N R Narayana Murthy, founder and former CEO of Infosys, a global consulting and information technology services company based in India, will reportedly invest in SKS Microfinance Ltd, an Indian microfinance institution (MFI) expected to soon float an initial public offering (IPO).
Search Results for: India
MICROCAPITAL BRIEF: Indian Government to Restructure the National Credit Fund for Women (aka Rashtriya Mahila Kosh or RMK)
India’s Ministry of Women and Child Development is considering a proposal to restructure and expand the National Credit Fund for Women (aka Rashtriya Mahila Kosh or RMK), a national microfinance program that targets poor women.
MICROCAPITAL BRIEF: Indian Microfinance Institution Grameen Koota Raises $4.2m from MicroVest Purchase of Non-convertible Debentures (NCDs)
Grameen Financial Services Private Limited, an Indian microfinance institution also known as Grameen Koota, has raised INR 20 crore (USD 4.27 million) from a sale of secured, redeemable, non-convertible debentures (NCDs) to MicroVest I LP, a US-based private equity fund.
MICROCAPITAL BRIEF: IFMR Capital Structures $6.5m Securitization of Microloans Originated by Four Microfinance Institutions in India
IFMR Capital recently completed a multi-originator securitization of micro-loans originated by Asirvad Microfinance Pvt Ltd, Sahayata Microfinance Pvt Ltd, Satin Creditcare Network Ltd and Sonata Finance Pvt Ltd.
MICROCAPITAL BRIEF: Non-Convertible Debentures (NCDs) Gain Popularity as New Source of Fundraising for Indian Microfinance Institutions (MFIs)
A recent article published by the Microfinance Focus website commented on the growing tendency of Indian microfinance institutions (MFIs) to raise funds via non-convertible debentures (NCDs).
MICROCAPITAL BRIEF: Mr Vijay Mahajan and Mr P N Vasudevan Debate Self-Regulation in Indian Microfinance Industry
Mr Vijay Mahajan, Chairman of BASIX and a Board Member of CGAP (Consultative Group to Assist the Poor), and Mr P N Vasudevan, Managing Director of Equitas Micro Finance, recently published an article entitled, ‘Microfinance in India: Twin Steps towards Self-Regulation.’
MICROCAPITAL BRIEF: Unitus and Hewitt Launch Microfinance Compensation & Benefits Survey in India
Unitus, an international nonprofit, has partnered with human resources consulting firm Hewitt to launch the second annual ‘Microfinance Compensation & Benefits Survey’ in India.
MICROCAPITAL BRIEF: Microfinance Branches Opened by Indian Bank and Canara Bank in Tamil Nadu, India, Allow Self-Help Groups to Gain Access to Credit
According to a recent article by The Hindu newspaper, self-help groups (SHGs) in Tamil Nadu, India, have achieved greater access to credit due to openings of microfinance branches of private commercial banks, such as Indian Bank and Canara Bank, in rural areas.
MICROCAPITAL BRIEF: CRISIL Credit Rating Agency Upgrades Long-Term Loan Rating of Asmitha Microfin Limited, a Microfinance Institution (MFI) in India, to “BBB With a Stable Outlook”
CRISIL, a credit rating agency based in India, has upgraded the long-term loan rating of Asmitha Microfin Limited, a microfinance institution (MFI) based in India [1,2,3].
MICROCAPITAL BRIEF: US-based Janta Foundation Accepting Online Microloans for Education in India, Nicaragua
The San Francisco-based Janta Foundation recently launched a website that allows individuals to make loans of USD 25 or more to be used for education in India or Nicaragua.
MICROCAPITAL BRIEF: Indian MFIs Agree to Voluntary Credit Code Enforced by Microfinance India Network (MFIN) And Take Equity Stake in Credit Information Bureau
At a meeting in Mumbai early this month, a group of thirty Indian microfinance institutions (MFIs) agreed to back a private credit bureau and a voluntary credit code.
MICROCAPITAL BRIEF: Technology Provider Gradatim of India Enjoys $3m Equity Investment from NEA-IndoUS Ventures
Gradatim, an international provider of technology services to microfinance institutions and insurers, has raised USD 3 million in Series A equity funding from NEA-IndoUS Ventures, a venture capital firm that invests in India.
MICROCAPITAL BRIEF: Commercial Banks, Limited to Charging Half of Microfinance Institution Interest Rates, Ask Reserve Bank of India (RBI) To Lift Cap
Private banks recently asked the Reserve Bank of India (RBI) to lift the interest rate cap on microloans under INR 2 lakh (USD4,265). Currently, private banks cannot charge more than their benchmark prime lending rates, which range from 11 percent to 16 percent, on these loan amounts. The banks argue that lifting the cap would allow them to go after unbanked segments of the population and provide competition against the high rates charged by microfinance institutions (MFIs) and money lenders. MFIs and moneylenders typically charge between thirty percent and thirty-five percent on these types of loans. Also given their distribution network, private banks argue that they can contribute to the growth of the microfinance sector. Mr. M. V. Nair, Chairman of the Indian Banks Association (IBA), declined to comment on banks’ interest rate proposal to RBI, however, he commented that, “Any distortion of the interest rate in the marketplace gives rise to malpractice. As long as banks extend credit at an appropriate price which the market can bear, extending microcredit will help achieve finance inclusion.”
MICROCAPITAL BRIEF: Small Industries Development Bank of India (SIDBI) Takes 11% Stake in Microfinance Institution Bandhan for $10.7m
Bandhan Financial Services Private Limited, a Indian microfinance institution reports that it has completed its first major equity raise with a INR 500,000,000 (USD 10.7 million) investment from the government-backed Small Industries Development Bank of India (SIDBI).
MICROCAPITAL BRIEF: SKS Microfinance Partners with State Bank of India (SBI), State Bank of Hyderabad (SBH) and State Bank of Mysore (SBM) to Integrate 600 Branches
SKS Microfinance has signed agreements to launch an integrated cash management system for 600 of its branches: 390 branches will partner with State Bank of India (SBI), 150 with State Bank of Hyderabad (SBH) and 60 with State Bank of Mysore (SBM).
MICROCAPITAL BRIEF: Traditional Moneylenders Gain as Microfinance Industry Grows in India
Since its founding in the 1990s by non profit organizations, the Indian microfinance industry has nearly doubled in value by delivering USD 2.5 billion in loans through early 2009. In connection to this rapid growth, government reports have shown an increased market share of traditional moneylenders, which include pawn brokers, gold merchants and other private moneylenders. The traditional Indian moneylending industry charges annual interest rates as high as 120 percent, according to CGAP (Consultative Group to Assist the Poor). A Reserve Bank of India (RBI) survey indicated that in recent years, “traditional moneylenders’ share of total rural Indian household debt grew to 29.6% from 17.5%.” Some academic researchers believe that moneylenders are keeping afloat many microfinance borrowers by acting as stopgaps so that micofinance borrowers can repay prior microloans. The concern is that these borrowers are just digging themselves deeper into debt. However, Padmaja Reddy, managing director of Spandana Foundation, a microlender in India, states that the boom in traditional moneylending represents an increase in “overall demand for credit” and an indication of the untapped market demand for microfinance.
MICROCAPITAL BRIEF: Reserve Bank of India (RBI) Asks Banks For Plans on Financial Inclusion and Criticizes Microfinance Institution Interest Rates
Governor D. Subbarao of the Reserve Bank of India (RBI), which is India’s central bank, stated that all banks will be required to formulate and get RBI approval for “financial inclusion plans” by March 2010. The effort is a part of a wider discussion on whether “financial inclusion” is actually working to integrate poor people into India’s formal financial sector. Governor Subbarao stated that while RBI is “committed” to allowing banks to lead the effort by creating appropriate “financial inclusion plans,” this commitment “is not irrevocable.” At this point, RBI’s participation is limited to approving bank drafted plans and providing support for sharing information, such as best practices and regulatory incentives. Governor Subbarao also acknowledged the role of microfinance institutions (MFIs) in serving India’s unbanked population, however, he criticized the practice of lending at rates of twenty-four percent to thirty percent. Governor Subbarao stated, “Compared to the informal sector, perhaps the rates are lower, but there are questions about whether these rates are affordable. The rate of interest charged should not be out of alignment with the cost of funds, transaction costs, risk costs and a certain margin. In any case, there is a need for transparency….”
MICROCAPITAL BRIEF: HSBC India, MicroEnergy Credits, Microfinance Institution Spandana Team Up to Offer Solar-powered Lighting
The Indian division of UK-based bank HSBC has made an unspecified grant to microfinance institution (MFI) Spandana of India to contract with US-based MicroEnergy Credits (MEC) to develop products to assist microborrowers in purchasing solar-powered lighting and selling carbon credits resulting from the use of the new lighting. MEC, which has worked with several MFIs to help them launch and scale clean energy programs, will work with Spandana to create products tailored to the needs of its clients. MEC will also assist clients that purchase the solar lights to sell credits they earn by using the clean energy. The project aims to reach 1 million households, reducing the burden of collecting biomass fuel and the health risks of breathing smoke.