Indian social venture firm and subsidiary of nonprofit Opportunity International Australia, Dia Vikas Capital recently invested INR 278 million (USD 6.1 million) in equity and debt and across four microfinance institutions (MFIs) in India.
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MICROCAPITAL BRIEF: Indian Banks Seek Personal Guarantees from Microfinance Institution (MFI) Executives As Condition of Debt Restructuring
Indian banks that have entered negotiations with microfinance institutions (MFIs) regarding restructuring wholesale microfinance debt have reportedly insisted on personal repayment guarantees from MFI directors [1].
MICROCAPITAL BRIEF: Indian Government Proposes Micro Financial Sector (Development and Regulation) Bill Include NBFCs, Andhra Pradesh Considers Non-Banking Financing Company (NBFC) Model to Balance Microfinance Institutions (MFI)
The Indian federal government has proposed changes to the Micro Financial Sector (Development and Regulation) bill to cover all types of microfinance institutions (MFIs), including non-banking finance companies (NBFCs) operating in the microfinance sector [2]. The Micro Financial Sector (Development and Regulation) bill, which was first passed in 2007, covers only MFIs not overseen by the Reserve Bank of India (RBI), India’s central bank [2]. RBI regulates banks and most NBFCs. This leaves NBFCs operating in the microfinance sector outside of the purview of both RBI and the Micro Financial Sector (Development and Regulation) bill [2].
MICROCAPITAL EVENT: Intellecap Presents Sankalp 2011: Social Enterprise & Investment Forum in Mumbai, India, May 5 – May 6, 2011
Event Name: Sankalp 2011: Social Enterprise & Investment Forum
Event Date: May 5 – May 6, 2011
Event Location: Mumbai, India
MICROCAPITAL BRIEF: Indian Microfinance Network Sa-Dhan Introduces Code of Ethics
Sa-Dhan, a microfinance network with 251 member organizations in India, has introduced a code of conduct in an effort to ensure borrowers are treated in an ethical way. The code, which was developed through consultation with microfinance institutions (MFIs), government representatives and a range of other stakeholders, consists of ten components: integrity & ethical behavior, transparency, fair practice, assessing need for financial services, appropriate interaction & collection practices, privacy of client data, governance, client education & financial literacy, competition, and feedback & grievance mechanisms [1]. The code of conduct also outlines the role of policy makers and the steps required for implementation including: the collection of data; analysis; capacity building workshops; enforcement; and integration with policies, training and MFI implementation [2].
MICROCAPITAL BRIEF: SKS Microfinance of India Sells $135m in Securitized Loans
SKS Microfinance, an Indian for-profit MFI, recently announced the sale of securitized loans worth INR 6.1 billion (USD 135 million), in an effort to increase liquidity amidst a funding shortage that is one part of the turmoil in the microfinance industry in the Indian state of Andhra Pradesh.
MICROFINANCE EVENT: Microfinance Crisis in India: Local and Global Implications – A Panel Discussion, April 8, 2011, Hosted by the American University, Washington DC, USA
Event Name: Microfinance Crisis in India: Local and Global Implications – A Panel Discussion
Event Date: April 8, 2011, 5.00 pm – 6.30 pm
Event Location: Room 120, School of International Service (SIS), American University, Washington DC
MICROCAPITAL BRIEF: Funding Shortage Continues in Indian State of Andhra Pradesh, Loans Overdue to SKS Microfinance Total $27m
London-based news agency Reuters recently reported that since the October 2010 passage of legislation by the state government of Andhra Pradesh in response to the turmoil in the microfinance sector there, funding still remains an issue for microlenders. This is despite efforts by India’s central bank, the Reserve Bank of India, to ease the liquidity crunch. According to Reuters, the issues of mission drift among for-profit players – putting short-term profits ahead of sustainability – and an uncertain regulatory outlook have contributed to the funding shortage [1]. Reuters also states that domestic lenders exercising extra caution when lending to Indian microfinance institutions (MFIs) further deter foreign investors [1].
MICROCAPITAL BRIEF: Malegam Proposals on Indian Microfinance Likely To Be Ratified on April 1, Bankers Defend MFIs’ Priority Sector Status
On April 1, 2011, the Reserve Bank of India (RBI) is expected to ratify some of the recommendations put forth by the Malegam Committee, headed by central bank director Y H Malegam, to amend the regulation of the Indian microfinance sector [1].
MICROCAPITAL BRIEF: Habitat for Humanity, Ask Group Launch MicroBuild India Fund for Home Improvement Loans
Habitat for Humanity International, a nonprofit Christian mission dedicated to building homes for poor people globally, and Ask Group, a financial services group that was established in India in 1983, recently launched the MicroBuild India Fund to help low-income individuals access financing for home improvement activities.
MICROFINANCE PAPER WRAP-UP: Making Insurance Markets Work for the Poor: Microinsurance Policy, Regulation and Supervision – India Case Study; by Sanjay Sinha and Swetan Sagar; Published by CGAP (Consultative Group to Assist the Poor) Working Group on Microinsurance
By Sanjay Sinha and Swetan Sagar; published by CGAP (Consultative Group to Assist the Poor) Working Group on Microinsurance; January 2009; 127 pages; available at http://www.microinsurancenetwork.org/file/8_India_Impact_RSP_2009.pdf
MICROCAPITAL BRIEF: Asian Development Bank (ADB) Refuses to Back Loans to Microfinance Institutions (MFIs) in Indian State of Andhra Pradesh, Reportedly Earmarks $75m of $250m Guarantee Fund for Standard Chartered
The Asian Development Bank (ADB), a multilateral finance institution that is based in Manila, recently reported that it will not back microfinance institutions (MFIs) in the Indian state of Andhra Pradesh as part of its risk participation program.
MICROCAPITAL BRIEF: India’s ICICI Lombard Looks To Expand Agriculture Microinsurance
ICICI Lombard, a private insurance company that is based in India, recently announced plans to expand its microinsurance product line and presence in the agriculture microinsurance sector.
MICROCAPITAL BRIEF: Bankers Urge Reserve Bank of India’s (RBI’s) Malegam Committee to Maintain Priority Status for Microfinance Sector
Bankers in India recently met with the Reserve Bank of India’s (RBI’s) Malegam Committee, headed by central bank director Y H Malegam, to discuss the work of the committee and to urge RBI to maintain the sector’s priority status.
MICROCAPITAL BRIEF: Micro Housing Finance Corporation (MHFC) of India Achieves $5.5m in Loan Sanctions
The Micro Housing Finance Corporation (MHFC), an India-based housing finance company established in 2008, has reported to MicroCapital that it has reached INR 250 million (USD 5.54 million) in loan sanctions.
MICROCAPITAL BRIEF: Indian Banks Collaborate on Restructuring Loans to Microfinance Institutions (MFIs), SKS Opts Out
Indian banks that have disbursed loans to microfinance institutions (MFIs) have reportedly prepared a blueprint for restructuring these loans. Under the proposal, Indian microfinance institutions (MFIs) would be given a maximum of ten years to repay loans to financial institutions at an interest rate of 12 percent. The loans that would be restructured under the proposal are estimated to total INR 130 billion (USD 2.8 billion) [1].
MICROCAPITAL BRIEF: India’s Business Standard Supports Reserve Bank of India (RBI) Proposal to Establish Two Types of Banking Licenses
The Business Standard, an Indian financial newspaper, recently extended its support of the introduction of two types of licenses for banks in India: one for basic banking services to serve the purpose of financial inclusion and the other for providing a full-range of banking services such as is offered by commercial banks. The proposal comes as the Reserve Bank of India (RBI) is reviewing draft guidelines that would bring additional entities such as industrial houses into the banking sector. RBI reportedly proposed provision of “full banking license” to industrial and business houses and some non-banking finance companies (NBFCs). A basic banking license would be issued to other NBFCs and nonprofit microfinance institutions (MFIs) [1]. How NBFCs would be divided between the groups was not specified.
MICROCAPITAL BRIEF: International Finance Corporation (IFC), MicroSave Publish “Deposit: Assessment in India” in Support of Increasing Savings Microfinance in India
The International Finance Corporation (IFC), the private-investment arm of the World Bank Group, and MicroSave, a for-profit microfinance training and technical resource center based in India, recently published a report entitled “Deposit: Assessment in India,” that argues in favor of supporting microsavings services for low-income individuals in India as a way to increase utilization of financial services.