What should be the financial information system of Micro Finance Institute (MFI)?
Tuesday, 12 February 2008

Md. Azahar Ali

In the age of information technology everybody knows- what is information? How it is essential? How it is made? After that I want to say regarding information also. You can say that it’s old topic to know & read as new. Information is meaningful data for communication with others. When a man wants to communicate with others to know something or get something or deliver something he has to supply specific requires what he says and demand. This specific something is called information. Information consists with various data. But it is remember that information must be true & correct otherwise it will be waste of time & money. It has many topics concerning information.

Now I desire to address financial information system of micro finance institute. Micro Finance Institute is the upcoming sector in the world. It is a great news that Most of the developed countries are going to start micro finance operation in their countries like Bangladesh. In the world, Bangladesh is the enthusiast in this sector. You may be please to know that many countries have recognized the Bangladesh by Micro Finance operation as new. I feel that it will be spread all over the countries of the world within short time. 

But the accountability and financial information system of Micro Finance Institute differ like many men many mind. Generally small micro finance organizations depends on donors or big organization to get the fund for continuing micro finance operation smoothly and for that they have to submit various financial data them according to their requirement.

As a result independency of the organization is hampering and always they keep under pressure. So, It may keep to request the entire key person of Micro Finance Institute (MFI) and government to set up standard financial information system for micro finance institute so that an organization can communicate and share with others easily and if do that it will be better for  government and organization to take any decision in this matter. If the set up standardized financial information system for micro finance institute the donors will be understand easily and compare with others organization and it would be better for them to take any decision also.

Financial information and financial information system is the most important for micro finance institute. You can know the sustainability of the organization by this information. An organization could not run efficiently without delivered accurate financial information. But what is financial information? What should be the financial information system?

Financial information is the related with financial data, such data assemble, calculate, classify, fund management, risk analysis, achievement, portfolio, sustainability condition, budgeting and goal of the organization and beneficiaries accountability and their development. But the method of this data communicating with other and supply to management is called the financial information system i.e financial information system is a method, convention, rules of collect financial data from branches within organization and supply to management and communicates and share with outsider.

When the management wants to take any decision they have to depend on financial information. If the financial information and information system is not correct management will not take any decision smoothly and for that an organization efficiency would be hampered and uncertainty. Financial information is tool of management.

Finance is the heart of the Micro Finance Institute and most of the organization could not run smoothly due to lack of utilization of fund. They do not know how to prepare efficient budget, utilization fund and liquidity condition of the organization which are source of financial information. The organization could not presentation their organization condition to the donors or others due to lack financial information system as well, which is important.

Finance is the related with all the operation and we can say that root of all operation are finance. If the financial base is not strong the organization sustainability will uncertain. On the basis of financial information the management can realize the organization sustainability. In the globalization world financial information must be supplied in due time to survive muscularly.

Organization efficiency depends on timely supply of correct financial data. Every organization has a unique formula for collecting data from branches to prepare financial statement and others statement provided to management or others but it is to prepare in accounting system when it is provided to outsiders. Data distributed/ collecting system depends on management require.

However, data collecting procedure must be friendly user so that representative can understand easily, timely and correctly. Firstly, requirement of financial data to be definite and format will be prepared according to the organization demand and those formats send to be branch where from data will be collected and train up personnel so that they can response with that requirement.

Financial information system to be made in such way so that staff can understand & fulfill organization requirement and not to require the specialist in entry & every level. If the professional / specialist need entry or every level you would not cost minimize which is very important to survive and achieve the goal of the micro finance institute.

ASA is one of the leading micro finance institute in the micro finance world and it has able to achieve to minimize the cost in every field. ASA’s financial information system is an innovative formulas and it may be vital role in the micro finance world. Its easiest and non commerce background can prepare easily and timely.

The micro finance institute can follow the ASA’s financial information system to survive in the long run. Above all the Micro Finance Institute should be set-up standardized financial information system based on their need by the mutual dialogue with the MFI key person, government, Accounting Institute and related specialist.

Md. Azahar Ali
Finance Officer
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