among them, which may lead to delays in sanction, double financing, etc. the building up, and sharing, of credit information will help in enhancing synergies among the various institutions and also ensure avoidance of multiple financing and consequent over - indebtedness. in this context, let me add that as per credit information companies ( regulation ) act, 2005, nbfcs, as credit institutions, are required to be members of at least one credit information company ( cic ) ( currently there are four cics ). what is important is that credit data regarding all the borrowers should be furnished to the concerned cic accurately and timely and full use should be made of the database of cics while extending credit, to guard against adverse selection and over indebtedness. diversification it was observed that mfis found a few geographies more profitable than others and against conventional wisdom which advocates diversification, ran in droves to the same geographies with southern region showing significant concentration of shgs and mfis. excessive proliferation of entities in a few regions, led to immense, and, sometimes, unhealthy competition leading to perverse practices. it is now comforting to see that, learning from the recent episode, the mfis are reorganising themselves and are spreading into, hitherto, untapped regions. diversification helps not only mfis in withstanding any region specific shocks but also help customers at large, by spreading the microfinance across the country. improvising the business model – reducing costs microfinance is a labour intensive sector involving significant delivery costs. while the entities could build these costs into their services and charge the customer, which many in fact did, the more efficient way of protecting or increasing one ’ s margins is reducing the operational costs by enhancing efficiency and leveraging technology. mfis should not pass on their operational inefficiencies to clients in the form of prices that are far higher than they need to be. considering the profile of the borrowers who are poor, to whom even a small increase in rates could make a lot of difference, mfis should strive to build more cost effective and efficient delivery models to serve their clientele better. credit rating of mfis the rating of mfis assumes critical importance as mfis are sourcing financing from banks and other institutions. there are several mfis in the country and their rating helps the lend

should support the enterprise business strategy. further, the governance oversight also should ensure putting in place processes by which proper coordination is established at organisational level between cio / cto and ceo with members across the business units so that the it deployment strategy synchronises with the business strategy in order to harness the full capability of the it systems. notwithstanding the timelines – be it short term or long term – it is the turnaround time of the it strategy and its implementation that would be critical to the success of any business strategy. therefore, at the board level it would be imperative to ensure that the business and it units are not driven in silos. some of the important questions that arise in this context are : who decides it resource / asset requirement? is it by it team or by business team? or is it board driven? investment in it is a strategic decision which will have large long term impact on the bank. it is proven fact that the it strategy of the firm and its declaration of it investment plan impact the value of the firm. 2 it strategy can be deployed differently in different circumstances and include : automate – i. e. substituting manual intervention with automated business processes provide information, at the asking, for decision making – i. e. provide correct information about business activities to senior management on time for taking right decision and also provide information about business activities to employees across the firm transform – fundamentally redefine business and industry processes and relationships combination of the above – while under normal circumstances automation could evolve over a period of time, in an incremental manner, typically in kaizen mode, the sudden challenge of the quickly changing business environment may need sweeping transformation, in the kaikaku mode. it is important for any bank to be certain about what strategy they are following. when banks took upon the core banking implementation challenge, what was actually targeted? was it 100 % branches coverage or effective managerial control over the banking assets and liabilities or mis or merely regulatory compliance and in the process harnessing residual benefits? was it “ automate ” strategy or simple “ mechanisation ”? or was it the “ transform ” strategy? even after many years of cbs implementation banks are struggling to provide information required for decision making or not able to automate the regulatory report “ the value relevance of announcement of transformational information technology investment ” – bruce dehning, veron j. richardson and robert w amud bis central bankers ’ speeches requirements out of cbs. this raises the