in rural areas and urban slum to defeat poverty
• Need based and cost effective financial services
• To build a Micro-finance institution, which will eventually be owned,
managed and used by the poor women

4.7 Skill:
Skill connotes the distinctive competencies of the organisation in the dynamic
environment Here Grameen Koota have several advantage over other players in the
microfinance sector in Karnataka. Following are some advantages to Grameen Koota.

• First Mover’s Advantage: As Grameen Koota started providing micro credit

first time in Karnataka so it has some advantage because it has already
explored markets for its products and services. It also becomes popular in
some of the areas of the state.
• Linkages with external organizations: As the external environment is turbulent
so to be in the mainstream and organisation need to have linkage with other
organisation. Grameen Koota has made relations with the organizations who
not only provide funds for credit but also the consultancy for the
organizational and product development.
• Delivery Mechanism: Grameen Koota’s field staffs go the villages and urban
slums and provide entire information about micro credit and the organization
its rules and regulations, which are supposed to be followed by the members.
They induct members into the group only when they pass the interview about
the rules and regulations. Hence Grameen Koota not only provides credit to
the poor at their doorstep but also make everything clear before them.
• Dedicated Workforce: We visited seven branches out of twenty-two branches
of Grameen Koota. And observed that most of the field staff are young
enthusiastic and dedicated to work. We never got evidence when they are late
at Kendra meetings. They are very routines, but it does not mean that they do
it in any pressure but they have internalized it in their life.
Chapter 5
5. Financial Analysis of Grameen Koota

The indicators used to measure the efficiency of a Micro Finance Institution mainly
falls under four categories namely: portfolio quality, efficiency and productivity,
financial management and profitability.

5.1 Portfolio Quality

The loan portfolio is by far an MFI’s largest asset and, in addition, the quality of that
asset and therefore, the risk it poses for the organisation can be quite difficult to
measure. For microfinance institutions, whose loans are not typically backed by
bankable collateral, the quality of the portfolio is absolutely critical. The portfolio
quality of Grameen Koota presents a very healthy figure. We find that the PAR for
GK stands at zero percent whereas the industry standards are at 5.8%. To be more
precise it indicates that GK has a repayment rate of 100% and it is not supporting
refinancing of loans. Moreover this ratio shows that none of the loans disbursed by
GK has been “contaminated” by arrears and therefore has almost nil repayment
In terms of the risk coverage ratio we find that GK is performing much ahead of other
MFI’s. As the repayment rate of GK is 100 percent with none of its loan portfolio
being refinanced the risk coverage ration stands zero. While higher risk coverage is
generally preferred, in the case of GK, where it maintains a loan loss provision of
nearly three percent of the loan portfolio a lower risk coverage ratio is quite

5.2 Efficiency Indicators

Efficiency indicators are performance measures that show how well the institution is
streamlining its operations. Productivity indicators reflect the amount of output per
unit of input while efficiency indicators take into account the cost of inputs and/or the
price of outputs. Efficiency of scale has much less impact in the case of a micro
finance institution because the associated variable costs are comparatively higher than
other institutions. We find that operating cost ratio of GK has shown a declining trend
across the years. However the present ratio at nearly 40 percent is still not in
conformity with the industry standards which stand at 19.9 percent. However looking
at the organisations growth phase one can argue that this ratio is going to further come
down as the portfolio volumes increase and returns start pouring in. The personnel
productivity ratio has shown a gradual increase through the years, which is a positive
sign for the organisation. The higher the ratio the more productive the organisation is.
In directly the ratio also says a fair amount about how well the MFI has adapted its
processes and procedures to its business purpose of lending money. However the

present ratio of 122 just falls behind the industry standard of 130. The loan officer’s
productivity ratio captures the productivity of the institution’s loan officer. The higher
the ratio the more productive the organisation is. Like personnel productivity ration it
also says a lot about the organisations adaptability to the processes and procedures.
Over the years GK has shown growth on this count too, however it is still falls short
of the industry standards of 500 per loan officer by nearly half of it. This is a key area
of concern for concern for the organisation.

5.3 Profitability Ratios

Financial management assures that there is enough liquidity to meet an MFI’s
obligations to disburse loans to its borrowers and to repay loans to its creditors.
Profitability ratios like return on assets and returns on equity tend to summarise
performance in all areas of the institution.
Return on equity indicates the profitability of the institution. The ratio is particularly
relevant for a private for profit entity with real flesh and blood owners. However
given that MFI’s are not-for-profit organisations, the ROE indicator is most often used
as a proxy for commercial viability of the institution. In case of GK we find that it has
never shown a positive return on equity and hence its long term commercial viability
is at stake. The reason for negative return on equity can be attributed to primarily two
factors namely
• Low portfolio yield
• High operating expenses
Thus there is need for the institution to streamline its operating procedures and attain
efficiency in its operation and high portfolio quality to even break even at the current
Return on assets is an overall measure of profitability that reflects both the profit
margin and the efficiency of the institution. In simpler terms it measures how well the
institution is using its assets. In case of GK we find that return on assets is gradually
increasing, however it is still not giving positive returns. Thus it can be said that the
assets of the organisation are not optimally used. The industry standards of 4.9%
suggest that GK falls short well short of this indicator too.

Particulars 31-Mar-01 31-Mar-02 31-Mar-03 31-Mar-04 31-Jan-05 Industry
Portfolio at Risk 0.00% 0.00% 0.00% 0.00% 0.00% 5.80%

Efficiency Ratios
Operating Cost Ratio 108.08% 98.23% 79.90% 58.77% 42.85% 25.00%
Active Loan Clients Per Staff 31.79 28.94 60.42 95 122 133.00
Active Loan Clients Per Loan Officer 55.63 45.48 90.63 137.00 242 330

Yield on Portfolio 27.94% 33.21% 38.81% 41.69% 34.90% 38.10%
Adjusted Return on Assets -64.56% -53.20% -35.99% -13.85% -4.21% 4.10%

Annexure -1

CEO (Vinitha M. Reddy)

COO (Suresh K.K.)

Office Assistant

Support Staff

PROGRAMME OFFICER Manager Audit (Laxmi
Finance Manager (Ramesh) PLANNING AND Narayan)

IT PO (Arta) IT PO (Praveen) IT PO (Priyanka)

Internal Auditors Internal Auditors Internal Auditors Internal Auditors

Assistant Finance Accountant Trainee Manager
Manger (Laxmi) (Sivanand) Desk Officer Trainee Insurance (Balu)
(CBC) Manager (Padma)

AM (Shiv Kumar AM AM
AM (Venkat Naik) AM (Thimappa) 3 AM (Lokesh) 3
M.S.) 5 (Raghavendra) 4 (Thimmagowda) 3

BM#1 BM#2 BM#3 BM#4


Annexure -2

Performance Ratios
Sl. No. Ratios 31-Mar-00 31-Mar-01 31-Mar-02 31-Mar-03 31-Mar-04 31-Mar-05
Portfolio Quality Ratios
1 Arrears Rate 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2 Portfolio at Risk 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3 Loan Loss Reserve 0.00% 2.48% 2.57% 0.00% 2.80% 2.69%
4 Loan Loss Rate 0.00% 0.94% 0.29% 0.00% 0.00% 0.00%

Efficiency Ratios
1 Administrative Cost Ratio (adjusted) 158.59% 100.22% 82.27% 62.47% 42.27% 31.56%
2 Administrative Cost Ratio
3 Operating Cost Ratio (adjusted) 160.33% 104.40% 93.83% 75.28% 58.77% 42.43%
4 Operating Cost Ratio
5 Personal Cost Ratio 50.97% 52.59% 52.59% 45.52% 36.66% 35.58%
6 No. of Active Loan Clients Per Staff 26.00 31.79 28.94 60.42 94.67 122.04
7 No. of Active Loan Clients Per Loan Officer 43.33 55.63 45.48 90.63 137.27 216.04
8 Outstanding Portfolio Per Loan Officer 121906.67 154781.88 124510.33 245974.83 372507.53 761067.57
9 No. of Clients Per Branch 130.00 222.50 191.00 388.43 686.33 1141.93

1 Return on Assets -36.01% -39.62% -38.01% -25.12% -12.92% -2.43%
2 Return on Equity -200.00% -121.03% -112.76% -97.72% -159.18% -1757.13%
3 Yield on Portfolio 16.05% 27.94% 33.21% 38.81% 41.69% 38.67%
4 Operational Self Sufficiency 10.01% 26.76% 35.40% 51.56% 70.94% 91.14%
5 Adjusted Return on Assets -69.66% -61.04% -49.31% -31.70% -13.85% -7.19%
6 Adjusted Return on Equity -386.87% -186.47% -146.28% -123.30% -170.66% -5204.35%
7 Financial Self Sufficiency 8.21% 22.04% 30.87% 45.13% 65.87% 79.67%
8 LLR as average Loan O/s 0.00% 2.48% 2.57% 0.00% 2.80% 2.69%

9 Cost Per Unit of Money Lent during the period 0.59 0.41 0.40 0.27 0.21 0.22

1 Average Loan size disbursed during the period 3876.92 3789.95 4224.86 5253.59 5144.99 5936.29
2 Average Loan size outstanding per borrower 2813.23 2782.60 2737.92 2713.96 2713.75 3522.80
3 Average Loan size outstanding per member 2151.29 2127.59 2078.47 2067.02 2096.86 2728.90
4 Average savings outstanding per member 156.48 386.79 510.68 577.50 592.61 567.70
5 No. of members per Field Officers 56.67 72.75 59.90 119.00 177.65 278.89
6 No. of Members per Staff 34.00 41.57 38.12 79.33 122.52 157.54
7 No. of Members per branch 170.00 291.00 251.60 510.00 888.25 1474.14
8 No. of Active Loan Clients Per Branch 130.00 222.50 191.00 388.43 686.33 1141.93
9 Percentage of Savings to loan outstanding 7.15% 17.65% 23.50% 26.53% 27.26% 20.19%
10 No. of Kendra per staff 4.00 5.25 4.33 6.17 7.55 10.34
11 Current Ratio 49.09% 11.55% 19.40% 8.27% 17.47% 12.81%
12 Average Cost of Funds 0.29% 1.43% 4.06% 4.80% 6.68% 5.87%
13 Percentage of Deposits to liabilities 2.36% 9.52% 11.37% 14.54% 15.99% 14.46%
14 Quick Ratio (liabilities / Assets) 118.01% 140.98% 130.88% 123.73% 103.35% 98.66%
15 Average New Members per staff per month 6.89 4.74 3.08 7.08 11.63 23.61
16 Average Net member increase per staff per 6.30 4.29 2.68 6.42 9.85 19.25
17 Average Dropouts per staff per month 0.59 0.45 0.40 0.66 1.78 4.36
18 Capital Adequacy Ratio -0.46 -0.54 -0.48 -0.35 -0.05 0.02

Annexure - 3

Grameen Koota: A Behavioural Analysis of Personnel on the basis of FIRO-B


FIRO-B, stands for Fundamental Interpersonal Relation and Organisational
Behaviour. Interpersonal interaction is an indispensable part of human beings
throughout their life. We interact with others at home, in the office, in the playground,
in the club, in all modes of transport, while communicating, at the shop, in the cinema
theatre, at the hospital etc., - the list is endless. Further, it is rightly said that man is a
superior type of social animal; we are all elements of various societies; we do not
exist in isolation.

Man, being inquisitive and innovative has always been eager to invent, test and
validate theories which explain his behaviour in the Interpersonal arena. Thus many
behavioral scientists have propounded various Two-dimensional and Three-
dimensional theories of Interpersonal Behaviour. In two dimensional score we see the
Expressed and wanted behaviour of individuals.

We used the three dimensional theories developed by William Schutz for interpersonal
behaviour. He proposed that human behaviour takes place in three dimensions namely
Inclusion, Control, and Affection. Each of these were bi-directional classified into
'Expressed' and 'Wanted' behaviour. Thus he developed the FIRO – B instrument for
measuring the interpersonal behaviour which comprises 54 questions, 9 each of which
measures the parameters Expressed Inclusion, Expressed Control, Expressed
Affection, Wanted Inclusion, Wanted Control and Wanted Affection. A perfect balance
individual is that person who scores like following.

• Expressed Inclusion = I include people.

• Wanted Inclusion = I want people to include me.
• Expressed Control = I control people.
• Wanted Control = I want people to control me.
But it is not realistic to get these equal score by and individual since no body in the
world is perfect.


FIRO-B is an exercise which is used for the purpose of knowing the expressed and
wanted behaviour of individuals which helps in team building. It also helps in
deciding the appropriate portfolio handling for the individual because every job have
different characteristics and needs and personality match job fit is preferable to
achieve coordination among the staff and to reach the target/goals of the organization.
As it is a behavioural exercise so the results of it all depend upon the mental status of
the individual on that present moment.

For analysis of the exercise personnel have been divided in five groups or
departments as Field Operation, Administration, Finance, IT and Finance. The
analysis will be first department wise then interdepartmental comparision and at last
overall organization performance.

Field Operations:
This group includes persons from field operation, like Divisional Managers, Audit

personnel, planning and monitoring personnel and insurance personnel. According to

the nature of the job employee of this group have to work with different people

(members, official of other institution, branch level staff) so they should be inclusive

to others, at the same time they have to be open minded to be accommodate by others

too. According to the score of the game most of the people have a tendency to include

others in their work and they also show the behaviour that other should also include

them in their matters. The level of expressed influence other activities is medium and

also they do not wanted to controlled by others. Most of the people of this group

shows that they want to get close with other people. But the level of desire that other

people share their feelings is low among them. So overall it shows that people want to

initiate activities but it is subjected to the other people and circumstances. Overall the

group behaviour shows by the people is that they want to be in-group and work as a

group to achieve the goals as it is indicated by the relatively high score of inclusion.

This is the positive thing with this group. Female member of this group need to put

some stress on their controlling activities it will help them in initiating activity which

is good for leadership.


In this group all are women members so their behaviour reflect by the score, in all the

aspects they showed less reactive. All of them want moderately include people in their

activities and their desire to be included in others activities is also low. But overall

they make balance in spending time alone and with people. They scored very little in

controlling behaviour instead they wanted to be controlled by others. It shows that

they hesitate in initiating activities by themselves and they are not willing to do things

independently. It needs to be changed because know in the era of cut throat

competition they have to be independent. Administration means the department,

which is responsible for the well functioning of the organization so the employee

should be confident to take decision.

IT Department

IT department personnel’s behaviour is good enough to these profession only. As IT

departments job is very individualistic across the organizations. Same results reflected

by the professionals here, neither they want to include people in their activity nor they

want to be included in other’s activity. But they are moderately accepting both

behavioural aspects to an extent. They neither want to control others nor do they want

to be controlled by others. As there job is formalized so they also do not need show

new innovation and initiative for new activity. This is good for the nature of the job

they are having here but to work in a team they should be accommodative and



Employee of finance department shows high level of expressed inclusion behaviour

which connotes that the degree to which they want to include others in their activities

is high but at the same time they do not want to be included by other people in their

activities. But this is unilateral behaviour, instead it need to be changed into bilateral

or multilateral behaviour. Which lead to a better mutual understanding among the

employees to achieve higher success. Their expressed and wanted behaviour for

influence others activity or influenced by other is also very low. This means that they

have very little tendency to lead any group activity. So they need to work these skill

like taking initiative in group activity, Perform task independently etc..

Head Office

If we look at overall organisation behaviour then we see that the degree to which most

of the employees want to include other people in their activity is high but at the same

time they want to be included by other people in their activity. So they need to change

this approach. Average score of the all the employees regarding expressed and wanted

control is low which indicates that they are lacking leadership quality, they are not

influential and possess comparatively low degree of decision making capacity. As the

organisation also believe in the fact that “Be a leader not a boss” so it is needed that

employee should be provided opportunity to develop entrepreneurship skill. It is also

in the favour of the organisation as it is in expansion phase and there is future need of

good entrepreneurs and leaders to meet the need of organizational growth.

Field Operation

Inclusion Control Affection Total

6,9,7,7,9,8 7,9,0,7,7,8 4,7,6,5,6,8 17,25,13,18,23,24

Expressed (7.66) (6.33) (6.16) (20.16)

Wanted 2,9,0,4,7,8 2,9,3,6,8,6,4 3,5,4,5,6,5 7,23,7,17,19,17,

(5) (5.33) (4.66) (15)

Total 8,18,7,11,16,16 9,18,3,15,13,12 7,12,10,10,13,1 24,48,20,36,42,41

, 3
(12.66) (35.16)

(11.66) (10.82)
Person Included: Haridarshini, CBC, Gopal, Srivatsa, Laxminarayan


Inclusion Control Affection Total

Expressed 5,4,6,7,7 1,1,3,2,2 5,8,2,1,6 11,13,11,10,15

(5.8) (1.8) (4.4) (12)

Wanted 0,8,4,8,7 5,9,2,3,7 4,5,3,3,6 9,22,9,14,20

(4.6) (5.2) (4.2) (14)

Total 5,12,10,15,14 6,10,5,5,9 9,13,5,4,12 20,35,20,24,35

(10.4) (7) (8.6) (26)

Person Included: Latha, Mamtha, Sumithra, Sangeetha

IT Department

Inclusion Control Affection Total
6,7,3 4,5,3 0,1,8 10,13,14,

Expressed (5.33) (4) (3) (12.33)

Wanted 4,7,1 4,3,7 1,4,1 9,14,9

(3.66) (4.66) (2) (10.32)

Total 10,14,4 8,8,10 1,5,9 19,27,23

(9) (8.66) (5) (22.65)

Person Included: Priyanka, Nagananda, Arta


Inclusion Control Affection Total

7,9 2,1 7,2 16,12

Expressed (8) (1.5) (4.5) (14)

Wanted 0,4 4,5 7,4 11,13

(2) (4.5) (4.5) (12)

Total 7,13 6,6 14,6 27,25

(10) (6) (10) (26)

Name of the person Included: Shivananda, Laxmi

Head Office

Inclusion Control Affection Total

7.66,5.8,5.33,8 6.33,1.8,4,1.5 6.16,4.4,3,4.5 20.16,12,12.33,14

Expressed (6.7) (3.14) (4.51) (14.62)

Wanted 5,4.6,3.66,4 5.33,5.2,4.66,4. 4.66,4.2,2,5.5 15,14,10.32,12

(4.315) 5 (4.09) (12.52)

Total 12.66,10.4,9,13 11.66,7,8.66,6 10.82,8.6,5,10 35.16,26,22.65,26

(11.015) (8.32) (8.6) (27.14)

Note: These scores are obtained by the employee FIRO-B exercise sheet.

Bracketed score is average score of that group. Name and score are not kept in

order due to the confidentiality of the game.