M-CRIL regularly undertakes long-term (3-7 years) and short-term (1-2 years) performance monitoring of microfinance institutions across countries on behalf of multi-lateral and bi-lateral developments organisations, donor organisations and financial institutions.

Monitoring service comprises of combinations of ratings, desk reviews and capacity building needs assessment of microfinance institutions. M-CRIL sets performance targets for an MFI, monitors the performance and makes recommendations to address areas of weakness. Longer term monitoring and hand holding enables an MFI build sustainable microfinance operations. M-CRIL's experience has indicated that MFIs benefit significantly more from such longer-term assessment and monitoring support as compared to that from one off assessments.

Following is an example of a typical 3-year M FI Assessment & Monitoring Programme. Programmes are customised to serve specific needs.  

Desk Reviews  

M-CRIL's Desk Reviews, undertaken either quarterly or biannually, complement the rating service to assess an MFI's progress between two full-scale ratings. Desk Review comments on the risk perception and suggests a revised exposure limit and lending conditions, if required, for the remainder of the rating validity period. The report provides observations on changes in the status of the MFI on governance aspects, managerial factors and financial performance and the progress made by it since the previous rating.

Desk Review Methodology

The review is based on information on the operational and financial performance of the rated institution which is assessed based on the projections of the organization as well as on the projections undertaken by M-CRIL in its rating. The MFI is required to provide the following documents ready for the quarter or the half-year period for which the review is being undertaken.

	Financial Statements
	Receipts & Payments, Balance Sheet and Income & Expense statement. In case the Balance Sheet and Income-Expense statement are not available, the Receipt & Payments statement is required
	Narrative Report
	A short narrative report on the steps taken and the progress made on the weaknesses identified in the rating report. The review assesses MFI performance on the three broad areas of governance, management and financial performance using select indicators

Capacity Building Needs Assessment

M-CRIL has developed a comprehensive understanding of systems and resources required for running successful microfinance operations. M-CRIL uses this experience to assess the capacity building needs of MFIs across regions. The Capacity Building Needs Assessment report details areas of improvement across the MFI's operations and recommends appropriate actions for improving the MFI's capacity.

Capacity Building Needs Assessment Methodology

The assessment involves evaluation of MFI's abilities in relation to the following operating aspects

	Setting up basic operating systems
		Loan appraisal, documentation and record keeping
		Accounting
		Cash and financial planning (especially budgetary planning)
		Portfolio management – disbursal, collections, tracking of overdues and diversification
		Management information systems
		Internal control and audit
	Members and group promotion and development
	Fund mobilisation
	Leadership and strategic planning
	Scalability

The next step in the process is to plan the appropriate form of capacity building method/s. Capacity building could be in the form of classroom training, short-term consultant's assistance, study tour of an established MFI or in the form of regular monitoring. This step is followed by prioritisation of areas that need capacity building.