by Diana Baide -

MICROCAPITAL BRIEF: Founder of Grameen Bank and Nobel Peace Prize Winner Dr Muhammad Yunus Speaks Out Against the Commercialization of Microfinance Institutions (MFIs)

Dr Muhammad Yunus, founder of Grameen Bank and winner of the Nobel Peace Prize for his work in microcredit, has again spoken out against the commercialization of microfinance institutions (MFIs) and their deviation from the mission of poverty alleviation.

by Witt Gatchell -

MICROCAPITAL BRIEF: Yes Bank of India Recalls Approximately $22m in Loans Advanced to Microfinance Institutions (MFIs)

Yes Bank Limited, a private bank based in Mumbai, India, has reportedly recalled approximately INR 1 billion (USD 22.2 million) in loans it advanced to microfinance institutions (MFIs).

by Witt Gatchell -

MICROCAPITAL BRIEF: Five Indian Microfinance Institutions (MFIs) Agree to Cut Interest Rates to 24%

The CEOs of Indian microfinance institutions (MFIs) SKS Microfinance, BASIX, Spandana, Share Microfin and Asmitha Microfin have agreed to reduce interest rates charged to borrowers to 24 percent on an annual basis. The announcement came after a meeting with financial services secretary, Mr R Gopalan.

by the MicroCapital Team -

MICROCAPITAL BRIEF: Wall’s Street Advisor Services Releases “Listed Microfinance Institutions’ Shareholder Valuations and Their Stocks’ Results”

Wall’s Street Advisor Services (WSAS), a US-based consultancy, has released a report, “Listed Microfinance Institutions’ Shareholder Valuations and Their Stocks’ Results”, which considers how publicly-traded shares of microfinance institutions (MFIs) are valued.

by Diana Baide -

MICROCAPITAL BRIEF: CGAP (Consultative Group to Assist the Poor) Labels IPO of Indian Microfinance Institution SKS “A Critical Transition”

A paper recently published by CGAP (Consultative Group to Assist the Poor) discusses how initial public offerings (IPOs) can shape the microfinance industry.

by Trevor Kwong -

MICROCAPITAL BRIEF: Muhammad Yunus and Vikram Akula Debate Microfinance Models at Annual Meeting of Clinton Global Initiative (CGI)

At the annual meeting of the Clinton Global Initiative, a forum on international development founded in 2005 by former US President Bill Clinton, Nobel laureate Muhammad Yunus and Vikram Akula, founder of Indian SKS Microfinance, which recently went public, discussed different models for microfinance institutions (MFIs).

by Lindsey Shaughnessy -

MICROCAPITAL BRIEF: Spandana Sphoorty Financial Limited Likely to Hire Citigroup, Morgan Stanley and JM Financial Limited to Manage its Initial Public Offering

Spandana Sphoorty Financial Limited, a microfinance institution (MFI) based in India, is reportedly likely to hire three global firms to manage its initial public offering (IPO): Citigroup, a US-based international financial services conglomerate; Morgan Stanley, a global financial services firm headquartered in New York City; and JM Financial Limited, an integrated financial services group based in India.

by Julia Korn -

MICROCAPITAL BRIEF: John Cookson of Big Think Argues Socially Responsible, Profit-Maximizing Microfinance Are Mutually Exclusive; Cites Muhammad Yunus’ Appearance on “The Simpsons” as Proof of Mainstreaming

John Cookson, a writer for an online “forum for connecting people and ideas,” Big Think, recently wrote a blog entry entitled “Microfinance: For Community or for Gain?” which questions the present-day motives of microfinance institutions (MFIs) quoting Jonathan Morduch, Professor of Public Policy and Economics at the New York University Wagner Graduate School of Public Service.

by Jennifer Shevock -

MICROCAPITAL BRIEF: Indian Microfinance Institution Spandana Sphoorty’s Board Actively Evaluating an Initial Public Offering (IPO)

Spandana Sphoorty Financial Limited, an Indian microfinance institution, is evaluating an initial public share offering (IPO) following the recent launch of SKS Microfinance’s IPO, the first IPO by an Indian microfinance institution.

by Stefanie Rubin -

MICROCAPITAL BRIEF: Microfinance Experts Express Concern Over Rapid Growth of Microlending by For-Profit Organizations in India

An article in the Financial Times titled, “Microfinancing Spreads Beyond India’s Grassroots,” discusses recent concerns raised by some microfinance experts surrounding the increase in microlending by profit-oriented companies in India.

by Conner Brannen -

MICROCAPITAL BRIEF: Indian Microfinance Institutions (MFIs) Receive $84m in Private Equity Investment in the First Half of 2010

Indian microfinance institutions (MFIs) have reportedly attracted private equity investment totaling INR 3.86 billion (USD 84 million) between January and June of this year – an increase of approximately 15 percent over the first half of 2009. According to unnamed “industry experts,” the increase is a result of the high profitability of the majority of Indian MFIs, brought about by the high interest rates that MFIs charge (30-60 percent per year) and high repayment rates (exceeding 95 percent).

by Jennifer Shevock -

MICROCAPITAL BRIEF: Private Equity Interest in Indian Microfinance Industry is Prominent Topic at Capital Markets Conference in New Delhi Sponsored by ACCION International, Citi Foundation and EDA Rural Systems

Amid increasing demand for capital in India’s microfinance industry and growing interest of equity investors, concerns exist such as valuation bubbles and whether growth can be sustained were discussed at the recent “Microfinance Cracking the Capital Markets Conference & Investment Marketplace” held in New Delhi.

by Conner Brannen -

MICROCAPITAL BRIEF: Nokia Launches Microfinance Scheme to Sell Mobile Phones to Poor People in Rural India

Nokia, a Finnish telecommunications company, is partnering with microfinance institutions (MFIs) to allow rural residents in the Indian states of Punjab and Haryana to use microloans to buy mobile phones. The company has already formed partnerships with several microfinance MFIs in the area, including SKS Microfinance, which is based in Hyderabad; Ujjivan, which maintains offices in Bangalore, Delhi, Kolkata and Pune; and Madura Microfinance, headquartered in Adyar. The payment scheme for the use each mobile phone will be as low as INR 100 (USD 2.14) per week.

by Matthew Fox -

MICROCAPITAL BRIEF: Microfinance Valuations Too High? Too Low? Depends Who You Ask

In the global microfinance industry, the topic of valuation is being debated by investors and representatives of microfinance institutions (MFIs). In an article released by the Financial Chronicle, a Hyderabad-based business news publication, Padmaja Reddy, managing director at Spandana Sphoorty Financial, proposes that MFIs share similar business models with banks and non-banking financial institutions, but are unjustly undervalued. Investors respond that the risks involved in MFI investment are too high. In a related article, The Wall Street Journal, a US-based business newspaper, cites the risks involved in MFI investment. Avnish Bajaj, managing director of Matrix Partners India which has an investment in one of India’s largest microfinance institutions, states, “There are elements of bubble in this sector. Over-lending, lack of processes, excessive geographical concentration and excessive product concentration,” all increase investors’ level of risk.

by Matthew Fox -

MICROCAPITAL BRIEF: Microfinance Expansion Suggests Increased Default Risks Says Financial Times

As part of its ‘BeyondBrics’ publication on business markets in emerging countries, the Financial Times (FT), a business news organization based in London, England, has predicted increased default risks in microfinance institutions (MFIs). James Fontanella-Khan, an online editor for FT, states, “Microfinance is expanding fast in emerging countries. The number of financial institutions piling in to grab a slice of the market is expanding at an even faster rate.”