Search Results for: india

by the MicroCapital Team -

ING Poised to Expand Microfinance Investment Activity Beyond India

ING Group is a Dutch company providing worldwide financial services including banking, insurance and asset management to clients in more than fifty countries. At the end of 2005, total assets were EUR 1,159 billion. As of April, 2006 ING was ranked as the 13th largest financial institution in the world based upon market value.

ING Vysya Bank Ltd, which became an ING subsidiary in 2002 when ING took over management of Vysya Bank Ltd, is the first International Indian Bank. Vysya reported assets of EUR 866 billion and net operating profit of EUR 5.97 billion at the end of 2005.

On the retail side, ING Vysya Bank provides group loans to villages in India. At the end of 2005, $3.4 million had been dispersed through loans and $2.6 million had been collected as micro deposits. On the wholesale side, ING Vysya had provided $11.5 million in loans to microfinance institutions (MFIs) as of November, 2005.
Continue reading “ING Poised to Expand Microfinance Investment Activity Beyond India”

by the MicroCapital Team -

ICICI Bank Expands Retail Microfinance Business In India

ICICI Bank of India has announced plans to further its entry into the retail microfinance space with the addition of 200-250 new partnerships with microfinance institutions (MFIs). The bank has already moved aggressively to double the size of its rural and agribusiness loan portfolio over the past nine months; and with the addition of the new targeted partner MFIs, ICICI Bank will have retail operations in 600 MFIs across India.

Under the ICICI Bank partnership model, the microfinance institution assumes the promotional role of identifying, training and promoting microfinance clients, while the bank provides the financial backing. ICICI Bank also provides securitization services for its partner organizations, which will become increasingly important as the secondary market for microfinance develops.

Additional Resources

1) ICICI Bank
2) MicroCapital Blog: “ICICI Bank Brings Microcredit One Step Closer to Investment From the Developed World,” February 6, 2006.
3) MicroCapital Blog: “Microfinance Invests in India’s Top Minds,” January 24, 2006.
4) MicroCapital Blog: “Why the Big Banks are Investing in Microfinance,” April 5, 2006.

by the MicroCapital Team -

Sun Microsystems founder, Vinod Khosla, Leads Charge in India’s Largest Microfinance Equity Investment to Date, Joining with Unitus and Others in Investing US$2.5 million in SKS Microfinance

Sun Microsystems (NASDAQ: SUNW) founder and Chief Executive Officer, Vinod Khosla, lead a group of investors today in committing US$2.5 million to SKS Microfinance of India. Founded in 1998, SKS Microfinance reported having a loan portfolio of US$7,604,876 and total assets of US$9,130,885 as of March 31, 2005. Since then, that portfolio has grown to over US$14 million. The bank’s 42 branches and 400+ employees serve women in India’s poorest regions, in particular, the drought plagued Deccan Region. Though it has yet to report a profit, SKS Microfinance has brought its return on equity up from -55.85% in 2000 to only -0.06% in the first quarter of 2005. With annual growth pegged consistently at around 250%, a positive return should be just around the corner.

Continue reading “Sun Microsystems founder, Vinod Khosla, Leads Charge in India’s Largest Microfinance Equity Investment to Date, Joining with Unitus and Others in Investing US$2.5 million in SKS Microfinance”

by the MicroCapital Team -

Indian Future Capital Holdings To Bet On Consumer And Retail Space, Looking at Microfinance Investment

Sahad of VC Circle, a blog on private equity in Indian brings us the following:
Here is an interview with Sameer Sain, CEO of Future Capital Holdings, a division of Pantaloon, India’s largest retail undertaking thus far (Reliance is planning one). Sain, a former MD with Goldman Sachs in Europe, is spearheading FCH.
He says FCH is a holding company and so far has three business lines up and running. Two are real estate funds – Kshitij (raised $80 million for it in 2005) is now fully deployed, while second fund called Horizon ($300 million) will be closing this month. The third is the private equity business which has Indivision India Partners Fund as a partner. "We’re currently raising money for this fund and targetting $350 million."
Here are some key points: He says there is tremendous opportunity for private equity investments in the financial services space. "Given that less than 50% of Indians have a bank account, we see great synergies between retail finance and shopping at a Pantaloon “Big Bazaar” store. In addition, our access to almost 25% of all modern retail space in India provides with a point of sale for financial producs. This is an area where I will focus given my own background." The company also plans to launch new businesses like microfinance, mortgage, auto, credit cards within the retail formats.
The critical success factor for FCH is their ability to attract and retain talent. "Our strategy is quite simple. We want to empower talent we hire to act like owners rather than employees. We want to give them the width and space to operate and the right financial incentives. We are rolling out a unique programme, LTWC (Long Term Wealth Creation) åö a variation of certain Western compensation models, tailored for India." [Via FinanceAsia.com]
by the MicroCapital Team -

Small Industries Development Bank of India (SIDBI) Makes over $220,000 Microfinance Equity Investment in SKS Microfinance

On January 31, 2006, SIDBI made their first equity investment in a microfinance institution (MFI) by presenting two SKS Microfinance (SKS) clients with a check in the amount of $113,095. This represents half of SIDBI’s total investment amount of $226,192 corresponding to a 7% stake in SKS Microfinance (SKS). Although SIDBI has supported microfinance through loans and capacity building, this is their first direct equity investment.
Continue reading “Small Industries Development Bank of India (SIDBI) Makes over $220,000 Microfinance Equity Investment in SKS Microfinance”

by the MicroCapital Team -

Legendary Venture Capitalist Vinod Khosla and Grameen Foundation Make $500,000 Microfinance Equity Investment into Indian Microfinance Institution

U.S. non-profit Grameen Foundation USA (GFUSA) and Silicon Valley Venture Capitalist Vinod Khosla have each made a $250,000 equity investment into Indian microfinance institution (MFI) Credit and Savings for the Hardcore Poor Financial and Technical Services (CFTS).

Continue reading “Legendary Venture Capitalist Vinod Khosla and Grameen Foundation Make $500,000 Microfinance Equity Investment into Indian Microfinance Institution”

by the MicroCapital Team -

ABN AMRO Bank Makes $4.5 Million Microfinance Investment into Indian Microfinance Institution SKS

Dutch ABN AMRO Bank recently loaned Indian SKS Microfinance Private, Ltd., a microfinance institution (MFI), $4.5 million. With over å¥855 billion in total assets as of June 2005, ABN AMRO ranks as the 20th largest commercial bank in the world, measured by tier 1 capital (equity capital and disclosed reserves).

Established in 1997 as a “non-profit society”, SKS India began operations in microfinance services, then incorporated SKS Microfinance PrivateLtd (SKSML) in 2003 as a “for-profit spin-off” that took over the microfinance operations specializing in savings, loans, and insurance. As of June 2005, the organization had total assets just over $458 million and total loans close to $400 million for about 87,000 clients.

Additional Resources

1) Consultative Group to Assist the Poor (CGAP): “Microfinance Capital Markets Update” is the best source for monthly updates on debt and equity deals in microfinance.
2) “ABN AMRO: Profile.”
3) “SKS: Product and Services.”
4) “SKS Milestones.”

by the MicroCapital Team -

PlaNet Finance Lands Another Big Bank: ABN AMBRO Bank to Award Excellence in Indian Microfinance

After a busy year of successes, PlaNet Finance announced a partnership with ABN AMBRO Bank, the 20th largest bank in the world measured by “tier 1 capital (equity capital and disclosed reserves) to establish an award to Indian microfinance organizations. The Microfinance Process Excellence Awards (MPEA) is made up of 18 awards which will be given to small, medium, and large—so-called “Flint, Flame, and Fire” categories—microfinance institutions throughout India.

Additional Resources

1) “Microfinance Process Excellence Awards 2006.”
2) “Corporate Profile.”
3) “MPEA 2006.”
4) “Tier 1 Capital.”
5) “MPEA 2006: Number of Awards.”

by the MicroCapital Team -

Improving Credit Access to India’s Agricultural Sector?

As part of its effort to increase credit flow to rural farmers, India’s National Bank for Agriculture and Rural Development (NABARD) will extend a pilot project, initially launched in eight states, to include the entire country this year.

The project is geared towards promoting and facilitating entrepreneurship among farmers. The project aims to educate farmers, who are encouraged to create "joint liability groups" which are akin to traditional self-help groups (SHGs) yet comprise a cross-section of farmers and participate in agri-business workshops. The number of such groups has grown by 49% in the past year. The workshops are meant to expose farmers to viable investment options such as minor irrigation and agricultural engineering.

For the past two decades, agriculture credit has grown by 15%. But with newly focused attention on the potential of this group, credit availability has increased by 40%. Sadly, the history of government-driven expansion of credit often creates more poverty, not less.

Additional Resources

1) Main article discussed in entry, Hindu Business Line: "NABARD to Extend Farm Credit to All States."

by the MicroCapital Team -

Microfinance Blazes Trail for Bringing Goods to Rural India

Even though 70% of India’s population inhabits rural areas, commerce has been rigidly focused on urban areas. The status quo approach is being inverted, though, as urban markets become increasingly saturated and companies’ views of rural markets are revised.

Rural Indian markets, whose potential has historically been dismissed, house 700 million people and account for more than 50% of fast-moving consumer good (FMCG) sales, and 60% of the durables market. The annual size of the rural market for FMCGs has been steadily growing and is estimated at $11 billion (pg. 3).

The shift to rural markets has only recently begun in full force as companies have realized that it is too costly to ignore this market any longer. While the per capita income of rural India is half what it is in urban India, disposable income does not follow suit. In fact, surplus disposable income is roughly the same, with the rural consumer paying virtually nothing for health, education, housing and food.

In overcoming the difficulties of penetrating rural markets, companies are turning to the rural poor not only as potential consumers, but as retailers as well. Collaborating with microcredit clients has proven to be good business.

The most revolutionary example of such partnership is between Indian company Hindustan Lever Limited (HLL), a subsidiary of Unilever, and CARE India’s multi-state microfinance program. By linking HLL with self-help groups throughout India, women have received training in retail and marketing to sell staple products in rural, low-income areas.

The joint venture, named Project Shakti, has already expanded to 12 states and aims to include 40,000 (up from 16,000) women by next year. By penetrating rural markets through access points such as microfinance institutions, an important catalyst to increase scale is emerging, with immense potential for future growth.

Additional Resources

1) Main article discussed in entry, Wall Street Journal: "With Loans, Poor South Asian Women Turn Entrepreneurial."

2) "HLL Inks Strategic Alliance with CARE India."
3) Book Review: "The Fortune at the Bottom of the Pyramid," C.K. Prahalad
4) Financial Express: "Competing Visions of Rural India."

by the MicroCapital Team -

Micro-insurance Facilitates Healthcare in India

Healing Fields Foundation, which currently provides microinsurance to 2,000 families in various districts in central India, will expand its program to the West Godavari District. According to Mukti K. Bosco, the leader of Healing Fields, fifty-two percent of rural borrowers take out loans for health-related emergencies. Microinsurance is beneficial for the following reasons:

1. The poor do not wait to seek health services until their illness becomes serious. Health costs decrease with early treatment. Furthermore, with a group health plan, the rural farmers can demand better health care services from their provider.

2. Calculations show that premiums for group insurance schemes are more cost effective than loan repayments.

3. Farmers are willing to invest more for farming when holding a weather insurance policy.

Additional Resources

1) Community Health Insurance Network (CHIN) members

2) Microinsurance Providers

3) Business Standard: “Insuring rural health”

4) Novartis Foundation for Sustainable Development: “Social Exclusion and Access to Health Care in Developing Countries”

by the MicroCapital Team -

Indian Microfinance at Long Last Attracting the Attention of Venture Capitalists

India, one of the most developed microfinance markets in the world, may have finally received long-awaited recognition. Venture capital has come to Indian microfinance, supporting the commercialization of the industry by providing much-needed capital. The joint venture is led by the American investment company Gray Ghost and the Dutch Hivos-Triodos Fund. To skirt India’s notorious red tape, the partners transformed an existing Indian microfinance institution into Bellwether, intended to be a source of financing for India’s most innovative microfinance institutions. The fund is capitalized at $10 million, and will address small and medium-sized institutions, which are considered less able to attract finance from the regular financial sector, relative to larger microfinance institutions.The mission of the fund is to promote the commercialization of microfinance through targeted investments and will seek out microfinance institutions that are or want to be commercially sustainable. A board and committee to advise on investments will together institutionalize Bellwether’s involvement with the chosen microfinance institutions. As the CEO of an upcoming microfinance institution spends more than 60% of his or her time fundraising, such an influx of funds will no doubt improve the availability and quality of microfinance services.

Additional Resources

1) Main article discussed in entry, Microfinance Information Exchange (MIX): "Hivos-Triodos Fund Starts the First Venture Capital Fund in India."
2) Bellwether Microfinance Fund

by the MicroCapital Team -

Will Documentation Kiosks in Rural India Increase Access to Credit?

An American company, Wyse Technology is working with Indian consulting company Comat Technologies to bring computer kiosks to 5000 villages around the Indian state of Karnataka. The ICICI Bank, Indian government, and the International Finance Corporation (IFC), which is a division of the World Bank (WB), will also participate. Six to ten networked terminals containing information about education, healthcare and land records will be set up in each village.

Some say simple projects to legally document property ownership will enable millions of villagers to access credit. However, the jury is still out on this theory. After property rights advocate and economist De Soto researched and published this theory, several quantitative studies contradicted his results. It is safe to assume that the security of private property under the law will increase access to credit by stabilizing the economy in general. The question before us is how best to achieve this property security in the context of the developing world. The current kiosk initiative may help us answer this important question if it can deliver property documentation efficiently to the general public in India.

Additional Resources

1) Main article discussed in entry: "Group Plans Kiosks for Rural India.”
2) “Thailand, China Eye Property Rights As Growth Key.” Reuters News 30 Jan 2003. Valisno, Jeffrey
3) "Thousands of Poor to Get Lots in Gov’t-Owned Land.” 21 Jan 2005. Field, Erica4) “Do Property Titles Increase Credit Access Among the Urban Poor? Evidence from a Nationwide Titling Program.” Working Paper. Harvard University: Jan 2004. Field, Erica
5) Review of de Soto’s “The Mystery of Capital.” Journal of Economic Literature. Dec 2001. Vol 39, No 4, pg. 1215-1223. Bishop, Matthew
6) Financial Times: "A Little Credit Can Go Far."
7) BBC News: "Insuring Ethiopians Against a Poor Harvest."
8) Center for International Private Enterprise: "An Interview with Hernando de Soto."
9) Cato Institute: "Hernando de Soto’s Biography."

by Hawra Moochhala -

MICROFINANCE PAPER WRAP UP: “Women Agents for Financial Inclusion: Exploring the Benefits, Constraints and Potential Solutions,” by Emilio Hernandez et al, Published by CGAP

Based on data collected from projects in India, Ghana and Pakistan that aim to improve financial inclusion for rural women, the authors examine the interplay between gender dynamics and the employment of women as agents supplying in cash-in and cash-out (CICO) services. This includes the impact these agents can have on communities, the challenges faced by women in becoming and succeeding as agents, and possible solutions to these challenges.

While training to become CICO agents,

by the MicroCapital Team -

SPECIAL REPORT: Partner with Agents for Impact, and We’ll Drive Impact Together!

This article is sponsored by Agents for Impact (AFI). We invite you to learn more about the firm via LinkedIn.

Andrij Fetsun, Founder & CEO at AFI:
AFI celebrated five years in bus­iness in October this year, and my team has attained several impact­ful goals during this challenging time. This would not have been possible without the im­mense support of our clients: the Ger­man impact-driven microfinance fund Invest in Visions, which has accumu­lated a volume of around EUR 1 billion with a major focus on micro­finance; HANSA­INVEST, which is based in Hamburg; and the crowdfunding platform Lendahand. Among the services we provide these clients is to perform plausibility checks of their funds’ ESG reports.

As the founder of AFI, I would like to highlight the culture we have built with our dedicated team that has come to­gether during these five years from dif­ferent parts of the world. I believe that corporate culture is crucial for every com­pany, especially for startups. Initially, we had trouble attracting Agents since we were not a well-established name in the industry or able to pay high salaries from the outset. Therefore, I focused on what truly makes for a great workplace

by the MicroCapital Team -

SPECIAL REPORT: The Business Case for Education Finance #EMW2023

e-MFP logoMany families in low- and middle-income countries send their kids to low-cost private schools because the government is not meeting the need. However, many of these schools are not registered as businesses and don’t keep good records, so it is hard for them to borrow from banks to improve their facilities. Meanwhile, about one in five school-aged children – 260 million worldwide – are not in school.

Varthana is a lender in India that specializes helping schools expand. Its loans are often in the range of USD 20,000 to USD 100,000. The firm has developed a track record and so now is able to