A TOFFE Risk Assessment Report from CreditWatch

This paper presents a risk assessment report on the Welfare Society of Eastern India (WSEI) conducted by Credit Watch. TOFFE is the risk assessment tool of Credit Watch designed for this purpose.

The paper discusses:

• The background: WSEI is an NGO operating in West Bengal, India, with a substantial microfinance program along with other developmental programs;
• The people involved in its operations;
• The economic environment: WSEI operates mainly in the area of agriculture, animal husbandry, poultry and sea-fishing activities.

The paper then lists the scoring of WSEI on the following dimensions of TOFFE:

• Outreach of financial services;
• Financial intermediation efficiency;
• Financial transparency and information system;
• Effective business risk and institutional endurance:
  • Financial and organizational sustainability;
  • Competition;
  • Intangible assets and social capital.

The paper presents the overall rating as follows:

• Based on the scores obtained by WSEI on various dimensions, the paper gives it a rating of AA which signifies that it is a low-risk NGO;
• In terms of outreach, WSEI has accomplished commendable levels in a short time;
• It has high levels of financial and organizational sustainability and a reasonable level of operational efficiency;
• It has high intangible assets in the form of social capital or trust;
• There is significant room for improvement in the operation of its formal Management Information System (MIS) and Internal control Systems.

The paper recommends that WSEI should:

• Invest more resources in devising an internal control mechanism and developing an effective MIS;
• Work towards a succession and back-up strategy;
• Seek to maintain a minimum loan disbursement target and reach;
• Be careful in maintaining and nurturing its social capital.