by Greg Casey -

MICROCAPITAL STORY: Indian Finance Minister and Insurance Industry Point Fingers While Touting Micro Insurance

Indian Government representatives and members of industry weighed in on the role of microinsurance from a recent Confederation of Indian Industry (CII) conference. During his speech, Tarun Bajaj, joint secretary of the department of financial services and the ministry of finance, expressed his view that insurance companies should place more emphasis on microinsurance: “Microfinance will not be complete without microinsurance as one event is enough to push back an aspiring farmer into his original state.” He urged insurance companies to work with microfinance institutions (MFIs) to provide insurance to the poor.

by Lori Curtis -

MICROCAPITAL STORY: India Post and NABARD Partner to Disburse Microcredit Throughout India

India Post will soon disburse microcredit sanctioned by The National Bank for Agriculture and Rural Development (NABARD) in the Northeast and eight additional states of India, building on a scheme operating in Tamil Nadu in the Southeast. The funds are sanctioned as microloans to Self-Help Groups, or SHGs which, according to Professor Annuppalle, of Sri Venkateswara University in India, is a “small voluntary association of poor people, preferably from the same socio-economic background.” While SHGs encompass both male and female participants, the funds will be distributed to female SHGs only.

by Greg Casey -

MICROCAPITAL STORY: Reserve Bank of India (RBI) Discussing Regulations Requiring Banks to Devote 10% of Loans to Microfinance

The Reserve Bank of India (RBI), the country’s central bank, is contemplating requiring that financial institutions direct at least ten percent of their total loans to medium small and micro enterprises (MSMEs). These new restrictions would come on top of the current requirements that banks devote at least 40 percent of lending to the priority sector, which includes poor and agricultural areas and industries. These current laws do not require that loans be made to enterprises of a certain size.

by Greg Casey -

MICROCAPITAL STORY: Commercial Insurance Companies Partner, including TATA AIG Life and Royal Sundaram, with Microfinance Institutions (MFIs) such as SKS India and Basix to Provide Microinsurance to the Rural Poor in India

The Economic Times recently reported on the growing trend of partnerships between commercial insurance companies and microfinance institutions. The insurance companies cite “saving infrastructure costs” and “creating distribution channels” as economic motivators for working with MFIs. Companies involved in such partnerships include SKS India, Bhartiya Samruddhi Finance Limited (Basix), Royal Sundaram Alliance Insurance and TATA AIG Life.

by Yrenilsa Lopez -

MICROCAPITAL STORY: India’s Stricter Capital Norms may Prompt more Efficient Financial Structures for Microfinance Institutions (MFIs)

India’s present growth rate for its microfinance sector has been recorded at 130 percent, with prospects of continued growth and increased demand in coming years. Microfinance Institutions (MFI) in India have been responsible for Rs 10,000 crore (approx. USD 2.23 billion) in loans to low-income individuals and small businesses. Currently a sector consisting of about 135 MFI’s throughout the country, the government of India has begun introducing tighter norms for the capital adequacy ratios (CAR) of its microfinance lenders, which are expected to be enacted within the coming year.

by Greg Casey -

MICROCAPITAL STORY: A Little World (ALW) of India Closes Series of Financing Totaling $6.3m from Investors including the Bellwether Microfinance Fund, the India Financial Inclusion Fund and Legatum Ventures

A Little World, a technology company based in Mumbia, India, recently finished a round of funding which brought in INR 287m (USD 6.3m). The investors included the Bellwether Microfinance Fund, the India Financial Inclusion Fund and Legatum Ventures. The investments, which were facilitated by Intellecap, are intended to help build ALW’s product portfolio. ALW focuses on using banking technologies to provide low cost financial services to those at the bottom of the economic period.

by Brett Rudder -

MICROCAPITAL STORY: Joint Microfinance Venture Between India’s Tata Group and American Insurance Group Inc. (AIG) Unveils a Burgeoning Micro Insurance Market in India’s Rural Poor

Tata-AIG Life Insurance Company is a joint venture established in April 2001 between India’s Tata Group and New York’s USD 60 billion insurance company AIG. The Tata Group, founded in 1868, is one of India’s oldest and largest corporate conglomerates, with annual revenues accounting for 3.2 percent of the country’s gross domestic product (GDP), and market capitalization of USD 65 billion. The Tata Group did not start selling micro insurance until its union with AIG yielded micro-life insurance products in August 2006. AIG earned its first micro insurance experience in 1996 with the creation of AIG Uganda.

by Greg Casey -

MICROCAPITAL STORY: Rising Interest Rates and New Reserve Bank of India Capital Adequacy Requirements Put Pressure on Indian MFIs

Recent increases in the cost of borrowing for many organizations around the world and new capital adequacy requirements are putting pressure on Indian Microfinance Institutions. According to The Times of India, both Equitas Micro Finance India (Equitas) and Madura Micro Finance ltd (Madura) are raising interest rates due to increases in the cost of borrowing. Also, SKS Microfinance (SKS) has begun looking for new sources of private equity funding, citing both the reserve requirements and increased interest rates.

by Ryan Benson -

MICROCAPITAL STORY: Indian MFI Association Sa-Dhan to Host Policy Forum Discussing Expansion of Microfinance in India’s Eastern Provinces, NABARD and SIDBI to Attend

Sa-Dhan, India’s largest association of microfinance institutions recently announced it would host a policy forum bringing together key stakeholders of Indian microfinance to conceptualize an expansion plan for microfinance in India’s eastern provinces. The two-day policy forum, titled “Breaking the vicious cycle of poverty: synergy between micro-finance and livelihood,” will examine the current state of microfinance in eastern India, particularly the states of Orissa and West Bengal, and identify the key challenges that impede regional growth there.