PayMate, an Indian mobile payments company, and IFMR Rural Finance, an operating model of the Indian Institute for Financial Management and Research (IFMR) Trust, recently announced an agreement to launch a suite of financial inclusion projects through IFMR’s local financial institutions (LFIs) Kshetriya Gramin Financial Services (KGFS).
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MICROFINANCE PAPER WRAP-UP: Microfinance in India – A Crisis at the Bottom of the Pyramid; Published by Legatum Ventures
Published by Legatum Ventures; May 2011; 11 pages; available at http://www.legatum.org/attachments/MicrofinanceCrisis.pdf
MICROCAPITAL BRIEF: Reserve Bank of India (RBI) Directs Banks to Exercise Additional Due Diligence When Lending to Microfinance Institutions (MFIs)
The Reserve Bank of India (RBI), India’s central banking authority, has indicated that banks must perform additional due diligence when lending to microfinance institutions (MFIs) following RBI’s enactment of microfinance guidelines that capped interest rates for end-borrowers at 26 percent and interest rate margins for MFIs at 12 percent.
MICROCAPITAL BRIEF: SKS Microfinance of India Reports Q4 Net Loss of $15m, Cites “Stringent” Loan Loss Provisioning
SKS Microfinance, a for-profit Indian microfinance institution, reported a decline of 36 percent in total income to INR 193.8 crores (USD 42.7 million) and a net loss of INR 69.8 crores (USD 15.4 million) for the first three months of 2011, as compared with a net profit of INR 62.9 crores (USD 14 million) in the same quarter last year.
MICROCAPITAL BRIEF: Small Industries Development Bank of India (SIDBI) Chairman Sushil Munhot Discusses Financing Small- and Medium-Sized Enterprises (SMEs), Hold On New Lending to Microfinance Institutions (MFIs)
Mr Sushil Munhot, chairman and managing director of the government-owned Small Industries Development Bank of India (SIDBI), recently argued in an interview with Indian newspaper The Economic Times that SIDBI complements commercial banks while also offering the added value of providing equity funding to small- and medium-sized enterprises (SMEs).
MICROCAPITAL BRIEF: Reserve Bank of India (RBI) Enacts Most of Microfinance Guidelines Proposed by Malegam Committee
The Reserve Bank of India (RBI), India’s central banking authority, recently announced that it has accepted – with some modifications – the framework of recommendations issued by the Malegam Committee for the country’s microfinance industry.
MICROCAPITAL BRIEF: Investor in Microfinance, Education, Health, Infrastructure, Matrix Partners India Raises $300m
Matrix Partners India, the Indian subsidiary of US-based private equity firm Matrix Partners, recently announced that it raised USD 300 million for its second fund. With the closing of this fund, Matrix Partners India currently has approximately USD 677 million in assets under management.
MICROCAPITAL BRIEF: Wholesale Lenders Agree to Restructure Debt of Indian Microfinance Institution (MFI) Spandana Sphoorty Financial Limited
A group of lenders, led by Indian commercial bank ICICI Bank, has approved a debt restructuring plan for Spandana Sphoorty Financial Limited, an Indian microfinance institution (MFI).
MICROCAPITAL BRIEF: Women Lose Out as Moneylenders Regain Ground From Indian Microfinance Institutions (MFIs) Pinched by Liquidity Crunch
A recent article in US-based newspaper The Washington Post spotlights the impact that the recent liquidity crunch for microlenders in the Indian state of Andhra Pradesh has had on women, who make up a majority of the microborrowers in the state, in particular as a result of a reemergence of unregulated moneylenders.
MICROCAPITAL BRIEF: Fitch Ratings Stresses Importance of Single Regulator for Indian Microfinance Sector
Multiple Indian newspapers have cited an unnamed report on Indian microfinance regulation from global ratings agency Fitch that reportedly states that a single regulatory body is crucial to ensuring a stable Indian microfinance sector and that future legislation affecting microfinance should be developed through cooperative efforts between state and federal authorities.
MICROCAPITAL BRIEF: Wall Street Journal Publishes “India Journal: Linking Health and Microfinance” By Somen Soha of Indian Institute of Public Health, Marcia Metcalfe of Freedom From Hunger
Mr Somen Saha, senior lecturer at the Indian Institute of Public Health in the state of Gujarat, and Ms Marcia Metcalfe, director of microfinance and health protection at California-based international development nonprofit Freedom from Hunger, recently co-authored an article that was published on the website of US-based newspaper The Wall Street Journal wherein they argue for the integration of health care with microfinance in India.
MICROCAPITAL BRIEF: Indian Microfinance Institution Swadhaar Finserve Private Limited (SFPL) Reports Serving 51,500 Clients in 2011, Earns Honors in Smart Campaign’s Call for “Appropriate Collections Practices Tools”
Swadhaar Finserve Private Limited (SFPL), an Indian microfinance institution, recently received honors for “Appropriate Collections Practices” from the Smart Campaign, an initiative that focuses on client protection in microfinance. According to Smart Campaign Tool Development Specialist Leah Wardle, “SFPL won our Call for Tools because their policies and procedures for collections are a good example of how microfinance institutions (MFIs) can provide staff with clear expectations for dignified treatment of clients during collections processes. From their general code of conduct for collections to their specifics on ethical loan recovery procedures, SFPL’s policies clearly embody elements of our Client Protection Principles.” [1]. Smart Campaign’s Client Protection Principles focus on non-coercive debt collection practices and other aspects of good governance such as avoiding client over-indebtedness, privacy practices and transparent pricing.
MICROFINANCE PAPER WRAP-UP: Mobile Value-Added Services (MVAS) – A Vehicle to Usher in Inclusive Growth and Bridge the Digital Divide; By Sachin Sondhi, Sandip Biswas, Gaurav Gupta, Prakash Bharwani; Published by Deloitte Touche Tohmatsu India Private Limited
By Sachin Sondhi, Sandip Biswas, Gaurav Gupta, Prakash Bharwani; published by Deloitte Touche Tohmatsu India Private Limited; January 2011; 68 pages; available at https://www.deloitte.com/assets/Dcom-India/Local%20Assets/Documents/Deloitte_ASSOCHAM_MVAS_Study.pdf.
MICROCAPITAL BRIEF: Cresa Microfinance, Sharada’s Women’s Association for Weaker Section (SWAWS) Microfinance of India Face Possible Bankruptcy
The Microfinance Institutions Network (MFIN), an association of Indian microfinance lenders, recently reported that several small and medium-sized microfinance institutions (MFIs) in India may soon file for bankruptcy as a result of decreasing liquidity.
MICROCAPITAL BRIEF: SEED Financial Services, Financial Information Network and Operations Limited (FINO), A Little World Seek Private Equity Funding to Scale Up Business Correspondent Operations in India
Business Standard, an Indian newspaper, has reported that SEED Financial Services, an Indian consulting, planning and implementation agency; Financial Information Network and Operations Limited (FINO), an Indian technology company that seeks to enable financial inclusion; and A Little World, a technology company based in India are seeking private equity funding to scale their business correspondent operations. Business correspondents are individuals or organizations that are permitted to “raise deposits; disburse tiny loans; recover bad loans; sell micro insurance, mutual funds, pension products and other third-party products; and receive and deliver small value remittances” on behalf on banks [2].
MICROCAPITAL BRIEF: Indian Microfinance Institution (MFI) Sahayata Microfinance Raises $4.4m from DWM (Cyprus) Limited Through Sale of Non-Convertible Debentures (NCDs)
Sahayata Microfinance, an Indian microfinance institution (MFI), has raised INR 195 million (USD 4.4 million) through the issue of secured, redeemable non-convertible debentures (NCDs) listed on the Bombay Stock Exchange.
MICROCAPITAL BRIEF: India’s Gujarat State Inks Microfinance Partnership With Large Industries, Self-Help Groups (SHGs)
The government of the Indian state of Gujarat has reportedly developed partnerships between self-help groups (SHGs), groups of individuals who are jointly responsible for the repayment of loans, with major industrial businesses, a strategy that it believes will encourage banks to offer loans to the groups at lower interest rates.
MICROCAPITAL BRIEF: India’s Business Standard Reports a Third of Indian Banks’ Loans to Microfinance Institutions (MFIs) in Restructuring, Which Analysts Argue is Inadequate to Solve Sector Issues
The Business Standard, an Indian financial newspaper, recently reported that a third of the loans made by Indian banks’ to microfinance institutions (MFIs) are in the process of being structured, due to the MFIs inability to repay following the turmoil in the sector in the state of Andhra Pradesh that began in late 2010. According to a report by the Malegam Committee, a sub-committee of the Reserve Bank of India, as of March 2010 approximately INR 138 billion (USD 3.06 billion) in loans were outstanding to MFIs from the Small Industries Development Bank of India, a government-owned bank providing credit to medium and large-scale MFIs and other banks. The report also stated that banks hold an additional INR 42 billion (USD 932 million) in securitized paper from MFIs.