Bhartiya Samruddhi Finance Limited (BSFL), an Indian microfinance institution (MFI) and member of the BASIX Group, has witnessed a sharp downturn in the quality of its loan portfolio and reportedly may not be able to continue operations without additional funding.
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MICROCAPITAL BRIEF: European Investment Bank (EIB) Sponsors Research Programs on Rising Risk in Microcredit
The European Investment Bank (EIB) has submitted a call for proposals to select university centers that wish to conduct research on the theme of the rising risk of microcredit, which include possible cause factors, warning signals, current states and future prospects.
MICROCAPITAL BRIEF: World Economic Forum, Boston Consulting Group Publish “Mobile Financial Services Development Report 2011”
The World Economic Forum (WEF), a nonprofit headquartered in Geneva that engages world leaders “to improve the state of the world”, in association with the US-based Boston Consulting Group (BCG) recently published a report entitled “Mobile Financial Services Development Report 2011”. Assessing the development of the mobile financial services (MFS) ecosystem in 20 countries, the report identifies several areas which might be addressed to build scale in MFS thus bringing more people into the formal economy.
MICROCAPITAL BRIEF: Microfinance Institutions in India Continue to Struggle for Funding After Loan Recast, Adoption of Malegam Proposals
Microfinance institutions (MFIs) in India reportedly continue to struggle after recasting of a significant portion of their wholesale debt and the adoption by the Reserve Bank of India (RBI), the country’s central banking authority, of many of the Malegam Committee’s proposals on regulating the sector.
MICROCAPITAL BRIEF: Indian Microfinance Institutions (MFIs) May Become Business Correspondents (BCs) for Commercial Banks
Indian microfinance institutions (MFIs), which have seen a downturn in business and portfolio quality since the Andhra Pradesh crisis that began in late 2010, are considering a business model that would make them intermediaries between commercial banks and poor people in rural areas.
MICROCAPITAL BRIEF: Indian Microfinance Institution (MFI) Janalakshmi Raises $14m in Equity Led by Citi Venture Capital International (CVCI)
Janalakshmi Financial Services (JFS), an Indian microfinance institution (MFI), has raised INR 65 crores (USD 14 million) through a third round of equity capital fundraising. Citi Venture Capital International, a US-based private equity investor affiliated with Citigroup, has taken a “significant minority stake” in JFS that reportedly represents its first investment in India since 2008.
MICROCAPITAL BRIEF: Spurned by Commercial Banks, Indian Microfinance Institutions (MFIs) Raise Funds from Social Investors IFC, ACCION, MicroVest, ShoreCap, Aavishkaar, BlueOrchard
Indian microfinance institutions (MFIs), which have seen new lending from commercial banks dry up since the “Andhra Pradesh crisis” broke in late 2010, instead have been accessing funds from social and philanthropic investors including: International Finance Corporation (IFC), the private-investment arm of the World Bank Group; ACCION International, a US-based nonprofit organization; MicroVest Capital Management, a US-based family of microfinance investment funds; Shore Capital, a UK-based investment banking company; Aavishkaar Goodwell India Microfinance Development Company Limited, an India-based financing company; and BlueOrchard Microfinance Investment Managers, a Swiss manager of microfinance funds.
MICROCAPITAL BRIEF: Wholesale Lenders Agree to Restructure $1b in Debt for Indian Microfinance Institutions (MFIs) Spandana Sphoorty, Asmitha, Future, Share, Trident
Following two months of negotiations, unnamed wholesale commercial lenders have agreed to restructure debt worth INR 5,000 crores (USD 1 billion) for five Indian microfinance institutions (MFIs): Spandana Sphoorty Financial Limited, Asmitha Microfin Limited, Future Financial Services Limited, Share Microfin Limited and Trident Microfin Private Limited.
MICROCAPITAL BRIEF: SKS Microfinance Reconsidering Business Strategy to Rebuild Reputation
SKS Microfinance, a microfinance institution (MFI) that serves groups of impoverished women in India, is reportedly considering new business growth avenues in an attempt to increase revenue and improve its reputation. Along with collateral-free loans, four new products would be offered: loans using gold as collateral, housing loans, loans to buy mobile phones and loans to local grocery stores in a supply arrangement with the cash-and-carry chain, Metro. “The pilot projects have been yielding very encouraging results,” says Vikram Akula, chairperson and founder of SKS Microfinance.
MICROCAPITAL BRIEF: New Draft Bill From Ministry of Finance Would Expand Role of Reserve Bank of India (RBI) to Regulate Entire Indian Microfinance Sector, Cutting Roles of NABARD, State Governments
The Indian Ministry of Finance is in the final stages of drafting a new microfinance bill that would transfer all regulatory power over microfinance to the Reserve Bank of India (RBI), the country’s central bank, in an effort to create a uniform framework for all microfinance institutions (MFIs), according to Indian news website Moneycontrol.com.
MICROCAPITAL BRIEF: Reserve Bank of India (RBI) to Allow Urban Cooperative Banks to Lend to Self-Help Groups (SHGs), Joint Liability Groups (JLGs) in Effort to Increase Microfinance Activities
The Reserve Bank of India (RBI), the country’s central banking authority, has recently begun permitting urban cooperative banks (UCBs), commonly known as credit unions, to lend directly to self-help groups (SHGs) and joint-liability groups (JLGs) in an effort to facilitate financial inclusion by increasing the availability of microfinance in India.
MICROCAPITAL BRIEF: Reserve Bank of India (RBI) Mandates Personal Guarantees from Promoters of Microfinance Institutions (MFI) Looking to Restructure Debt
The Corporate Debt Restructuring (CDR) cell of the Reserve Bank of India (RBI), after a unanimous decision, declared that promoters of microlenders will be required to provide personal guarantees in order for their institutions to refinance their debt in the wake of the microfinance turmoil in the Indian state of Andhra Pradesh that began in 2010.
MICROCAPITAL BRIEF: Union Bank of India (UBI) Launching Microfinance Schemes Under “unioninclusions”
Union Bank of India (UBI), a nationalized bank with approximately USD 44 billion in total assets, recently announced the launch of “unioninclusions” in an effort to deepen financial inclusion. Announced in Mumbai by Shri Pranab Mukherjee, India’s Finance Minister, the initiative includes the following five schemes: 1) the opening of 11 specialized financial-inclusion branches; 2) biometric card-to-card remittance facility for migrant laborers; 3) mobile van banking to serve unbanked villages in the state of Odisha; 4) publication of a comic book series intended to spread financial literacy among illiterate people in rural areas; 5) funding solar power for Union Adarsh Gram, a program launched by UBI in June 2010 to adopt 101 rural villages across India to offer development and modernization.
MICROCAPITAL BRIEF: Costs Rise for Indian Microfinance Institutions (MFIs) Looking to Securitize Loan Portfolios From 10% to Over 12%
Indian microfinance institutions (MFIs), which have struggled to procure loans from commercial banks since turmoil struck the microfinance industry in Andhra Pradesh in November 2010, have found that raising money by securitizing even their higher-quality loan portfolios has become more expensive.
MICROCAPITAL BRIEF: India’s MicroSave Publishes “No Thrills: Dormancy in NFA Accounts,” by Ann-Byrd Platt, Akhilesh Singh, Sachin Bansal, Anurodh Giri, Akhand J Tiwari re “No Frill” Microfinance Accounts
MicroSave, an Indian for-profit technical assistance, training and resource center, recently published “No Thrills: Dormancy in NFA Accounts,” a study on India’s “No Frill Accounts (NFAs),” a basic account option legally required of private banks as part of Reserve Bank of India’s (RBI’s) “Financial Inclusion Programme.”
MICROCAPITAL BRIEF: Microfinance Information Exchange (MIX): Microfinance Institutions Will Face Difficulties Meeting New Reserve Bank of India (RBI) Regulations
Microfinance Information Exchange (MIX), the US-based, nonprofit data provider, foresees a significant impact on microfinance institutions (MFIs) in India as a result of the regulations that were recently issued by the Reserve Bank of India, the country’s central banking authority, in response to the turmoil that has disrupted the microfinance sector since late 2010, particularly in the state of Andhra Pradesh.
MICROCAPITAL BRIEF: Credit Rating and Information Services of India Limited (CRISIL) Predicts Reserve Bank of India Guidelines Will Spur Bank Lending to Microfinance Institutions (MFIs), Trigger Consolidation
The Indian rating agency Credit Rating and Information Services of India Limited (CRISIL) has announced that it expects, “Growth prospects for microfinance institutions (MFIs) will remain subdued over the medium term,” due to microfinance guidelines issued earlier this month by the Reserve Bank of India (RBI), the nation’s central banking authority.
MICROCAPITAL BRIEF: Corporation Bank of India Opens Microfinance Branch
Corporation Bank of India (CorpBank), a government-owned bank based in Karnataka, recently opened a microfinance branch in Hyderabad, the capital of the state of Andhra Pradesh.