by Radhika Chandrasekhar -

MICROCAPITAL.ORG BRIEF: ACCION International invests $500,000 for 49.5% Equity Stake in Indian Microfinance Institution Saija Finance Pvt Ltd

ACCION International recently invested USD 500,000 for a 49.5 percent equity stake in Saija Finance Pvt Ltd, [4] a microfinance institution (MFI) based in Northern India that started in April 2008. The investment was made through ACCION International’s ACCION Gateway Fund. [3] Saija is the fund’s fourth investment in India. Other recent investments in Indian MFIs include Swadhaar FinServe, [5] which caters to the urban poor, Lok Capital, [6] which serves social enterprises, and United Villages, [7]  which focuses on the rural poor.

by Diya Chopra -

MICROCAPITAL.ORG STORY: Indian Microfinance Sector Sees Increase in Private Equity Investments from $61m to $143m

The Financial Express, a web-based Indian financial news source, said that from January to October of 2009, the Indian microfinance sector has seen a significant growth in private equity (PE) investments. In that time period, eleven PE deals worth USD 143 million were carried out, compared to eight deals worth USD 61 million in the previous year. According to the article, the Indian microfinance sector’s compound annual growth rate (CAGR) has reached 105% [1].

by Diya Chopra -

MICROCAPITAL.ORG STORY: SKS Microfinance Planning to Expand Network into Punjab, India

SKS Microfinance, an Indian non-banking microfinance institution (MFI), recently announced plans to expand its network into Punjab, India. Mr. Rao, COO of SKS Microfinance said “Punjab has approximately 2 [million] people living Below Poverty Line, with a credit demand of Rs 1,168 crore [USD 2.5 million]” [1]. According to a previous statement released by SKS, its expansion into Punjab will take place primarily in urban areas [2].

by Radhika Chandrasekhar -

MICROFINANCE PAPER WRAP-UP: The Global Financial Crisis and Indian Microfinance by Amit Garg and Diana Lewin

Written by Amit Garg and Diana Lewin; published in August 2009; MicroSave India Focus Note 23. http://www.microfinancegateway.org/gm/document-1.9.37780/The%20Global%20Financial%20Crisis%20and%20Indian%20Microfinance.pdf

This note analyzes the impacts of the financial crisis on the Indian microfinance sector. The authors focus especially on the microfinance institution (MFI) Sonata Finance Pvt. Ltd. and Dia Vikas Capital Pvt. Ltd. (Dia), a microfinance investor. The authors then provide several recommendations for MFIs on how to cope with the effects of the crisis.

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 Christopher Maggio -

MICROCAPITAL.ORG STORY: The Central Bank of India, A Nationalized Commercial Bank, Signs Deal with Government of Orissa and State-Owned Industrial Promotion and Investment Corporation (IPICOL) for Rs 25,000 Crore (USD 5.3 Billion) Line of Credit for Micro, Small and Medium Enterprises (MSMEs) Over 5 Years

The Central Bank of India, a nationalized commercial bank has plans to extend Rs 25,000 crore, the equivalent of over USD 5.3 billion worth of credit over five years to micro, small and medium enterprises (MSMEs) in the east coast state of Orissa [1,2]. The credit comes after the Central Bank signed a deal with the government of Orissa and the Industrial Promotion and Investment Corporation (IPICOL), a state-run organization that “[operates] the State incentive schemes to large and medium industries under the Industrial Policy of the Government” [3,4]. Prior to this, the Central Bank of India had only made investments worth Rs 3,000 crore, the equivalent of over USD 644.8 million, in the Orissa state [1].

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: Continuing Challenges To Expanding Microfinance In India – Criminal Activity And Danger Impede Microfinance Activities In India’s Naxal-Dominated Areas And Remote Tribal Groups In The Non-Cash Communities Of Jharkhand And Chhattisgarh Find Microcredit Unfamiliar

A recent report by Deepti Chaudhury on the Live Mint online financial news portal entitled ‘Crime, inaccessibility impede spread of microfinance activity’ [1] discusses the challenges faced by some MFIs that operate in certain regions in India including Bangalore, Uttar Pradesh and the remote areas in Jammu and Kashmir. The report talks about an interview with a potential microfinance client in Uttar Pradesh’s Bahraich town. The potential client has been unable to secure access to microcredit facilities despite being young and having the means to repay simply because he lives in an area where ‘even the MFIs don’t want to go because widespread poverty has made forming self-help groups difficult’. In addition, most people in the area work in a livelihood or sector that cannot be expanded.

by Radhika Chandrasekhar -

MICROCAPITAL.ORG STORY: Equitas Micro Finance India Receives $21.6m Loan from Small Industries Development Bank of India (SIDBI)

A recent article from The Economic Times stated that Equitas Micro Finance India, a microfinance institution (MFI) based in Chennai [2], received a USD 21.6 million (Rs 100 crore) loan from Small Industries Development Bank of India (SIDBI). Equitas’ Managing Director, P.N. Vasudevan, stated that the loan is repayable over four years, and that the MFI intends to raise USD 21.6 million more from other lenders. [1]

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].