by Chinq Yee Chong -

MICROCAPITAL.ORG STORY: India-based Credit Rating Agency Crisil Observes That Percentage Of Bad Loans In Indian Microfinance Institutions May Triple As Microborrowers Feel The Impact Of The Global Economic Crisis

In an article entitled ‘MFI’s bad loans may triple: Crisil’ on India’s Business Standard online news portal [1], it was stated that the percentage of bad assets of MFIS’ is expected to triple to 1.5 percent from 0.5 percent by March 2010, as compared to the levels of bad assets in March 2009.This was the conclusion of India-based credit rating agency, Crisil. The agency attributed the increased levels of deteriorating assets to the global economic crisis which has had an adverse impact on microborrowers’ ability to repay their loans. Nonetheless, Crisil’s managing director and CEO, Ms Roopa Kudva stated that the deterioration in asset quality was still not at the levels seen in 2007 and that MFIs’ asset quality was generally healthier than those of other participants in India’s financial sector.

by Chinq Yee Chong -

MICROCAPITAL.ORG STORY: Observations In The Philippine Star and The Manila Times On Rural Microfinance Institutions In The Philippines – The Philippines Central Bank Bangko Sentral ng Pilipinas Moves To Allow Rural Banks to Sell Microinsurance And Consolidation May Benefit A Minority Of Rural Microfinance Institutions That Are Undercapitalized

It was recently reported on the online news portal of The Philippine Star [1] that the Philippine central bank, Bangko Sentral ng Pilipinas (BSP) [2], is taking steps to allow rural banks and other community-based banks to sell simple microinsurance products. BSP officer-in-charge Mr Nestor Espenilla Jr informed members of the Rural Bankers Association of the Philippines [3] that a formula allowing rural banks to sell simple insurance products to cover mortgage redemption, the protection of farm equipment and services vehicles as well as health insurance would soon be presented to the Monetary Board [4] in the Philippines for approval.
At the moment, foreign and commercial banks can sell insurance products of their affiliates as long as they hold a minimum 5 percent stake in the insurance affiliate. Unlike such banks, rural financial institutions often lack the resources to invest in insurance companies.

by Chinq Yee Chong -

MICROCAPITAL.ORG STORY: International Banking Systems Online Journal Publishes Supplement On The Role of Technology In Microfinance And Highlights Importance Of Risk Management Systems

The International Banking Systems publication (IBS), an online journal that provides information on banking systems and operations, have produced a detailed supplement on the role of technological systems in microfinance [1]. An article within the supplement entitled ‘Technology for Microfinance – Trends driving the technology’ [2], the authors discuss the growing importance of risk management systems in MFIs. These systems are significant as they allow MFIs to address critical issues such as over-indebtedness, a problem which has become acute for some MFIs in the current financial turmoil, and report to their investors promptly.

by the MicroCapital Team -

MEET THE BOSS: Emmanuelle Javoy, Managing Director of Planet Rating

Emmanuelle Javoy is the Managing Director of Planet Rating. This feature is sponsored by PlaNet Finance.

MicroCapital: Please briefly describe your organization.

Emmanuelle Javoy: Planet Rating is a microfinance rating agency, meaning that we provide ratings or evaluations of the sustainability of microfinance institutions (MFIs) – both the financial and social sustainability of the institution.

by Diya Chopra -

MICROCAPITAL.ORG STORY: Peruvian Commercial Bank, Banco de Credito, to Acquire Microfinance Group, Financiera Edyficar from CARE, International Finance Corporation (IFC), and MicroVest (MV)

Banco de Crédito del Perú (BCP) recently announced its deal with nongovernmental organization CARE, to purchase a 77.2% stake in the Peru-based microfinance company, Financiera Edyficar. BCP is a Peruvian publicly-traded commercial bank founded in 1889 and owned by Credicorp Ltd, a financial holding company in Peru. BCP offers services and products to businesses and individuals, as well as small and medium-sized enterprises [1]. In March 2008, BCP reported total assets of USD 17.3 billion, a debt-equity ratio of 1,422.10%, and a return on average assets of 2.13%. It has a BBB- credit rating from both Standard & Poor’s and Fitch Ratings. As of June 2009, BCP claimed 32% of loans and 36% of deposits in the Peruvian banking system. Approximately 97% of BCP is owned by Credicorp [2].

by Bharathi Ram -

MICROCAPITAL STORY: Mexican Microfinance Institution Banco Compartamos Reports Second Quarter Results; Wall Street Journal Analysts See the Bank’s Target Market to be Largely ‘Recession Proof’

Banco Compartamos, a Mexican microfinance bank, announced its non-audited financial results for the second quarter ending June 30, 2009. The figures were announced in pesos and have been converted here to US dollars. The figures adhere to the requirements of the Comision Nacional Bancaria y de Valores (CNBV), the Mexican banking and securities regulator [4]. Compartamos underwent an Initial Public Offering (IPO) in April 2007, and has since been publicly traded on the Mexican Stock Exchange. The highlights of the report were the net income increase of 31 percent compared to the same quarter of last year. The result gains more significance when the global financial recession and performance of the overall banking system is taken into account. While filing the report with the Mexican Stock Exchange, the bank has stated that Net profit was Ps 327 million (USD 24.7 million), up from the Ps.249 million (USD 18.8 million) recorded in the second quarter of 2008. Earnings per Share (EPS) was Ps.0.76, up from the Ps.0.58 per share for the second quarter of 2008 [1].

by Uyen Tran -

MICROCAPITAL STORY: The International Finance Corporation (IFC) in Washington, DC and European Investment Bank (EIB) in Luxembourg Create the Global Emerging Markets (GEMs) Risk Database Consortium with the European Bank for Reconstruction and Development (EBRD), African Development Bank (AfDB), and Inter-American Development to Join (IDB)

The International Finance Corporation (IFC), a member of the World Bank Group, and the European Investment Bank (EIB), the long-term lending bank for the European Union (EU), have agreed to create a Global Emerging Markets Risk Database Consortium. Other international financial institutions (IFIs) that will be joining the Consortium include the European Bank for Reconstruction and Development (EBRD), the African Development Bank (AfDB), and the Inter-American Development Bank (IDB). The Consortium is to pool data on individual institutions and strengthen risk-management practices among multilateral banks.

by Sally Levy -

MICROCAPITAL STORY: Philippines Government and Microfinance Institutions (MFIs) Initiate Loans Totaling $3.3b Since July 2004

In 2004 the Philippines Government and private microfinance institutions (MFIs) agreed to increase microfinance lending across the country. At the 11th anniversary of the Filipino National Anti Poverty Commission (NAPC), data was released indicating that loans totaling PHP 161 billion (USD 3.3 billion) have been made to 5.8 million microfinance clients from July 2004 to April 2009. The NAPC, a government body, estimated that 2.7 million jobs have also been created through this investment. In 2007 PHP 25.9 billion (USD 537 million) in loans were made and this grew to PHP 64.8 billion (USD 1.3 billion) in 2008. From January to April 2009 PHP 9.7 billion (USD 201.1 million) microfinance loans have been created. It was not clear how this data was collected or the methodology behind it.  

by Sally Levy -

MICROCAPITAL STORY: European Fund for Southeast Europe (EFSE) provides EUR 5m Microfinance Loan to ProCredit Bank Albania

ProCredit Bank Albania has received a EUR 5 million loan from the European Fund for Southeast Europe (EFSE), a Luxembourg based microfinance fund. The loan is split into two components with EUR 2 million for Energy Efficiency Housing Loans and EUR 3 million for Rural Loans. ProCredit Bank will be the first bank in Albania to offer these specialized energy loans which are aimed at helping families and businesses reduce their energy costs by financing energy-saving technologies. The bank also hopes to extend its outreach to small and medium enterprises (SMEs) in rural areas as the Rural Loans will be targeted towards small-scale agricultural clients.  

by Jaclyn Berfond -

MICROCAPITAL STORY: Inter-American Development Bank’s Multilateral Investment Fund (MIF) Invests USD 2.15 million in Centro de Investigación y Desarrollo Regional (CIDRE) to Expand Microfinance Services

The Inter-American Development Bank’s Multilateral Investment Fund has approved a USD 2 million loan and USD 150,000 in technical cooperation to help Centro de Investigación y Desarrollo Regional (CIDRE) to expand access to credit and other financial services for small producers, micro and small enterprises and rural communities in Bolivia. The funding will allow CIDRE to expand its loan portfolio, as well as assist in the transition into a regulated microfinance institution (MFI).

by Laura Anderson -

MICROCAPITAL STORY: SKS Microfinance Plans to Raise USD 104 Million in Rated Debt

SKS Microfinance, a Hyderbad-based microfinance institution (MFI), announced it plans to raise Rs. 500 Crore (USD 104 million) in rated debt products in order to satisfy customer loan demands.  According to Dili Raj, Chief Financial Officer, the new debt will include bonds, commercial paper (CP), and securitization of receivables.  Included in the total amount is the recent one-year, 10 percent USD 16 million bond issue reported in a recent MicroCapital story.  Those bonds were listed on the Bombay Stock Exchange and fully subscribed by Standard Chartered Bank.  In fiscal year 2009, SKS raised a total of Rs. 3,700 Crore (USD 767 million) in debt, of which Rs. 150 Crore (USD 31 million) was in bonds, CP, or securitizations.  This fiscal year SKS plans to issue an incremental Rs. 5,000 Crore (USD 1 billion) in debt.

by Zoran Stanisljevic -

MICROCAPITAL STORY: Co-Operative Bank and Deutsche Bank to Launch a USD 50 Million Microfinance Fund to Directly Target Credit Unions and Co-operatives

Co-Operative Bank and Deutsche Bank (DB) have recently announced the launch of a USD 50 million microfinance fund to target credit unions and co-operatives directly.  The “Global Co-operative Development Fund” (GCDF) is expected to launch this month and will be open to investors in the fourth quarter 2009.  The fund aims to provide capital to the poorest communities with a geographical target of Central Europe, Asia, and Latin and Central America.  The GCDF will be managed by Deutsche Bank and sub-managed by Oikocredit.  The Co-operative Bank will be principal sponsor for the GCDF.  No additional information regarding how the fund will function is provided.