News coming to us courtesy of the CGAP-MIX MCM Newsletter, Pragathi Mutually Aided Cooperative Credit and Marketing Federation Ltd, a India based Non Governmental Organization received a 6yr USD 654,600 loan from Oikocredit.
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Oikocredit Grants 6 Year USD 436,400 Loan to Indian Microfinance NGO Adarsha Welfare Society
News coming to us courtesy of the CGAP-MIX MCM Newsletter, Adarsha Welfare Society, an Indian Non Governmental Organization received a 6yr USD436,400 loan from Oikocredit.
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Indian Microfinance InstitutionåöESAF receives USD 1 million loan from Oikocredit
News coming to us courtesy of the CGAP-MIX MCM Newsletter, Evangelical Social Action Forum (ESAF), a Christian NGO with 81-90% percent of its operations in microfinance, was granted a 6 year, USD 1 million loan by Oikocredit.
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Microfinance Institutions Reach Crucial Agreement with Government in Andhra Pradesh, India
In a broad reaching agreement, Microfinance Institutions (MFIs) operating in Andhra Pradesh, India have reached an agreement with the state government on MFI interest rates, product portfolio, inter-MFI competition, credit disbursement and loan recovery methodologies. An agreement pertaining to a smaller jurisdiction åö the Krishna district of Andhra Pradesh was earlier reported on MicroCapital.
As per the terms of the agreement, MFIs have agreed to an interest rate ceiling of 15%. They have agreed to desist from providing multiple credit to an existing borrower and recover loans at a pace compatible with the borrower’s income level. MFIs are also to remain strictly within the micro-credit domain, avoiding micro-insurance products.
India’s Largest Life Insurance Company ‘sweetens’ MicroInsurance Space with a New Product
India’s largest Life Insurance Company, the Life Insurance Corporation of India (LIC) has quickly followed through on recent announcements of MicroInsurance plans with the launch of a microinsurance life product åö ‘Jeevan Madhur’ (roughly translates to ‘sweet life’).
Under this product scheme, life insurance coverage from a minimum of Rs5,000(about USD110) to a maximum of Rs30,000(about USD650) can be obtained. The product is customizable in the sense that the customer can make minimum premium payments of Rs25 (USD0.55) per week, Rs50 (USD 1.1) fortnightly, Rs100 (USD 2.2) per month and a minimum of Rs250 (USD 5.5) over longer periods. The term of the policy ranges from 5-15 years.
Microfinance Bill to be Introduced Before Indian Parliament in Winter Session
A draft of microfinance legislation is ready to be put before the Indian Parliament within the next three months. The legislation will focus on regulating and developing the growing microfinance sector in India. The bill aims to nurture the microfinance movement in India, replacing informal local moneylending, as well as expanding and enforcing regulation within the sector. Vinod Rai, special secretary for banking in the finance ministry, announced this news at a seminar organized by the Confederation of Indian Industry (CII).
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Indian Bank åö ICICI Reaches Arrangement with Provincial Government on Micro-Loan Interest Rates
ICICI bank has reached an agreement with the provincial government of Andhra Pradesh, India to cap interest rates at 15% and charge a diminishing interest rate on the loans disbursed through microfinance institutions (MFIs) in the Krishna district of the state. The revised interest rates will be charged retrospectively from April 2006. As per the terms of the agreement, the bank will also open an MFI desk and 10 rural centers in Krishna district to offer loans directly to customers. The bank will also explore the possibility of opening additional branches in other districts. The state government, in turn, has lifted the ban on MFIs loan collections at the agreed upon interest rates.
Earlier this year, the government of Andhra Pradesh, an Indian state where microcredit has witnessed rapid growth, had accused MFIs of usurious lending practices and unethical collection methods. Multiple suicides over MFI harassment were reported from five districts were reported with Krishna district being the most affected region. The government specifically charged the following MFIs åö Spandana, Asmita, Umduma Poddu Pedatha and Share Microfin of extortionate practices and subsequently, the Krishna district administration enforced temporary closure of 50 branches of these MFIs, seizure and destruction of loan records and encouraged non-payment of loans.
Lok Capital, a microfinance venture capital fund in India, raises US$ 12m from International Public Institutional Investors
Lok Capital LLC, a microfinance venture capital fund, based out of Delhi, India, has raised US$ 12m towards seed capital and equity investments in start up microfinance institutions. The investors in this fund include – Commonwealth Development Corporation (CDC), International Finance Corporation (IFC), Netherlands Development Finance Company (FMO) and KfW- Entwicklungsbank of Germany.
Continue reading “Lok Capital, a microfinance venture capital fund in India, raises US$ 12m from International Public Institutional Investors”Indian Insurers Begin Offering Micro-Insurance
Life Insurance Corporation, New India Assurance, United India Insurance, and Oriental Insurance will begin offering microinsurance. All four insurers will use microfinance and nongovernmental organizations to act as agents for their services. SEWA and SKS MicroFinance are notable among the forty institutions that have met with the insurers.
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Indian Banks ICICI, Andhra, and Canara Seek Takeover of United Western Bank to Bolster Microfinance Presence
Commercial banks ICICI, Andhra, and Canara made separate takeover proposals of United Western Bank. The action comes at a time of rising interest in Indian microfinance from commercial banks. According to Indian news service Moneycontrol, “ICICI Bank had been planning a major foray into agricultural and rural lending, [and] the branch network of UWB will come in handy in achieving that target in this sector.” United Western has experienced severe stock price volatility following a Reserve Bank of India moratorium issued September 2, 2006. As a result, the bidding banks have not yet released valuation details. United Western has not responded to the three proposals.
Grameen Foundation Guarantee Assists Microfinance Investment in India’s Cashpor and the Center for Community Transformation in the Philippines
Cashpor, an Indian microfinance institution founded in 1997, is receiving a loan for 50 million Indian Rupees (or US$1.1 million) with a US$110,000 guarantee from the Grameen Foundation. As of March 31, 2006, Cashpor served over 123,000 borrowers, composing a gross loan portfolio of $11.4 million. Assets totaled $13.9 million; return was negative 11.44%.
Commercial Banks in India Delve into Microfinance Investments
Banks in India have begun to enter the microfinance lending market, and many are partnering with regional microfinance institutions. Increasingly, loans as small as $100 are being made by mainstream Indian banks such as ICICI, HDFC, and UTI, and often contain unconventional covenants typical of microfinance transactions.
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Working Toward Transparency in Microfinance Investment: India’s MICROSOP Foundation Offers Free Rating Tool to Microfinance Institutions
India’s MICROSOP (Microcredit School of Practitioners) Foundation has developed a rating tool for rating Microfinance Institutions (MFIs). It is available free of cost with the objective of promoting transparency and familiarizing small MFIs with the concept of rating.
Bellwether India-focused Private Equity Microfinance Fund Makes Second Investment of US$274,000 in Arohan Microfinance Services
Bellwether Microfinance Fund purchased shares valued at $274,000 from Arohan Microfinance Services. They also granted $164,400 in convertible debt, which carries the option of being converted to equity.
Modular Corporation of Malaysia Launches Its First Microfinance Smart Card for the Microfinance Institution Mahasemam Trust of India
Modular Corporation, a wholly owned subsidiary of Modular Techcorp Holdings of Malaysia, announced the launch of its first Microfinance Smart Card for the Mahasemam Trust, a microfinance institution based in Madurai, India. Field officers of the Mahasemam Trust will use the Smart Card in combination with a small hand held device to record data such as payments and transactions. This information would then be downloaded daily to a central server.
Unitus Equity Fund, Bellwether Microfinance Fund and the Dell Foundation Make Microfinance Investment in Indian Ujjivan Financial Services
Unitus Equity Fund (UEF) and the Michael & Susan Dell Foundation (MSDF) are financing Ujjivan Financial Services Private Limited, a microfinance institution (MFI) offering microloans to India’s urban poor. With its investment of about $296,000, UEP will gain a 24% ownership stake in Ujjivan. MSDF will possess a 13.8% stake, and the Bellwether Microfinance Fund will continue its support of Ujjivan by taking a 12.6% stake.
Ujjivan reported net current assets of 11,359 thousand rupees ($249,000) as of March 31,2005 and a net loss of 830 thousand rupees ($18,200) for the last quarter. However, it does not report to the MIX Market, the microfinance information clearinghouse. The gaze of the microfinance sector in India is focused on rural India even though the population of urban poor is estimated to equal 106 million, 30% of the total urban population. Ujjivan believes the key difference between the urban and rural populations is lack of time and availability of space, not stability or community affinity, and is tailoring its products to serve the population of around 2 million urban poor in the city of Bangalore. Two driving reasons for borrowing by women in this segment, according to Ujjivan’s market research, are providing family housing and business working capital.
Continue reading “Unitus Equity Fund, Bellwether Microfinance Fund and the Dell Foundation Make Microfinance Investment in Indian Ujjivan Financial Services”Filling a Gap: Aavishkaar India Micro Venture Capital Ups the Ante
Micro-credit lenders typically provide entrepreneurs with small, short-term loans; on the small or “micro” scale for which they are intended, these loans are quite effective at allowing rural and urban poor in developing nations to establish sustainable businesses. At a certain point, however, these micro-loans are ineffective in stimulating further growth. The small size of the loans cannot support growth beyond a certain scale, and the short duration does not allow the capital to work for an extended period of time. Enter the Aavishkaar India Micro Venture Capital Fund.
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New Indian Microfinance Venture, Future Capital, Leverages Talents of Investment Banking Veterans
Future Capital, based in Mumbai, India, is generating buzz with its massive move into commercial finance. The company’s “Project Moneybazaar” will offer a stunning array of financial products from credit cards to auto loans to mutual funds, financial planning services, insurance, money transfers, mortgages and microfinance services. Project Moneybazaar will be a consumer-centric operation, aimed at building capacity in its marketspace through innovative distribution channels.
On the microfinance level, the company is developing specialized kiosks to access the poor in urban areas. In addition, Project Moneybazaar will offer bundled pricing to its clients, allowing them more affordable access to a wider arrange of products.
Led by CEO, Samir Sain, an 11 year veteran of Goldman Sachs’ investment banking arm; and drawing from a pool of talent with backgrounds at McKinsey Consulting and Coca-Cola, Future Capital and Project Moneybazaar promise an exciting entry into microfinance.
Additional Resources
1) Economic Times: “Future Capital to Foray into Retail of Financial Products,” April 25, 2006.