Requirements to Microfinance Organizations

Requirements to lending to microfinance organizations:

Selection criteria

When selection microfinance organizations the OJSC SME Bank uses the following criteria:

Organizational criteria:

  • legal persons registered in compliance with the RF legislation (microfinance organizations that provide microfinancing services for SMEs and operate as non-banking entities, have the structure of a limited liability company, an open or closed joint stock company, or a non-profit organization, including in the form of a fund, an agricultural credit consumer union, a credit consumer union where SMEs can be shareholders) (the 1st Level Microloan PLUS product covers all of the above mentioned organization types with the exclusion of unions);
  • absence of negative information with respect to the business reputation of the microfinance organization;
  • absence of sanctions on the part of supervisory and regulating authorities in the form of license suspension, prohibition to perform certain operations, in the cases where a license or permit is required in accordance with the applicable legislation.

Financial criteria:

  • fully formed authorized capital;
  • positive value of equity capital and net assets;
  • absence of litigations* between the microfinance company and state authorities, state entities, taxation and supervisory authorities, with counteragents where the microfinance organization acts as the defendant and the claims exceed 5% of its total balance;
  • absence of an unstructured defaulted debt to the budget, extra-budgetary funds and other state entities;

* this covers litigations where judgments have not taken legal effect, or have taken effect but have not been fulfilled by the microfinance organization where the claimant is the Bank of Russia, the Russian Ministry of Finance, the Federal Financial Markets Service, the Federal Financial Monitoring Service, the Federal Tax Service of Russia, the Prosecutor’s Office of Russia.

Additionally for the 1st Level MICROLOAN product:

  • absence of losses within the last 3 closing dates leading to a net assets value decrease of more than 25% against the current accounting year maximum;
  • absence of defaulted payments with respect to the loan portfolio for the last 12 calendar months (positive credit history);

Additionally for the 1st Level MICROLOAN PLUS product:

  • absence of losses as of the closing date leading to a net assets value decrease of more than 25% against the maximum for the past 12 months;
  • absence of defaulted payments with respect to the loan portfolio for the last 180 calendar days (positive credit history);
  • the shareholder base of the microfinance organization should include banks (or their subsidiaries) assigned to I and II quality category, and/ or state authorities with the minimum share of 20%;
  • practical experience in SME project funding — at least 1 year;
  • a financial standing not lower than average as determined in accordance with the SME Bank regulations;
  • the loan portfolio as per one borrower — under 25% of the total loan portfolio;
  • presence of an internal regulation governing the selection of SMEs, including an assessment of their financial standing, project implementation terms.

Preference is given to microfinance organizations which are not credit institutions (including non-banking credit institutions) and have:

  • practical experience in funding SME projects — at least 1 year;
  • capital value (p. 490 F № 1) in accordance with the closing date balance of the microfinance organization — over 10.0 mln. RUB;
  • the overall amount of loans awarded by the microfinance organization to one borrower not exceeding 25% of the overall amount of loans granted by the microfinance organization. In case the microfinance organization is a credit union (excluding agricultural ones) the overall amount of loans awarded to one borrower shall not exceed 10% (20% — for a credit union with the operation history of less than two years since the date of incorporation) of the overall amount of loans granted by the microfinance organization;
  • presence of an internal regulation governing the selection of SMEs, including an assessment of their financial standing, project implementation terms.


Information on SME lending via microfinance organizations:

 


Sergei S. Voevodin
Deputy Director
Small and Medium Enterprise Financing Department
Tel.: +7 (495) 783-7998, extension 04-02

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