According to Arun Natarajan, CEO of Venture Intelligence (a provider of analysis and information on private equity (PE), Venture Capital (VC) and Mergers and Acquisition deals (M&A) in India), Venture Capital firms invested USD 117 million in over 27 deals in India during the six months ending June 2009 [1]. Microfinance Institutions (MFIs) raised roughly USD 68 million in India from venture capital (VC) and private equity (PE) firms in May through July 2009 [2]. While this increase in capital bodes well for MFIs, it brings forth a necessity for greater level of due diligence. According to Deepti Chauhary of Livemint, (an Indian provider of global, financial and economic headline news), such high cash inflows may bring new risk to MFIs such as over-indebtedness and malpractices in pre-loan disbursal [2]. Does this pose a barrier for MFIs to obtain future funding from outside investors?
Search Results for: Microfinance Institutions Bill India
NEWS WIRE: Cambodia: Transparency Meets Microfinance
Source: Asia Times Online.
MICROCAPITAL.ORG STORY: CEO of Aavishkaar India Micro Venture Capital Fund Vineet Rai Expects Merger And Consolidation Of Indian Microfinance Institutions To Increase
The CEO of Mumbai-based Aavishkaar India Micro Venture Capital Fund (Aavishkaar) [1], Mr Vineet Rai, was recently quoted as stating that “consolidation would become necessary for MFIs which are large in size while those smaller MFIs work at the grass roots level and hold the key to engage the borrowers. Here, the big MFIs would prefer to take over the district and semi-urban MFIs to get access.” [2] Aavishkaar was established on 22 May 2002 and aims to support rural and semi-urban entrepreneurs in India by through appropriate financial investment and by providing management support, professional expertise and other resources. According to information on its website, Aavishkaar looks for start-ups and functioning enterprises that impact the average rural or semi-urban Indian and offers financial solutions to enterprises that meets its investment criteria. The idea is for Aaviskaar to help these enterprises become self-sustaining or to be in a position to obtain funding from larger institutions.
MICROCAPITAL STORY: Indian Venture Capital/ Private Equity Funds Turn to Investing in Microfinance Institutions in India
Venture Capital/ Private Equity funds in India are now looking at investments in Indian microfinance institutions (MFIs), reports The Times of India, an Indian daily owned by The Times Group [1]. The release quotes undisclosed industry observers as predicting that around INR 1000 crore (approx USD 200 million) will be invested by VC/ PE funds in the Indian microfinance space in 2009 alone. Presence of a good management structure coupled with the business scalability demonstrated by several MFIs has been indicated as some of the ‘essential elements’ favoring VC/ PE funding [1]. In addition, the social angle to the business, scope for high growth and opportunity for exit for investors are also projected as factors favorable to potential investors [1].
MICROCAPITAL.ORG PAPER WRAP-UP: Elevated Food Prices – Impact on Microfinance Clients by Zaved Ahmed and Camilla Nestor
By Zaved Ahmed and Camilla Nestor, Grameen Foundation, published by the MixMarket Microbanking Bulletin, Issue 18, Spring 2009, pages 14-16, available at:
http://www.themix.org/sites/default/files/MBB%2018%20Spring%202009.pdf
According to the report in the Spring 2009 MixMarket Microbanking Bulletin, food prices in developing countries remain elevated (above international market prices) and continue to negatively impact microfinance clients. Amazingly enough, approximately 1 billion people (nearly one-sixth of the world’s population) subsist on less than USD 1 per day. Both Ahmed and Nestor of the Grameen Foundation note that increasing food prices have the greatest effect on the poor populations that spend between 70 and 80 percent of their household income on food.
MICROCAPITAL STORY: Sri Lanka Government Backs Microfinance, Seeking to Rebuild Economy of War Affected Regions
In an effort to resettle the 300000 Tamil people relocated due to ethnic conflict in the Northern part of the country, the Sri Lankan government has launched a USD 26 million microfinance loan program to spur local agriculture and business in the region. According to a press release on the Reuters portal, the efforts to rebuild the war-torn Northern region of Sri Lanka – which has been dubbed ‘Northern Awakening’- will support ‘the resumption of economic activities in agriculture, livestock, fisheries, micro and small enterprises’. A related release on the Sri Lankan newspaper Daily Mirror states that the launch of the scheme was announced by the Sri Lankan President Mahinda Rajapaksa following a meeting with heads of banking institutions to discuss the role of the banking sector in the development of the Northern Province. As per available information, the Central Bank of Sri Lanka (CBSL) will initially disburse the earmarked sum of USD 26.12 million under the loan scheme at a concessionary rate of interest among eligible Micro, Small and Medium scale Enterprises (MSMEs) through certain Participating Financial Institutions (PFIs). These PFIs which have already been identified by the CBSL include the Bank of Ceylon, People’s Bank, Hatton National Bank, Commercial Bank, Seylan Bank and SANASA Development Bank.
MEET THE MICROBANKER: Interview with Scott Budde, Managing Director of the Global Social and Community Investment Group (GSCIG) and founder of the Global Microfinance Investment Program (GMIP) at TIAA-CREF
TIAA-CREF is a national financial services organization with more than USD 398 billion in combined assets under management (9/30/08) and a provider of retirement services in the academic, research, medical and cultural fields. In 2006 the company had formed a new Social and Community Investing Department within its Asset Management area. The Global Microfinance Investment Program is part of TIAA-CREF’s Social and Community Investing Department, which develops new socially oriented products, oversees the screening methodology of social screened funds, formulates policies around key social issues and manages community investment programs. Notable accomplishments for the firm have been the creation of a USD 100 million Global Microfinance Investment Program (GMIP) to invest in selected Microfinance Institutions (MFI’s) worldwide. Concurrently, TIAA-CREF also announced GMIP’s first investment – a USD 43 million private equity stake in ProCredit Holding AG, a microfinance company.
Scott Budde, Managing Director of the Global Social and Community Investment Group (GSCIG), and founder of the Global Microfinance Investment Program (GMIP) at TIAA-CREF
MICROCAPITAL STORY: Opportunity International’s MicroEnsure of the United Kingdom to Launch Microinsurance Program for Climate Change and Crop Failure in India
MicroEnsure, an insurance intermediary established in 2005, stated that it plans to launch a microinsurance scheme next year for up to 600,000 farmers in India’s Kolhapur province. MicroEnsure is also a subsidiary of Opportunity International, a global non-profit microfinance network, which was formed in 1974, has assets totaling USD 736 million as of 2007 and lends to over 1 million people globally. The plan will insure farmers against their rice crops failing due to drought or heavy rains. Furthermore, the plan is to help farmers access larger loans to pay for seeds and equipment. According to the World Bank, India’s rural population account for about 72 percent of the India’s 1.1 billion people, and most of the rural poor rely on rain-fed agriculture.
WHO’S WHO IN MICROFINANCE: Catherine Quense, ACCION International’s Interim President and CEO
Catherine Quense, ACCION International’s Chief Administrative Officer and Chief Deputy, will take over as interim president and CEO, replacing Maria Otero, who has left to join the Obama Administration as Under Secretary of Global Affairs in the US State Department. Ms. Quense will direct ACCION in line with its 2008-2011 strategic plan and the key initiatives launched under Ms. Otero’s direction, “ACCION’s Model for Social Change” from its 2007 annual report. The four issues the plan addresses are “low income, poor quality of life, vulnerability and lack of dignified solutions,” through which the provision of financial services to low-income households will address. ACCION will broaden and reach beyond its target audience from informal-sector microentrepreneurs in urban Latin America for a greater global reach. The new areas include Inner Mongolia, China and Nigeria.
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.
MICROCAPITAL STORY: Bill & Melinda Gates Foundation Gives USD 20m to World Bank to Establish Agriculture Finance Support Facility
The World Bank Group has announced the establishment of an Agriculture Finance Support Facility to support the expansion of rural finance in developing countries. The Facility is made possible by a USD 20 million grant from the Bill & Melinda Gates Foundation, through their Financial Services for the Poor program.
NEWS WIRE: India: Banks Building Innovative Distribution Channels Through Microfinance Institutions to Reach the Bottom of the Pyramid
Source: Outlook Business (India).
MICROCAPITAL STORY: Indian Giant Builds Microfinance Business: Tata Housing Company and Micro Housing Finance Corporation (MHFC) Offer Houses with Micro Mortgages
Indian companies Tata Housing Development Company Ltd., a subsidiary of the massive Tata Group, and the Micro Housing Finance Corporation (MHFC) have partnered to offer low cost housing. While Tata Housing will facilitate construction of the residential complex Shubh Griha, MHFC will provide long term micro mortgages to approved applicants. The cost of the homes ranges from USD 8,300 to USD 14,200. According to India´s Ministry of Housing and Urban Poverty Alleviation, there is a housing shortage of about 24.7 million units in the country, with 99 percent of this shortage pertaining to low income households.
NEWS WIRE: Eastern Europe: Crisis In Microfinance Sector
Source: Reuters
MICROFINANCE PAPER WRAP-UP: Bringing Finance to Pakistan’s Poor: A Study on Access to Finance for the Underserved and Small Enterprises
Written by Tatiana Nenova, Cecile Thioro Niang and Anjum Ahmad this report by the World Bank, released May 2009, 187 pages, available at: http://go.worldbank.org/0KKMYAT130
This World Bank report measures and describes the current state of formal and informal financial services in Pakistan for underserved populations and enterprises. Currently 14 percent of Pakistanis use savings, credit, insurance, payments and remittance services from the formal financial system. This is compared to India, Bangladesh and Sri Lanka where 48 percent, 32 percent and 59 percent respectively have access to formal financial services. In addition about 36 percent of Pakistanis use moneylenders, committees, family and friends. The State Bank of Pakistan (SBP), which regulates the banking sector, has grown over the past few years yet it has not met demand. Further details about the market and players in Pakistan are found in Chapter 1.
PAPER WRAP-UP: Will the Bottom of the Pyramid Hit Bottom? The Effects of the Global Credit Crisis on the Microfinance Sector, by the United States Agency for International Development (USAID)
By Barbara Magnoni and Olga Jennifer Powers of EA Consultants, published by the United States Agency for International Development (USAID), March 2009, microReport number 150, 54 pages, available at:
The produced report by USAID provides an assessment on the impact of the financial crisis on the microfinance sector. The paper provides a framework for assessing the impact of the crisis on the microfinance sector by analyzing the effects on both the liabilities side (access to finance, cost of funding, financial risk) and the asset side (portfolio growth, portfolio risk, portfolio quality) of an MFI’s (Microfinance Institutions) balance sheet in order to determine the extent that MFIs may have been impacted.
MICROCAPITAL STORY: European Development Finance Institutions Part 3: The Netherlands Development Finance Company (FMO) Invests Over USD 160 million in Microfinance in Last Two Years
The Netherlands Development Finance Company (FMO), founded by the Dutch government in 1970 to support the private sector in developing countries, invests in microfinance as a way to stimulate sustainable economic growth. Between January 2007 and March 2009, FMO has invested at least USD 160 million in microfinance services around the world.
MICROCAPITAL STORY: European Development Finance Institutions Part 2: KfW Entwicklungsbank Remains One of the Largest Global Investors in Microfinance
KfW Entwicklungsbank (KfW), a development bank that finances investments on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), has made significant contributions to the microfinance sector in recent years. Between January 2007 and April 2009, KfW has invested at least USD 250 million in microfinance services around the world, with its outstanding commitments to the sector likely making that number even higher.