Posts Tagged ‘microfinance’
Posted on September 2, 2010 - by M. Bennett
India: MFIs increasingly raising money through securitisation…
30 Aug, 2010, 01.42AM IST, Shailesh Menon,ET Bureau
MUMBAI: Microfinance companies are increasingly adopting the securitisation model to raise capital. Over a dozen organised lenders have raised money over the past one year by selling their assets (micro-loan units) in the securitised form. This involves the pooling of similar type of micro-loans and repackaging them into marketable debt securities.
Microfinance institutions (MFIs) are finding buyers for their securitised pass-through certificates (PTCs) in insurance companies, mutual funds, bank treasuries and private wealth managers. Ashirvad Microfinance, Satin Creditcare, Sahayata Microfinance, Grameen Financial Services, SKS Microfinance, Share Microfin and Equitas Microfinance are among such entities who have raised capital through this route.
Posted on September 2, 2010 - by M. Bennett
The Economist: Power to the people…
Technology and development: A growing number of initiatives are promoting bottom-up ways to deliver energy to the world’s poor
Sep 2nd 2010
AROUND 1.5 billion people, or more than a fifth of the world’s population, have no access to electricity, and a billion more have only an unreliable and intermittent supply. Of the people without electricity, 85% live in rural areas or on the fringes of cities. Extending energy grids into these areas is expensive: the United Nations estimates that an average of $35 billion-40 billion a year needs to be invested until 2030 so everyone on the planet can cook, heat and light their premises, and have energy for productive uses such as schooling. On current trends, however, the number of “energy poor” people will barely budge, and 16% of the world’s population will still have no electricity by 2030, according to the International Energy Agency.
But why wait for top-down solutions? Providing energy in a bottom-up way instead has a lot to recommend it. There is no need to wait for politicians or utilities to act. The technology in question, from solar panels to low-energy light-emitting diodes (LEDs), is rapidly falling in price. Local, bottom-up systems may be more sustainable and produce fewer carbon emissions than centralised schemes. In the rich world, in fact, the trend is towards a more flexible system of distributed, sustainable power sources. The developing world has an opportunity to leapfrog the centralised model, just as it leapfrogged fixed-line telecoms and went straight to mobile phones.
Posted on September 2, 2010 - by M. Bennett
India: ‘Citigroup will grow with India’…
New Delhi, September 02, 2010
Being the first Indian to head Citigroup, CEO Vikram Pandit says Citi will continue to support microfinance in India and work towards financial inclusion. Excerpts: Your job has been described as one the toughest banking jobs in the history… Leading Citi through one of the worst global slowdowns has certainly been challenging… but it also has been incredibly gratifying.
I took the job because I believe in Citi’s purpose — connecting clients with the world and helping customers build their financial futures. I was also excited to rebuild the world’s largest financial institution. The last two years have been difficult. However, I had the privilege of working with an incredible management team and 259,000 talented colleagues around the world. Together we have made tremendous progress and I am looking forward to our shared future.
Posted on September 2, 2010 - by M. Bennett
SKS Microfinance Market Capitalization crosses US$ 2 Billion…
SKS Microfinance has risen by more than 30% on it’s issue price of Rs 985 .
The market capitalization of SKS Microfinance, India’s largest micro finance company which listed on the stock markets on the 16th August 2010 has crossed US$ 2 Billion in a short span of two week. The stock also made a new 52 week high of Rs 1312.80 in todays trade. SKS Microfinance currently has 7,19,72,542 shares outstanding which at todays closing price of Rs 1286.70 gives the company a market capitalization of US$ 2.01 Billion.
Posted on September 1, 2010 - by M. Bennett
Hints of the Subprime in New Microcredit…
John D Conroy | September 01, 2010
Enthusiasm for microfinance has surged since Professor Muhammad Yunus and his Grameen Bank shared the Nobel Peace Prize in 2006.
This November, APEC finance ministers will be asked to adopt an initiative on “financial inclusion” when they meet in Kyoto.
Unfortunately, this coincides with a wave of financialization of micro-lending, a phenomenon Yunus deplores.
As events unfold, micro-lending may come to provide an uncomfortable analogy, in terms of credit bubbles and systemic damage, with subprime home mortgage lending. APEC should avoid endorsing negative aspects of financialized microcredit.
Thinking about financial services for the poor has evolved since the 1980s, when Yunus pioneered micro-lending.
During the 1990s, the emphasis shifted to microfinance, seen as a range of financial services — deposits, transfers, remittances, even micro-insurance, as well as credit. Recently the idea of financial inclusion — access to formal services for all — has taken hold.
Posted on September 1, 2010 - by M. Bennett
Thailand Post may provide microfinance centres…
Published: 31/08/2010 at 12:00 AM
Thailand Post offices nationwide could be transformed into microfinance centres as part of the government’s bid to extend financial services to lower-income groups, said Finance Minister Korn Chatikavanij.
The postal service’s 1,200 branches and tens of thousands of staff nationwide could serve as a broad distribution channel for rural communities, he said.
If approved by the Bank of Thailand, the Thailand Post could join with state banks such as the Government Savings Bank and the Bank for Agriculture and Agricultural Co-operatives in promoting microfinance programmes.
The GSB for the past several years has offered the People’s Bank programme as a funding source for urban residents by offering small loans to support entrepreneurial activities. The BAAC meanwhile is championing community bank schemes where villagers play a direct role in vetting and approving loan requests by residents.
Posted on September 1, 2010 - by M. Bennett
After SKS success, more microfinance public issues are on the horizon…
Namrata Acharya / Kolkata August 31, 2010, 0:55 IST
It was merely a coincidence that the year after C K Prahalad’s bestseller, The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits (2004), that Vikram Akula returned to SKS Microfinance, leaving a consultancy job at McKinsey & Company in Chicago that he took a year earlier.
Akula, a Fulbright Scholar researching poverty and a student of arts, had founded SKS Microfinance as a non-profit venture in late 1997 with funding close to $52,000 raised from 357 people. He converted it into a for-profit company in 2005 during his second stint. Success came rather swiftly. In 2006, Akula was named by Time magazine as one of the world’s 100 most influential people.
In less than a decade, SKS emerged as the largest micro-finance institution (MFI) in the country. Profits after tax (PAT) increased from Rs 2 crore in FY07 to Rs 80 crore in FY09, and Rs 174 crore in FY10. Little wonder, then, that the company’s recent initial public offering (IPO) attracted high-profile investors like billionaire George Soros, and was oversubscribed 13.69 times, even with the price fixed at the highest band of Rs 985 a share.
Posted on August 22, 2010 - by M. Bennett
Bangladesh: Asia Microfinance Forum to focus on Financial Inclusion in Asia…
The Asia Microfinance Forum 2010 convened by the Banking With the Poor Network (BWTP) and organised by the Foundation for Development Cooperation (FDC) will be held in Colombo, Sri Lanka from 12-15 of October 2010. Citi Foundation is Lead Sponsor and Hatton National Bank, the Local Host for this event. Microfinance Focus will be the official media partner of the conference.
Entitled ‘Financial Inclusion-Achieving Asia’s Potential, the forum will bring together leading microfinance practitioners, policymakers, financiers, academics and advocates as partners in achieving greater financial inclusion in Asia.
The first day of the conference will gain robustness around the forum’s theme of ‘Understanding Financial Inclusion’ and the role of microfinance in achieving it. Concurrent sessions will be conducted to discuss the role of field officers and a robust human resource policy, credit risk management and social performance management.
Posted on August 22, 2010 - by M. Bennett
India: Top 100 Microfinance Institutions in the World…
For the third year running, MIX has released it’s Composite Ranking of the performance of microfinance institutions and Grameen Financial Services Pvt Ltd is the highest ranked Indian MFI at No 4 . Next comes SKS Microfinance at No 7, followed by Spandana at No 8. BASIX is ranked at No 11, SHARE at No 12 and Bandhan Microfinance at No 13.
What is the MIX Global 100 Composite Ranking ?
The MIX Global 100 attempts to provide a composite picture of MFI performance using a series of attributes: outreach, efficiency, and transparency. It views MFI performance, something that is inherently local and influenced by the conditions of the market in which the MFI must operate, through the lens of universal goals—a financially sound institution and expanding outreach to clients at the lowest possible cost—and all done in the public arena so that others may learn from the experience.
Posted on August 22, 2010 - by M. Bennett
Kenya: Microfinance rules to suppress profit greed…
By FREDRICK OBURA
The Association of Microfinance Industry (AMFI) has adopted rules designed to govern and promote accountability among its members.
AMFI Chairperson Jennifer Riara, said rising concern worldwide on the effectiveness of microfinance to fight poverty had prompted the signing of the new regulation that was witnessed by 43 of its members at a Nairobi
hotel.
“There has been growing concern about our activities… the thin line between poverty eradication and profit making continues to confuse members of the public,” said Riara at a news briefing.
“What we have signed would help streamline our operation and instill a sense of professionalism in meeting the objective of reaching out to the 80 per cent of the un-banked members of the society,” she said.
Posted on August 22, 2010 - by M. Bennett
Fortune: Can microfinance be both moral and profitable?
by Nin-Hai Tseng, reporterAugust 19, 2010: 10:52 PM ET
FORTUNE — There’s a debate brewing in the world of do-gooder banking, pitting the father of microfinance Muhammad Yunus against a few entrepreneurs who have put an unlikely spin on Yunus’ model of lending to the poor.
Earlier this week, India’s biggest microlender, SKS Microfinance Ltd., made its debut on the Bombay Stock Exchange. Shares surged 18% on their first trading day.
An IPO is a rare and controversial step for a major microfinance company to take, since these lenders typically rely on donations, governments and international organizations such as the World Bank for funding. Only a handful have raised public money on the idea that helping small entrepreneurs like farmers and basket weavers gain access to financing is not only the right thing to do, but also a profitable venture.
Posted on August 12, 2010 - by M. Bennett
India: Goodbye, microfinance…
12 Aug 2010, 0546 hrs IST,T K Arun,ET Bureau
Microfinance is slated to join the ranks of flintstones, the crossbow , gas lamps, the pigeon post and the floppy disk — all excellent in their own time but rendered obsolete by the march of technology.
What made microfinance tick? One, failure of formal finance to reach out to the majority , particularly in rural areas. This left the rural lending field to the moneylender, the landlord, the trader or some other ‘informal’ , usually expensive, source of credit. So, when microfinance came up with a loan that was cheap when compared to the informal sources of credit, it found ready takers.
Two, the paucity of alternate sources of cheap credit. This made people repay their micro loans. If you spoilt your credit standing , you also spoilt the standing of the people in your group and you lost face, as well.
Both these conditions are disappearing. The second factor first. The success of microfinance has led to a rush of microfinance entrepreneurs into rural areas, who push money at all and sundry, to build up a large asset portfolio in a short time. Many rural women find themselves taking multiple loans and finding it difficult to repay most of them. But then, even if you defaulted on one, some other desperate chaser of micro gold at the bottom of the pyramid was at your doorstep with a loan offer.
Posted on August 12, 2010 - by M. Bennett
Size matters as microfinance gives unemployed a First Step up to big things…
By Charlie Weston
Thursday August 12 2010
MICROFINANCE, where people who cannot get access to funding from banks are provided with credit, is set to mushroom and move into the mainstream, new research indicates.
The report from London-based financial research group Lafferty has concluded that microfinance is set to assume a major profile.
The report analyses the dynamics behind the evolution of microfinance from a small, not-for-profit activity.
It says microfinance is set to evolve into a dynamic, profit-oriented sector that is attracting the interest of some of the world’s leading financial institutions.
The goal of microfinance is to give low-income people an opportunity to become self-sufficient by providing a means of saving money, borrowing money and insurance.
Posted on August 12, 2010 - by M. Bennett
‘SKS IPO proceeds will go to non-profit work’
13 Aug 2010, 0157 hrs IST,M Rajshekhar,ET Bureau
Roughly a month before the SKS Microfinance IPO, the Seattle-based charity Unitus, a large investor in the firm, unexpectedly announced it was shuttering its non-profit operations in micro-credit and laying off more than 40 employees. The decision sparked a controversy because Unitus stood to make $70-80 million from the sale of its shares in SKS. In an e-mail interview with ET , Unitus chairman Joseph Grenny answers all the uncomfortable questions regarding the exit.
Why was the non-profit operations shuttered so abruptly?
First, let’s clear up one of the most prevalent misconceptions currently making its way through the rumour mill: Unitus is not ceasing its non-profit operations – we are only shifting away from micro-credit banking. Our overarching mission was never exclusively tied to micro-lending, but rather to the larger vision of poverty alleviation and empowerment of the working poor in India and elsewhere. Accordingly, our goal was to demonstrate the commercial viability of micro-credit in the hope of increasing access to the lifeblood of capital for untold millions of working poor. Now that a large and growing contingent of commercial lenders have entered the field, alongside non-profit players such as Grameen, ACCION and Opportunity International, it is time for Unitus to shift our energy and talent to other high-impact poverty-alleviation activities.
Posted on August 12, 2010 - by M. Bennett
RBI final guidelines on securitization will consider implications on microfinance feedback…
August 12, 2010 1:19 AM EDT
At the Inaugural Address by Shyamala Gopinath, Deputy governor of the Reserve Bank of India at the India Securitisation Summit 2010 hosted by the National Institute of Securities Markets (NISM), August 10, 2010, Mumbai, says that RBI is examining the responses and the final guidelines for banks as well as NBFCs will be issued after taking into account the feedback. From her speech, it is reflected that RBI aware about possible implications of recent draft guidelines on Securitization on microfinance sector.
The recent draft guidelines on securitization issued in April 2010 stipulate a minimum holding period (MHP) and a minimum retention requirement (MRR) by the originators. The guidelines envisage MHP of 9 months and 12 months respectively for loans with maturity of less than 24 months and more than 24 months. Similarly, the MRR for loans with maturity of less than 24 months and more than 24 months has been proposed as 5% and 10% respectively. Banks will not be permitted to hedge the credit risk in the retained exposures counting towards the minimum retention requirements.
Posted on August 12, 2010 - by M. Bennett
Huffington Post: Poverty Group Honest About Its Work; How Rare Is That?
By Jonathan Lewis
August 12, 2010 02:55 PM
With a mournful voiceover pitching us to donate to the number on the T.V. screen, the camera pans to half-dressed little children drinking dirty water. The poverty charity reminds us about the desperate plight of the poor in their squalid villages. As human beings and as global citizens, we are simultaneously moved to action and justifiably suspicious of hucksterism.
Melanie Moore Kubo, CEO of See Change, notes in a useful blog, “much individual giving in this country, and even that of organized philanthropy, still follows this basic pattern: Image. Story. Emotion. Action. This causal chain is seared into our DNA.”
With 3 billion people in poverty around the world, we already know the need is great. What we don’t know is whether this or that particular nonprofit or cause is effective, well-run and making a real difference. We want to do good, but we don’t want to be played for saps.
Ever since Nobel Peace Prize Laureate Mohammad Yunus pioneered micro-banking for the poor in Bangladesh (tiny business loans to impoverished people, mostly women), this highly-leveraged anti-poverty program has been growing in public support. No over-wrought T.V. commercials needed.
Posted on August 11, 2010 - by M. Bennett
Economic Times: IFC in talks with banks, FIs to invest in clean tech projects…
11 Aug 2010, 0252 hrs IST,ET Bureau
MUMBAI: International Finance Corporation (IFC), the private sector lending arm of the World Bank, is in talks with banks and financial institutions to invest in clean technology projects.
To being with, it has disbursed $75 million to IDFC, the local infrastructure financing firm, which in turn will lend to projects promoting clean technology.
Speaking to ET, IFC’s head of South Asia operations Paulo Martelli said: “IFC’s $75 million equivalent loan to IDFC for climate change initiatives in renewable energy, energy efficiency and cleaner production is what I call the ‘wholesaling of climate change initiatives’ approach. This is the first such climate change focused project with a financial institution in India.”
Posted on August 11, 2010 - by M. Bennett
After SKS success, Share Microfin, Spandana Sphoorty may go public…
Posted: Thu, Aug 12 2010. 1:00 AM IST
Deepti Chaudhary & Shraddha Nair
Buoyed by the warm response to the $350 million (`1,628 crore) public issue of the country’s largest microfinance firm SKS Microfinance Ltd late July, two more prominent microfinance firms— Share Microfin Ltd and Spandana Sphoorty Financial Ltd—have expedited their listing plans, said people familiar with the moves.
Microfinance institutions (MFIs) lend small sums to the poor, mainly to people in remote areas and without bank accounts. As of mid-2008, the requirement for such loans was `2.4 trillion while the available credit was around `20,000 crore, according to the Union finance ministry.
To scale up fast, MFIs need more capital than they can garner from investors such as private equity (PE) funds. A share sale provides just this.
Posted on August 11, 2010 - by M. Bennett
Huffington Post: Microfinance: Keeping the Mission When Non-Profits Become For-Profits…
By Elisabeth Rhyne
Posted: August 9, 2010 01:36 PM
Most people with a lively interest in microfinance know that the majority of microloans dispensed throughout the world today come from for-profit microfinance institutions, rather than donation-dependent non-governmental organizations (NGOs).
What may be less recognized is how these for-profit MFIs were born. Many of the world’s largest and most successful microfinance organizations — including India’s SKS Microfinance, which just raised some $358 million in a closely-watched IPO — started life as nonprofit NGOs. Riding on early success in attracting clients, they decided to undergo dramatic transformations: they found investors, obtained regulatory approval, and spun off licensed, for-profit financial institutions, leaving the original NGO behind. This process has now happened dozens of times around the world.
Posted on August 11, 2010 - by M. Bennett
WSJ: Confessions of a Micro-Financier…
August 11, 2010, 5:38 PM IST
By Bijou George and Eric Bellman
Microfinance doesn’t help the very poor.
While the argument that all the attention the microlending industry attracts sometimes diverts funds from reaching programs that need it more is not new, India Real Time was surprised to see it outlined by Vikram Akula, the founder of SKS Microfinance Ltd.
Back in 2004, when SKS was almost unknown, Mr. Akula submitted his 183-page doctoral thesis to the University of Chicago. It outlined the problems and the potential of the microfinance industry. It said that many organizations got it all wrong and ended up ignoring the very poor for the “middle and upper” poor.
The MiFi Report
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