Posts Tagged ‘india’
Posted on March 10, 2010 - by James
India: SKS to file for IPO in 3-4 weeks…
MUMBAI, March 8 (Reuters) – SKS Microfinance, an Indian firm that makes small loans to poor borrowers, plans to file application papers for an IPO in 3-4 weeks, three sources with knowledge of the deal said. The exact size and structure of the fundraising was not yet determined, with one source putting the figure at roughly $200 million, some of which might be raised through a pre-IPO placement. Another source said the company could raise $250-$350 million.
The sources did not wish to be named as they were not authorised to speak with the media. SKS founder Vikram Akula declined to comment. The for-profit company is India’s largest microfinance institution and is backed by private-equity firms such as Sequoia Capital, Kismet Capital and Sandstone Capital.
Posted on February 25, 2010 - by James
BBC News: “Saving holds key to women’s empowerment”
Once upon a time, Sumitra used to roam the streets of the Indian city of Ahmedabad, collecting discarded caps which could be recycled and sold back to manufacturers such as Coca-Cola.
She would spend the whole day sifting through the rubbish collecting the caps in return for a few hundred rupees – about $2. Then in 2006, Sumitra was introduced to a microfinance initiative which provided her with a small loan to start her own business. Four years on, she employs five women, and is the proud owner of six bottle-cap straightening machines which process 50kg of caps a day.
Posted on February 21, 2010 - by James
WSJ: Microfinance has The Makings of An Industry…
Opportunities at the bottom of the pyramid are driving the buzz today. One of the most significant areas in this category in India is Microfinance – both in what it has been able to achieve over the past couple of decades, as well as in its unrealized potential. Besides the scale of business that is possible in microfinance, what is even more exciting is the scale of impact that is possible through microfinance, in enabling other businesses in that segment.
One of the most significant aspects of microfinance over the past 5 years has been the talent and capital it has been able to attract. From socially-focused entrepreneurs and grants, the industry has moved to attracting the best consumer finance professionals (with an equally compassionate outlook) and large scale institutional financing. This, coupled with the experience that early Microfinance Institutions provided, has led to emergence of this opportunity at an unprecedented scale.
Posted on February 17, 2010 - by James
Reserve Bank of India Asks MFIs to Improve Governance Standards
HYDERABAD: India’s booming microfinance segment is under the scanner, with the Reserve Bank of India (RBI) issuing a veiled warning that it could be taken off the priority sector lending list of banks if the industry fails to improve its governance standards.
This was spelt out at a meeting in late January between senior RBI officials, representatives of Sa-Dhan—the association of Indian microfinance institutions (MFIs)—and some senior MFI managers from Karnataka, West Bengal and Andhra Pradesh.
The RBI officials reportedly told MFI executives that the central bank was aware of the extent of benami loans being given by MFIs, the practice of writing off bad loans and sloppy corporate governance in some of the entities, all of which could have their impact years down the line.
Posted on January 13, 2010 - by James
India: Investors happy as microfinance lenders discipline growth…
Microfinance institutions (MFIs)—firms that offer tiny loans to low-income groups—are moderating their pace of growth, but private equity (PE) and venture capital (VC) funds that have invested in them aren’t complaining.
MFIs are going slow on opening branches and acquiring loan customers. In an attempt to improve quality control, the industry has prepared a code of conduct, following which MFIs will try to avoid heavy concentration in some regions and stop chasing the same set of customers.
High growth means high returns for PE and VC funds. Yet investors are pleased the Rs11,750 crore microfinance industry is starting to rein in lending to address concerns that unbridled growth may cause bad assets to pile up.
Posted on January 7, 2010 - by James
Indian Microfinance Sector Demand Exceeds Current Fundraising…
With more than Rs. 1,000 crore capital inflow into the microfinance sector in 2009, new avenues to raise funds have come under scrutiny of microfinance institutions to meet the demand for rapid expansion that the sector is witnessing in the last two years despite the global financial meltdown in the mainstream banking sector.
Led by SKS microfinance and Spandana Sphoorthy which have successfully raised funds via the non-convertible debentures (NCD) route, many MFIs will follow the suit. The NCDs, which can be issued to both retail and institutional investors, will be in the form of a loan to a company that cannot be converted into equity.
The country’s first ever listed MFI’s non- convertible debentures issue was by Hyderabad-based SKS Microfinance that had raised Rs 75 crore by one year NCD at a coupon rate of 10 per cent in May 2009. The NCDs are listed on the Bombay Stock Exchange (BSE) and have been placed with the Standard Chartered Bank’s Foreign Institutional Investments (FII). The company chose to raise funds through NCDs (debt) so that it could match its debt with the equity it raised a year before.
Posted on December 22, 2009 - by James
India: SKS Microfinance ties up with State Bank of India…
SKS Microfinance has tied up with State Bank of India and two of its group banks for integration of 600 of its branch accounts with them.
“This is an innovation on the liability side we are offering to our customers. It will facilitate last mile cash-dealing,” Mr Dilli Raj, Chief Financial Officer, SKS Microfinance, told Business Line here.
As a part of the agreement, the Hyderabad-based microfinance institution would integrate its accounts in 390 branches with State Bank of India, 150 with State Bank of Hyderabad and 60 with State Bank of Mysore.
SKS had earlier tied up with Axis Bank, HDFC Bank (NYSE:HDB) and ICICI Bank (NYSE:IBN) for a similar facility.
“In addition, State Bank of India is also giving us Rs 100 crore funds as a mix of term loan and cash credit. This is significant because it shows the willingness of public sector banks to be associated with MFIs which was not happening earlier,” he said.
SKS, which has an outstanding portfolio of Rs 3,628 crore as on November 30, 2009, now had 36 per cent of its credit sources coming from 17 public sector banks.
CAPITAL
On the need for further capital, Mr Raj said evaluation of all possible options in debt and equity (including IPO) was being examined.
SKS has been aggressive on securitization of its agri/weaker section portfolio with banks. “Before March 31, 2010, we will be doing Rs 1200 crore through this route as the funds would be cheaper by 200 to 250 basis points than the term loans (at about 8.25 per cent), he said.
So far, it had tied up with ICICI Bank, HDFC Bank, Axis Bank, Kotak Mahindra, Punjab National Bank and Yes Bank (OOTC:YESBF) in this regard.
The benefit in the cost of funds would eventually be passed on to the 5.7 million customers SKS currently had, the CFO said.
“In fact, we have reduced our lending rates in Orissa, Karnataka and Andhra from 15 per cent (flat) to 12.5 per cent recently,” Mr Raj said.
SKS, which had ‘pioneered’ securitization of portfolio in MFI sector, had also tied up with Religare for commercial papers worth Rs 25 crore.
“This is the first standalone debt paper from a Mutual Fund to MFI,” Mr Raj said.
SKS, which has over 19,000 employees on its rolls, is now currently adding 1000 new employees every month to its field force for expanding its reach, he added.
Source: http://www.istockanalyst.com/article/viewiStockNews/articleid/3730342
Posted on December 16, 2009 - by James
WSJ: Microfinance’s Financial and Social Objectives
Wall Street Journal
According to the 2009 Microfinance India State of the Sector (MISS) Report, the microfinance industry’s client outreach has grown by 30% over the last year to 76.6 million and the total outstanding loan portfolio has grown by a staggering 56% to INR 359 Billion over the same period.
The growing integration of the sector with the capital markets has led to an influx of funds from various channels and has accelerated the transition of the Indian Microfinance Institutions (MFIs) into mainstream companies. While such a period of heady growth especially amidst an overall slowdown in the economy is laudable, one must question whether the industry is fulfilling its core charter of integrating millions of underserved Indians into our financial system in a socially responsible way. Critics have pointed out that even today financial inclusion remains as elusive as ever to the people at the absolute bottom of the pyramid (BOP).
There is also a real danger that some borrowers are falling behind by taking on excessive debt and then using debt rollover to meet their obligations. MFIs are also expanding the scope of their services by using their delivery platforms to bring more goods and services within the reach of rural India; but the same trend could also lead to financial profligacy amongst consumers. We delve into the intricacies of the microfinance debate and look ahead to see how Indian MFIs can manage the next phase of their growth in a way that benefits…
Posted on December 16, 2009 - by James
WSJ: As Microfinance Grows in India, So Do Its Rivals
Mahabubnagar, India
By KETAKI GOKHALE
The practice of making tiny loans to poor people, or microfinance, was supposed to help drive traditional village moneylenders from rural India.
Instead, traditional moneylenders, who typically charge high interest rates, are thriving, even in areas most heavily targeted by microfinance, which was begun as a way to help combat poverty by granting the poor access to capital to start businesses. Muhammad Yunus, the Bangladeshi founder of microfinance, won a Nobel Peace Prize.
Even as the government and nonprofit organizations came together to create the Indian microfinance market in the 1990s, traditional moneylenders’ share of total rural Indian household debt grew to 29.6% from 17.5%, according to a government survey. Another recent survey by the Reserve Bank of India found that between 1995 and 2006, the number of registered traditional moneylenders increased 56% to 19,627 from 12,601. Though much harder to quantify, unlicensed lenders are believed to have made similar gains, the survey says.
Posted on November 26, 2009 - by boris
India: Microfinance institutions wary of housing loans over default fears…
Concerns of defaults are holding back microfinance institutions, or MFIs, from a full-fledged expansion into home loans even as they seek to turn their clientele of poor borrowers into consumers and compete with commercial banks.
MFIs, established mainly to lend small sums to the unbanked poor to help them earn a living, say there’s potentially a huge demand for home loans among their customers. “This is unsecured lending. Risks are too many,” said a senior official at SKS Microfinance Ltd, India’s largest MFI, who didn’t want to be named. “It’s a different and a difficult ball game. We do not know yet how to price it.”
Home loans would be an extension of the consumer finance business of MFIs, who have already gone beyond their traditional role by financing the purchase of mobile phones, water purifiers and even refrigerators and are seeking to expand their product offerings to compete with commercial lenders.
Source: http://www.livemint.com/2009/11/23212808/MFIs-wary-of-housing-loans-ove.html
Posted on November 18, 2009 - by boris
IFC helps India’s Kerala State to develop a port that will create jobs…
IFC, a member of the World Bank Group, will work with the Indian state of Kerala to develop a greenfield port that will create jobs while addressing the state’s trade and transportation capacity needs.
The new port, to be located at Vizhinjam near the state capital of Thiruvananthapuram, is expected to become a national hub for container traffic. Developing this deep water port will build on the natural advantages of the proposed site and its proximity to international shipping routes, providing access to larger ships.
IFC will act as a principal advisor to Vizhinjam International Seaport Limited to structure, market, and implement the project to attract serious investors through an open, transparent, and competitive bidding process.
Source: http://finchannel.com/Main_News/Business/52035_IFC_Helps_India%E2%80%99s_Kerala_State_Develop_Port_Infrastructure_to_Build_Trade_Capacity/
Posted on November 17, 2009 - by boris
IFC plans to invest $1 billion in India this year…
International Finance Corporation (IFC), a member of the World Bank Group, plans to invest $1 billion in India this year. The investment could go up further in subsequent years.
IFC’s executive vice president and CEO, Lars Thunell, said: ‘‘We have increased our exposure in the last couple of years and, today, it’s our largest investment in a country.” The multilateral agency is also increasing its capital globally to fund investments in countries like India.
Being an IDA (international development association) country, part of World Bank, India is a priority market for IFC. Three years ago, IFC did around 25% of its business in IDA countries, which rose to 45% last year. The increased activity has prompted IFC to increase its capital for funds.
Source: http://economictimes.indiatimes.com/news/news-by-industry/banking/finance-/finance/IFC-to-infuse-1-bn-into-India/articleshow/5237958.cms
Posted on November 5, 2009 - by boris
Global perspective is an essential attribute for an investor in India…
Jayant Sinha is a cricket enthusiast who has written a script on Ranji Trophy cricketers that will soon be turned into a movie. He has written books and newspaper columns on Indian investments.
Sinha, 46, is also an avid investor who has been in the business of backing and advising enterprises for the last 20 years. He was recently named country head of Omidyar Network India Advisors, the newly formed entity of philanthropic investment firm Omidyar Network.
The global investment firm was established by eBay founder Pierre Omidyar and his wife Pam in 2004 to back and help scale up innovative enterprises that have the potential to catalyse economic, social and political change. It has so far committed $270 million (around Rs1,272 crore) in for-profit and not-for-profit organizations across the world.
Source: http://www.livemint.com/2009/11/05002222/Global-perspective-is-an-essen.html?h=A1
Posted on November 5, 2009 - by boris
U.N. plan to spread clean energy technology in India…
A new type of U.N. scheme is spreading clean energy technology to millions of people in India, promising to cut carbon emissions and help investors earn valuable carbon credits.
Two leading carbon offset project developers in India say the scheme offers the promise of improving livelihoods and greatly expanding the reach and potential investment returns of the U.N.’s existing Clean Development Mechanism.
The CDM allows investors to build clean-energy projects, such as wind farms and solar power stations, in developing countries and earn carbon offsets in return. These can be sold on to help buyers in rich nations meet mandatory emissions targets.
Source: http://in.reuters.com/article/topNews/idINIndia-43552120091030
Posted on October 30, 2009 - by boris
India: Banks asked to lend more to employment generating sectors…
Finance Minister, Pranab Mukherjee has asked CEOs of north based banks to increase lending to sectors like agriculture, micro and small enterprises that generate employment.
He said that government is providing interest subvention of one percent on all housing loans amounting to Rs. 10 lakh and suggested the banks to pay attention to these home loan borrowers. He stressed the importance of extending these loans to rural population to meet their housing requirements.
Mukherjee said that the growth rate of loans to this sector has been 13 percent for the last six months and needed to be improved to a target of 20 percent on year-on-year basis.
Source: http://www.rupeetimes.com/news/home_loans/banks_asked_to_lend_more_to_employment_generating_sectors_2918.html
Posted on October 29, 2009 - by boris
India: Crisil upgrades microfinance PTCs’ ratings…
Microfinance is fast emerging as a promising new asset class for debt and equity investors across the globe with Crisil upgrading the ratings of the senior and junior tranches of microfinance pass-through certificates (PTCs) to AAA (so) and A (so), from their original ratings of AA (so) and BBB (so) respectively.
The transaction, which was concluded by IFMR Capital in March 2009, involved securitisation of micro-loan portfolio of Rs 157 million (principal outstanding) originated by Equitas Micro Finance India Pvt Ltd.
The upgrade is based on the performance of the pool, the timeliness of payments to the SPV and the extent of credit enhancement in relation to the outstanding cash flows on the pool, says a release.
Source: http://sify.com/finance/crisil-upgrades-microfinance-ptcs-ratings-news-news-jk2rq2edfaj.html?&tag=topnews
Posted on October 27, 2009 - by boris
India: Micro loans bring light to rural poor…
When night falls in remote parts of Africa and the Indian subcontinent, hundreds of millions of people without access to electricity turn to candles or flammable and polluting kerosene lamps for illumination.
Slowly through small loans for solar powered devices, microfinance is bringing light to these rural regions where a lack of electricity has stymied economic development, literacy rates and health.
“Earlier, they could not do much once the sun set. Now, the sun is used differently. They have increased their productivity, improved their health and socio-economic status,” said Pinal Shah from Sewa bank, a micro-lending institution.
Source: http://in.reuters.com/article/topNews/idINIndia-43449620091027
Posted on October 23, 2009 - by boris
India: Microfinance firms grow 100% despite slowdown…
Despite the global slowdown, the Indian micro finance institutions are on an upsurge. The microfinance institutions have registered a whopping 100 per cent increase in the total loan portfolio at Rs 11,700 crore at the end of March. The total number of clients too increased to 76.6 million at the end of 2008-09 against 59 million clients a year-ago.
“Unlike the global scenario, the micro finance institutions (MFIs) in India have shown a rapid growth and we added close to 8.5 million clients during 2008-09, an increase of 60 per cent over the previous year,” said Brij Mohan, chairperson of Access Development Services.
“The average cost of lending for MFIs is coming down by 1.5 per cent every year and the average rate of lending stands at 21.5 per cent,” Mohan added.
Source: http://www.mydigitalfc.com/news/micro-finance-firms-grow-100-despite-slowdown-561
Posted on October 15, 2009 - by boris
Micro Housing Finance Corporation gets Rs. 25 Crores in fundraising…
Micro Housing Finance Corporation (“MHFC”) has raised Rs 25 Crores as an equity commitment in its first round of external funding from the India Financial Inclusion Fund (“IFIF”) and the Michael & Susan Dell Foundation.
Incorporated in May 2008, MHFC is a housing finance company based in Mumbai and focused on the lower income group of the urban community, specifically those in the informal sector.
According to MHFC Chairman, Madhusudan Menon, “This underserved segment is estimated to represent more than 90% of the workforce, but has almost no financial institution catering to its housing finance needs. Microfinance has paved the way to lend to this segment in an economically sustainable way, but its focus is on short term loans. We hope that MHFC will be able to take this process further and move towards supporting longer term financing requirements, especially for an important basic need like housing.”
MHFC received its license from the National Housing Bank in February 2009 and began operations in June 2009. The Company aims to provide long-term housing finance to urban lower income families, particularly informal sector clients who cannot provide documentary evidence of their income and thus cannot access mainstream banks and other housing finance companies.
Source: http://www.indiaprwire.com/pressrelease/financial-services/2009101435869.htm
Posted on October 14, 2009 - by boris
Omidyar Network has established a new entity in India to expand the firm’s level of investment…
Omidyar Network, a philanthropic investment firm, announced that it has established a new entity in India to expand the firm’s level of investment in the rapidly growing economy. The organization has engaged Jayant Sinha to lead Omidyar Network India Advisors, the newly formed entity.
The Indian office will enable Omidyar Network to increase investments and partner more closely with India-based portfolio organizations in order to support India’s economic and social transformation.
“I am confident that Omidyar Network’s investment in high-impact entrepreneurs and innovative organizations will catalyze economic opportunity and social impact in India,” said Sinha. “I am excited to lead the organization to encourage market-based approaches that have the potential to improve millions of lives.”
Source: http://www.reuters.com/article/pressRelease/idUS39832+14-Oct-2009+PRN20091014
The MiFi Report
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