Internal controle system

SMCS is committed to good Corporate Governance and is consistently striving to further strengthen the same to ensure greater transparency and better coordination at all levels. SMCS believes that good corporate governance is much more than complying with legal and regulatory requirements. Good governance facilitates effective management and control of business, enables SMCS to maintain a high level of business ethics and to optimize the value for all its stakeholders. The objectives can be summarised as:

  •  To protect the interest of all stakeholders such as customers, employees and society at large.
  • To ensure transparency and integrity in communication and to make available full, accurate and clear information to all concerned.
  • To ensure accountability for performance and customer service and to achieve excellence at all level.
  • To provide corporate leadership of highest standard for others to emulate.
  • SMCS’s Corporate Governance philosophy is woven around its total commitment to ethical practices in the conduct of its business.

SMCS  has been scrupulously  ensuring compliance with norms laid down by regulatory authorities like RBI in all areas.

To ensure that the corporate philosophy of SMCS is practised in letter and  spirit in all the functional areas of SMCS for fulfilling the Mission adopted,SMCS has an effective and transparent system of Corporate Governance driven by a professional Board.

Internal Control:
SMCS has streamlined its internal control system introducing following procedure:

  • Monthly Internal Audit by Internal Audit Team
  •  Quarterly Audit by Chartered Accountant Firm
  • Strengthening the monitoring visit to the loanees and areas
  • Taking corrective measures on the ratio analysis made by Accounts Dept. from time to time.

The MIS system is maintained through computer by a Software Package installed by Elitser IT Solutions Pvt. Ltd. Hyderabad and reports generated on portfolio quality and overdue are regularly put up to the Board and also reviewed by the WTD. The Demand, Collection & Balance (DCB) statement as per NABARD guidelines is generated by the software every month. To add value to the internal control, the following MIS reports are generated.

  • Monthly Progress Report
  •  Weekly and Monthly demand statement
  •  Overdue statement
  •  DCB statement
  •  Ageing Analysis Statement
  • Funder wise disbursement status
  •  Purpose wise loan disbursement

SMCS is negotiating with various Companies who are providing handset for delivering receipt at the time of collection by our clients
The accounts are maintained in Tally package which is working well. Process of integration between the Account’s Tally Package and the MIS Software package is in progress.

Credit Rating:
a. Credit Analysis & Research Lt (CARE Ratings) have assigned a grading of “MFI 3+” in their report dated 25.10.2012, which has improved from their rating report of MFI 3 given on 08.09.2011
b. CARE Rating in their report dated October 2012 on RBI’s guidelines for priority sector bank lending to MFIs (w.e.f. April 1, 2011) based on Malegam Committee recommendations has mentioned as follows:

Code of Conduct Assessment:
ACCESS ASSIST, an agency approved by SIDBI was assigned Code of Conduct Assessment (COCA) of your company. ACCESS ASSIST in their report dated October 2012 assigned SMCS overall Grade of A (2nd highest in 6 grades scale, highest being AA). As per Access Assist it indicates that “the organization has good appraisal systems, transparent pricing policies, employee friendly HR policies to ensure alignment and adherence to a developed Code of Conduct. The client comprehension across SMCS is excellent with defined Code of Conduct practices followed throughout the operations. More could be done to improve the diversity in products and services offered.”

Vigilance
Vigilance administration is an important part of management function, aimed at improving the efficiency and effectiveness of the organisation.
Stress is being laid on preventive vigilance by initiating preventive vigilance studies at branches, discussing on preventive vigilance aspect in monthly staff meetings.
Codes of Conduct as prescribed by Sa-Dhan & approved by the Board of Directors are being followed strictly by all in SMCS.

Inspection and Audit
SMCS has its own internal Inspection Department that examines the adherence to the systems, policies and procedures. The guidelines received from the Board, Audit Committee of the Board and others have become part of the Internal Control System for better risk management. Inspection Department carries out Inspection of branches and Head Office as per the periodicity decided by the Audit Committee of the Board and examines adherence to such systems of internal control and risk management. The Auditors during the course of their audit also visit some of the financed SHGs/NGOs both standard and NPAs. One Chartered Accountant farm also audits our branches and Head Office at quarterly intervals.