by Lori Curtis -

MICROCAPITAL STORY: India’s Ujjivan Increases Equity With Investments By Unitus Equity Fund, Bellwether Microfinance Fund, Michael and Susan Dell Foundation, Sequoia Capital, Lok Capital, India Financial Inclusion Fund and SIDBI

Ujjivan Financial Services, a Bangalore-based microfinance institution (MFI), has completed the fourth round of equity infusion by raising Rs 940 million (USD 18.7 million) making it the fourth highest capitalised MFI in India with total paid up capital and reserves standing at over Rs 1.08 billion (USD 21.5 million) The increase in capital was largely invested by existing shareholders including Unitus Equity Fund (UEF) managed by Elevar Equity L.L.C., Bellwether Microfinance Fund, Michael & Susan Dell Foundation, A.W. Holdings and individual investors including promoter & CEO Samit Ghosh. The five new investors in this private placement transaction will include: Sequoia Capital, Lok Capital, Unitus Equity Fund II, India Financial Inclusion Fund and SIDBI.

by Scott Everett -

TECHNOLOGY FOCUS: Rural users yet to take a call on mobile banking

SOURCE: Business Standard

Original story available here.

Mobile banking (m-banking) in India, viewed by the government as a potent tool for financial inclusion, is yet to clear many hurdles before it can fulfil its objective of reaching the unbanked masses. Primarily so, say analysts, since the mobile density in tier II and III cities, is 11 percent and 10 percent respectively.

by Scott Everett -

MICROCAPITAL STORY: The Global Financial Crisis And Microfinance

As financial markets struggle internationally, some microfinance institutions (MFIs) have begun to see downstream effects in the form of rising lending rates. Royston Braganza, chief executive officer of Grameen Capital India observed “the demand for funds is high because microfinanciers have drawn up aggressive growth plans” and “the cost of funds remains a concern due to the 2 percent increase in just the last quarter.” These factors could make fundraising very difficult for microfinance institutions in cases where they have not built up proper reserves according to K. Vinod Kumar, Assistant Vice-President of member services at SKS Microfinance.

by Greg Casey -

MICROCAPITAL STORY: Rising Interest Rates and New Reserve Bank of India Capital Adequacy Requirements Put Pressure on Indian MFIs

Recent increases in the cost of borrowing for many organizations around the world and new capital adequacy requirements are putting pressure on Indian Microfinance Institutions. According to The Times of India, both Equitas Micro Finance India (Equitas) and Madura Micro Finance ltd (Madura) are raising interest rates due to increases in the cost of borrowing. Also, SKS Microfinance (SKS) has begun looking for new sources of private equity funding, citing both the reserve requirements and increased interest rates.

by Greg Casey -

MICROCAPITAL STORY: Ugandan Government Sets Interest Rates for Savings and Credit Cooperative Organizations at 9 to 13 Percent

The government of Uganda has set interest rates for Savings and Credit Cooperative Organizations (SACCOs) at 9 to 13 percent. SACCOs became regulated in June 2008 after a rash of investigations into illegal behavior and fraud. These microfinance institutions are now controlled by the The Uganda Cooperative Savings and Credit Cooperative Union, a newly established government regulatory agency.

by Greg Casey -

MICROCAPITAL STORY: Indian Microfinance Institutions (MFIs) Increase Focus on Urban Areas

A recent article in the Business Standard reported an increase of urban microfinance in India. The piece pointed to facts from a study conducted by Sa-Dahn, an Indian NGO that serves as a trade association for MFIs. According to the study, recent experiences in urban microfinance show that success is possible despite higher start-up costs necessitating larger loans.

by Ryan Benson -

MICROCAPITAL STORY: Indian Information Technology Firm Gradatim Launches Microinsurance Technology Platform

India-based information technology firm Gradatim IT Ventures recently announced the launch of “MF-Insure”, a new technology platform designed to consolidate and simplify various business operations of microinsurance providers. Details on MF-Insure’s design features are not yet available. However, a platform that appears to be a predecessor is described on the company’s website as a product that streamlines business processes in the areas of Billing and Collection, Insurance Policy Servicing, and Claims.

by Ryan Benson -

MICROCAPITAL STORY: Indian Banking Giant HDFC (Housing Development Finance Corporation) to Expand Microfinance Arm with 8 New Branch Offices

Indian bank HDFC (Housing Development Finance Corporation) has announced plans to open eight additional branches solely dedicated to microfinance before December 2008. The expansion would increase its microfinance branch offices from four to twelve. HDFC first ventured into microfinance in February 2007 with the launch of its microfinance branch, as reported by MicroCapital. When designing its microfinance services, the bank modeled lending after India’s self-help group linkage model. Its microfinance product suite includes savings, credit, insurance, and remittances.

by Greg Casey -

MICROCAPITAL STORY: Indian Village Council Issues Gram Sabha Credit Cards (GSCCs) for Microfinance Loans

In the rural Indian village of Jaltara, the village council is extending microfinance loans to villagers by issuing Gram Sabha (village council) Credit Cards (GSCCs). As part of the government-sponsored Madhya Pradesh Rural Livelihoods Project, the council issues the GSCCs, which serve as loans from the village treasury, instead of distributing money. The size of each loan, which must be repaid in six months, and the repayment schedule are decided in the council meetings.

by Ryan Benson -

MICROCAPITAL STORY: Nonprofit Nigerian Institute of Animal Science Urges Microfinance Institutions to Ensure Food Security

Responding to an emerging world food shortage, nonprofit research institute Nigerian Institute of Animal Science (NIAS) has urged the country’s microfinance institutions to aim their microlending services at small and large-scale livestock farms to ensure food security.