by Stefanie Rubin -

MICROCAPITAL.ORG STORY: Trade Association Boss Claims China’s Regulations Impede Growth and Calls for Wholesale Microfinance Fund

A recent article by Ms. Wang Xinyuan in the Global Times, a daily Chinese newspaper, commented that despite a growing demand for microfinance in China, government regulations are inhibiting microfinance institutions´ (MFIs) growth [1]. Government regulations state that MFIs are not allowed to accept deposits to finance micro-loans. Additionally, interest rates for MFIs are capped at four times the prime lending rate, which currently stands at 5.31 percent [2].

by Christopher Maggio -

MICROFINANCE PAPER WRAP-UP: Half the World is Unbanked, by Alberto Chaia, Aparna Dalal, Tony Goland, Maria Jose Gonzalez, Johnathan Morduch, and Robert Schiff

Written by Alberto Chaia, Aparna Dalal, Tony Goland, Maria Jose Gonzalez, Johnathan Morduch, and Robert Schiff, Published by the Financial Access Initiative in October 2009, available at: http://financialaccess.org/sites/default/files/110109%20HalfUnbanked_0.pdf

This paper uses improved data on financial usage, socioeconomic, and demographics to construct an accurate estimate of how many adults (older than 15 years) in the world do not use formal financial services. The data sources included the estimates of 2003 access to formal and semi-formal financial services (using data from banks, microfinance institutions (MFIs), and household surveys) from Patrick Honohan’s 2008 paper “”Cross-country variation in household access to financial services,” 2005 population, per capita income and urbanization data from the United Nation’s Human Development Index, and poverty data from the World Bank’s PovcalNet [1,2,3]. The authors specifically study “usage” of financial services as opposed to “financial access.”

by Zoran Stanisljevic -

MEET THE BOSS: Interview with Robert Annibale, Global Director of Citi Microfinance (Part Two of a Two Part Series)

Bob Annibale is Global Director of Citi Microfinance. He leads the bank’s commercial relationships with microfinance institutions, on a multi-business and product basis, providing financing and product partnerships to institutions that serve the poor and the unbanked.

He joined Citibank in 1982. After a first assignment in Greece, he held a number of senior treasury, risk and corporate positions at Citi in Athens, Bahrain, Kenya, London and New York.  Mr. Annibale completed his BA degrees in History and Political Science at Vassar College and his Masters Degree in African Studies (History) at the University of London, School of Oriental and African Studies.

Mr. Annibale served on the Board of Advisors for the United Nations High Level Commission on Legal Empowerment of the Poor. He represents Citi on the Board of the Microfinance Information Exchange, on the Council of Microfinance Equity Funds and with the Microfinance Network. He also serves on a number of other external boards and councils.

by Zoran Stanisljevic -

MEET THE BOSS: Interview with Robert Annibale, Global Director of Citi Microfinance (Part One of a Two Part Series)

Bob Annibale is Global Director of Citi Microfinance. He leads the bank’s commercial relationships with microfinance institutions, on a multi-business and product basis, providing financing and product partnerships to institutions that serve the poor and the unbanked.

He joined Citibank in 1982. After a first assignment in Greece, he held a number of senior treasury, risk and corporate positions at Citi in Athens, Bahrain, Kenya, London and New York.  Mr. Annibale completed his BA degrees in History and Political Science at Vassar College and his Masters Degree in African Studies (History) at the University of London, School of Oriental and African Studies.

Mr. Annibale served on the Board of Advisors for the United Nations High Level Commission on Legal Empowerment of the Poor. He represents Citi on the Board of the Microfinance Information Exchange, on the Council of Microfinance Equity Funds and with the Microfinance Network. He also serves on a number of other external boards and councils.

by Kenny Kline -

MICROCAPITAL.ORG STORY: Bandhan India receives $32m loan from PNB

Bandhan, a microfinance institution (MFI) in Kolkata, India, received a Rs 1.5 billion loan (USD 32 million) loan from Punjab National Bank (PNB).  Bandhan plans to add a minimum of 100,000 new borrowers over the next five months.  PNB has linked the rate of the loan to its benchmark prime lending rate (BPLR), so the movement in BPLR will affect Bandhan’s cost of funds.  Currently the BPLR is at 11 percent.  The cost of the loan including a processing fee and operational cost is estimated to be 11.75 percent.  The loan will be offered for a three-year period.  Bandhan will use the funds to offer micro loans to poor women at 12.5 percent per year. [1]

by Diya Chopra -

MICROCAPITAL.ORG STORY: Microfinance Institutions (MFIs) Grameen Koota of India and Enda Inter-Arabe of Tunis Receive Consultants to Evaluate Standards for Open Source Information Platform

A recent press release announced that MFIs Grameen Koota of Bangalore, India and Enda Inter-Arabe of Tunis, Tunisia are working with consultants recommend Enterprise Resource Planning (ERP) solutions to these MFIs [1]. ERP refers to the integration of an organization’s data and processes into one single system [2]. This process is meant to help the MFIs integrate better with Mifos, an open source information platform.

by Hio Kyeng Lee -

MICROCAPITAL.ORG STORY: Developments in the Past Year of Microfinance Regulation Coverage by Microcapital.org

     Microfinance regulation has provided rich fodder for reporting over the past twelve months of coverage by Microcapital.org.  Nearly twelve months ago, in November 2008, Microcapital.org reported on the World Economic Forum’s Inaugural Summit on the challenges posed by regulatory frameworks as policy makers grappled with the question of how to advance microfinance.  Since that time, there have been a number of international agencies as well as developed country governments involved in researching and collaborating on guidelines for the strengthening of microfinance regulation. On the other hand, there have also been doubts about the relevance of regulation to microfinance sector:

by Kenny Kline -

WHO’S WHO IN MICROFINANCE: Norwegian Microfinance Initiative (NMI)

The Norwegian Microfinance Initiative (NMI) is a strategic partnership between the Norwegian public and private sectors that invests in microfinance institutions (MFIs) in developing countries and provides professional assistance and technical support for these institutions. NMI’s investors have committed NOK 600 million (USD 100 million) for investment. There is an equal amount of public and private investment in the NMI. [1] Investors include Norfund (a development finance institution owned by the Government of Norway) and four private sector partners: Ferd, KLP, DnB NOR, and Storebrand.

by Chinq Yee Chong -

MICROCAPITAL.ORG STORY: Braking Securitizations – India’s Economic Times Reports That The Reserve Bank of India Proposes To Ask Originating Banks To Hold Loans On Their Balance Sheets For 6 Months To Stem ‘Reckless Securitizations’ And Suggests That Holding Periods Should Be Tailored For Banks Originating Microfinance Loans

A recent article in India’s Economic Times entitled ‘The Reserve Bank of India may ask banks to hold securitised debt for six months’ [1] by Gaurav Pai noted that the Reserve Bank of India (RBI) [2] may ask Indian banks to retain originated debt on their loan books for six to seven months before selling or securitising those loans to other market players. A securitisation is a financing technique under which loans originated by a bank are sold to another market participant, usually a special purpose vehicle (SPV) for an agreed price. The SPV funds the purchase of the portfolio of loans from the originating bank by issuing debt instruments to investors. These debt instruments are often known as ‘asset backed securities’ as they are typically backed or collateralised by the portfolio of loans.

by Chinq Yee Chong -

MICROCAPITAL.ORG STORY: CEO Of Delhi-Based NGO Access Development Services Warns Of The Risks Of Commercialization And Government Intervention In Microfinance And Discusses The Need For ‘Microfinance-Plus’ Services Including Livelihood Planning

In a recent article in India’s Business Standard online paper entitled ‘There is a tension between scale and soul in microfinance’ [1], reporter Sreelatha Menon interviews the CEO of Access Development Services (ADS) [2], Mr Vipin Sharma, on microfinance and the forthcoming event organized by on ADS later this month on responsible and social finance. Delhi-based ADS is a non-profit company that was established in March 2006 with a focus on ‘incubating emerging MFIs’ and helping them ‘upscale their operations, enhance their portfolio and meet the growing demand among poor communities’. ADS also seeks to facilitate on-lending fund flows from financial institutions through the ACCESS Microfinance Alliance platform [3].

by Christopher Maggio -

MICROCAPITAL.ORG STORY: Micro Housing Finance Corporation (MHFC) Recieves Rs 25 cr (USD 5.4 million) in Private Equity From the India Financial Inclusion Fund (IFIF) and the Michael & Susan Dell Foundation

Micro Housing Finance Corporation (MHFC), a “housing finance company” based in Mumbai, India that is “focused on the urban lower income group,” has received a commitment for Rs 25 cr, the equivalent of over USD 5.3 million, in private equity from the India Financial Inclusion Fund (IFIF), a fund that specifically invests in companies that provide financial services to low-income clients, and the Michael & Susan Dell Foundation, which aims to reduce urban poverty [1,2,3,4].

by Chinq Yee Chong -

MICROCAPITAL.ORG STORY: India Goes For Agent Banking – Reserve Bank Of India To Encourage Indian Microfinance Institutions To Adopt ‘Business Correspondent’ Model To Improve Outreach And Relax Requirements On Transaction Reporting

It was recently reported in India’s Economic Times [1] that the central bank, the Reserve Bank of India (RBI) [2] may widen the scope of the ‘Business Correspondent’ model for Indian MFIs following receipt of preliminary feedback from some Indian banks. Under the Business Correspondent model, banks are entitled to engage intermediaries to disburse ‘small value credits’, recover principal and interest payments, collect ‘small value deposits’, sell microinsurance or pension products and receive or deliver ‘small value remittances’ according to information on the RBI website [3]. The intermediaries engaged as Business Correspondents must be ‘well established’ and enjoy a good reputation locally. The idea is for Business Correspondents to improve an MFIs outreach without compromising the quality of services provided to microfinance clients. The RBI has now proposed to ‘unveil new norms for Business Correspondents’ in a way that would relax certain requirements and widen the geographical coverage of many MFIs. The RBI’s aim is to encourage more ‘banks with scattered branches particularly, private and foreign banks’ to adopt the Business Correspondent model. Examples of intermediaries that can be engaged as Business Correspondents include ‘NGOs, farmers’ clubs, cooperatives, community based organisations, IT enabled rural outlets of corporate entities, post offices [and] insurance agents’.

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: Founder And Officer Of India-Based SKS Microfinance Comment On Prospects For Microfinance In China In A Wall Street Journal Report

A recent article entitled ‘Microfinancing China’ in the Wall Street Journal [1] by Mr Vikram Akula and Mr Tarun Khanna discuss the scope for microfinance in China and explores why the concept of microcredit has a ‘notably minimal footprint’ in a mammoth economy such as China. Mr. Akula is founder and chairperson of India-based MFI, SKS Microfinance [2]. Mr. Khanna, the author of the book ‘Billions of Entrepreneurs’ [3] is Jorge Paulo Lemann Professor at Harvard Business School and serves on SKS Microfinance’s board of directors. The view taken by Mr Akula and Mr Khanna is that ‘it will take hard work and reform to grow microfinance in China’ but that millions of poor people in the world’s third largest economy could derive benefits from microloans.