MicroCapital » Asia

MICROCAPITAL BRIEF: Mexico, Indonesia, Haiti Use Tiered Savings Account Requirements to Promote Financial Inclusion

Natalie Baer — Fri, 10 Feb 2012 15:07:40 +0000

Mexico, Indonesia and Haiti are responding to the challenge of balancing financial access with security by creating tiered requirements for savings accounts. In 2011, Mexico proposed implementation a four-tier account system, with the lowest tier including monthly deposits of up to USD 280. These “Level 1” accounts would be “anonymous,” though the details of how they would be implemented have not yet been determined. At the other end of the spectrum, deposits over USD 3,860 require both photo identification and a tax identification number. In Indonesia, for non-bank e-money accounts of up to USD 110, customer identity is not recorded [1] [3]. In Haiti, the Central Bank allows two mobile money service providers, T-Cash by Voila and TchoTcho Mobile by Digicel, to offer entry-level accounts of up to USD 62 that do not require face-to-face registation [1] [2]. For several years, South Africa also has allowed remote registration for mobile banking, which requires submission of the individual’s national ID number. Transactions conducted via these accounts are capped at USD 146 per day [1].

By Natalie Baer, Research Associate

Sources and Additional Resources:

[1] “Mexico, Indonesia and Haiti Advance Financial Inclusion with Bold Approaches to Account Opening” by Ignacio Mas and Claire Alexandre, http://centerforfinancialinclusionblog.wordpress.com/2012/01/19/mexico-indonesia-and-haiti-advance-financial-inclusion-with-bold-approaches-to-account-opening/

[2] Tracking Mobile Money Use in Haiti,
http://technology.cgap.org/2011/11/22/tracking-mobile-money-use-in-haiti/

[3] Email discussions with Ignacio Mas, Consultant on technology-enabled models for financial inclusion

Browse the MicroCapital Universe and add your entry to the wiki at: http://www.microcapital.org/microfinanceuniverse/

MICROCAPITAL BRIEF: Lok Capital Closes Venture Fund, Lok II, at $65m

Charlotte Newman — Fri, 10 Feb 2012 11:00:54 +0000

Lok Capital LLC, an India-based microfinance investment firm, has closed its second venture capital fund, Lok II, at USD 65 million. Lok II plans to invest in full-service financial institutions, microcredit, small-business lending, mobile payments, remittances, low-cost healthcare and education and vocational training markets. The fund aims to make investments of between USD 2 million to USD 4 million per investee with an investment horizon of four to six years. Investors in Lok II include the World Bank Group’s International Finance Corporation (IFC), UK-based development finance institution Commonwealth Development Corporation, state-owned German development bank Kreditanstalkt fur Wiederaufbau (KfW), Swiss investment company responsAbility, Netherlands-based development bank Nederlandse Financierings-Maatschappijvoor Ontwikkelingslanden NV (FMO), French development finance institution Proparco and Dutch microfinance investment vehicle ASN Novib. The amount of each firm’s investment in Lok II has not been disclosed.

Lok Capital I was launched in 2006 with USD 22 million and typically invests between USD 500,000 and USD 3 million in each investee.

About Lok Capital
Lok Capital LLC is a limited-life, limited-liability company based in India that provides equity and equity-linked investments to microfinance institutions (MFIs) in India. It consists of venture capital funds Lok I and Lok II and the Lok Foundation. Lok I was launched in 2006 with USD 22 million. Its investors include ACCION International, The Commonwealth Development Corporation (CDC), Developement International Desjardins, Netherlands Development Company (FMO in Dutch), International Finance Corporation (IFC), Kreditanstalt für Wiederaufbau (KfW) and responsAbility. Under Lok I, the fund’s investments generally range from USD 500,000 to USD 3 million. Lok II was closed in 2012 with USD 65 million. Investors included previous investors IFC, CDC, KfW, FMO and responsAbility along with new investors Proparco and ASN Novib. Under Lok II, the fund’s investments range from USD 2 million to USD 4 million. The Lok Foundation provides technical assistance to Indian MFIs.

About Lok II
Lok II is a venture capital fund managed by Lok Capital LLC, a microfinance investment firm based in India that invests primarily in Indian microfinance institutions (MFIs). It was founded in 2010 and is sponsored by the Lok Foundation, a non-profit corporation based in New York that provides technical assistance to MFIs. Lok II was closed in 2012 with USD 65 million. The International Finance Corporation (IFC), the investment arm of the World Bank, has committed USD 15 million in equity to the fund. The fund’s other investors are UK-based development finance institution Commonwealth Development Corporation, state-owned German development bank Kreditanstalkt fur Wiederaufbau (KfW), Swiss investment company responsAbility, Netherlands-based development bank Nederlandse Financierings-Maatschappijvoor Ontwikkelingslanden NV (FMO), French development finance institution Proparco and Dutch microfinance investment vehicle ASN Novib. The amounts of these firms’ investments in Lok II have not been disclosed.

By Charlotte Newman, Research Associate

Sources and Additional Resources:

Financial Chronicle: “Lok Capital Raises $65m to Back Social Ventures,” http://www.mydigitalfc.com/companies/lok-capital-raises-65m-back-social-ventures-069

MicroCapital.org story, November 25, 2010, “MICROCAPITAL BRIEF: Lok Capital Announces $52m Close for Indian Microfinance Fund, Lok II,” http://www.microcapital.org/microcapital-brief-lok-capital-announces-52m-close-for-indian-microfinance-fund-lok-ii/

MicroCapital.org story, May 6, 2010, “MICROCAPITAL BRIEF: International Finance Corporation (IFC) Provides $15m Equity Investment to Lok II, an $80m Microfinance Fund that Will Invest in Microfinance Institutions (MFIs) in India,” http://www.microcapital.org/microcapital-brief-international-finance-corporation-ifc-provides-15m-equity-investment-to-lok-ii-an-80m-microfinance-fund-that-will-invest-in-microfinance-institutions-mfis-in-india/

MicroCapital Universe Profile: Lok Capital http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Lok+Capital+LLC#Description_140_word_limit_

MicroCapital Universe Profile: Lok II
http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Lok+II#Description_140_word_limit_

MicroCapital Universe Profile: International Finance Corporation
http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=International+Finance+Corporation+%28IFC%29

MicroCapital Universe Profile: Commonwealth Development Corporation
http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=CDC+Group

MicroCapital Universe Profile: Kreditandstalkt fur Wiederaufbau
http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=KfW+Entwicklungsbank+%28KfW%29

MicroCapital Universe Profile: responsAbility
http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=responsAbility

MicroCapital Universe Profile: Nederlandse Financierings-Maatschappijvoor Ontwikkelingslanden NV
http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Nederlandse+Financierings-Maatschappijvoor+Ontwikkelingslanden+N.V.+%28Netherlands+Development+Finance+Company%2C+FMO%29

MicroCapital Universe Profile: Proparco
http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=PROPARCO

MicroCapital Universe Profile: ASN Novib
http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=ASN-Novib+Fund

Browse the MicroCapital Universe and add your entry to the wiki at http://www.microcapital.org/microfinanceuniverse/

MICROCAPITAL BRIEF: Microfinance Credit Bureau, MiDAS, Launched by Microfinance Institutions in Philippines

Courtney Snelling — Thu, 09 Feb 2012 11:48:09 +0000

Microfinance institutions (MFIs) Taytay Sa Kauswagan Incorporated (TSKI), Opportunity Kauswagun Bank, CARD Bank, CARD NGO, Negros Women for Tomorrow Foundation Incorporated, Ahon Sa Hirap and ASA Philippines signed a memorandum of agreement creating the Microfinance Data Sharing System (MiDAS) in January of this year after an initial pilot phase in 2011 [1]. Overindebtedness due to borrowing from multiple MFIs was the impetus for the creation of MiDAS.

The seven participating institutions are voluntarily submitting data to MiDAS, which can be used for assessing a prospective borrower’s credit worthiness. The Banking Association of the Philippines Credit Bureau (BAP-CO) is partnering with the participating MFIs to implement MiDAS [2]. The creators of MiDAS encourage other MFIs to contribute and participate [1]. A functionality which differentiates MiDAS from traditional credit information systems is that MiDAS allows users to search for information on barangays (the smallest administrative division in the Philippines, similar to a village, ward, or district) and not only on clients [2].

There are about 200 banks and credit institutions in the Philippines that engage in microfinance [1]. The US-based NGO Microfinance Information Exchange (MIX) reports data on 93 MFIs in the Philippines that have an aggregate loan portfolio of USD 632 million and serve 3 million borrowers.

By Courtney Snelling, Research Associate

About Taytay Sa Kauswagan Incorporated (TSKI): Taytay sa Kauswagan Incorporated (TSKI), established in 1986, is a Christian development organization in the Philippines which focuses on alleviating poverty through microfinance. TSKI provides group-based loans, individual loans, and offers its clients technology training and product development assistance. In 2011, TSKI reported to the US-based nonprofit data provider Microfinance Information Exchange (MIX) total assets of USD 47.3 million, a gross loan portfolio of USD 24.1 million and 205,022 borrowers.

MicroCapital Universe Profile: Taytay Sa Kauswagon, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Taytay+Sa+Kauswagan+Inc.+%28TSKI%29

About Opportunity Kauswagun Bank (OK Bank): Four Philippines-based organizations and US-based Opportunity International network established Opportunity Kauswagun Bank also known as Opportunity Microfinance Bank (OK Bank) in 2001. OK Bank’s objective is to provide microfinance services for poor entrepreneurs in thePhilippines. OK Bank provides credit and savings products in addition to business development training. OK Bank extends unsecured loans which range from USD 80 to USD 500. OK Bank also provides loans over USD 900 to individual entrepreneurs as additional capital for growing larger businesses. In 2010, OK Bank reported to the US-based nonprofit data provider Microfinance Information Exchange (MIX) total assets of USD 11.1 million, a gross loan portfolio of USD 5.8 million and 30,793 borrowers.

MicroCapital Universe Profile: Opportunity Kauswagun Bank (OK Bank), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Opportunity+Kauswagun+Bank+%28OK+Bank%29

About CARD NGO and its subsidiary CARD Bank: Rural development practitioners organized the Center for Agriculture and Rural Development Incorporated (CARD NGO) as a social development foundation in December 1986. CARD NGO’s mission was to establish a bank created for, owned by and managed by landless rural women. In 1997, CARD NGO obtained a banking license from the Bangko Sentral ng Pilipinas to operate as a rural bank in San Pablo City, with an initial paid-up capital of PHP 5 million (USD 167,000. After obtaining a banking license, CARD NGO transferred some of its NGO branches into CARD Bank. In 2010, CARD Bank reported to the US-based nonprofit data provider Microfinance Information Exchange (MIX) total assets of USD 63.4 million, a gross loan portfolio of USD 44.7 million and 267,282 borrowers. In 2010, CARD NGO reported to the US-based nonprofit data provider Microfinance Information Exchange (MIX) total assets of USD 87.9 million, a gross loan portfolio of USD 66.8 million and 606,488 borrowers.

MicroCapital Universe Profile: Center for Agriculture and Rural Development Incorporated, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Center+for+Agricultural+and+Rural+Development+%28CARD%29+Rural+Bank

About Negros Women for Tomorrow Foundation Incorporated (NWTF): Negros Women for Tomorrow Foundation Incorporated (NWTF), a non-governmental organization established in 1984, seeks to empower women by providing access to finance. NWTF makes loans using a methodology patterned after the Grameen Bank model of Bangladesh. In 2010, NTWF reported to the US-based nonprofit data provider Microfinance Information Exchange (MIX) total assets of USD 16.6 million, a gross loan portfolio of USD 11.1 million and 85,808 borrowers.

MicroCapital Universe Profile: NegrosWomen for Tomorrow Foundation (NTWF), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Negros+Women+for+Tomorrow+Foundation+Incorporated

About Ahon Sa Hirap: Ahon Sa Hirap (ASHI) is a microfinance institution in the Philippines, established in 1989, which bases its loan programs on the Grameen Bank model of Bangladesh. The goals of Ahon Sa Hirap include: becoming a sustainable microfinance institution, facilitating the empowerment and enhancement of women and their families, delivering quality and professional microfinance service, integrating and sharing expertise among microfinance institutions (MFIs) and anti-poverty institutions. In 2010, Ahon Sa Hirap reported to the US-based nonprofit data provider Microfinance Information Exchange (MIX) total assets of USD 8.8 million, a gross loan portfolio of USD 5.2 million and 22,196 borrowers.

MicroCapital Universe Profile: Ahon Sa Hirap (ASHI), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Ahon+Sa+Hirap

About ASA Philippines Foundation: ASA Philippines Foundation (ASA) is a non-profit organization, established in 2004, which focuses on microfinance. ASA’s main office is in Manila, Philippines. Since its formation, ASA has expanded its services across the Philippines. ASA provides loans, savings, and insurance products in addition to business development training and academic scholarships for clients and their children. In 2010, ASA Philippines reported to the US-based nonprofit data provider Microfinance Information Exchange (MIX) gross loan portfolio of USD 24.5 million and 299,433 borrowers.

MicroCapital Universe Profile: ASA Philippines Foundation, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=ASA+Philippines+Foundation

About Banko Sentral ng Pilipinas (BSP): Bangko Sentral ng Pilipinas (BSP) is the central bank of the Republic of the Philippines. Established under the provisions of the New Central Bank Act of 1993, the headquarters of BSP is in Manila, Philippines. The bank has three regional offices performing cash operations and eighteen branch offices. BSP participates in various advocacy programs concerning microfinance, financial education and consumer protection.

MicroCapital Universe Profile: Banko Sentral ng Pilipinas, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bangko+Sentral+ng+Pilipinas+%28BSP%29

About Bankers Association of thePhilippines: Bankers Association of the Philippines (BAP) is a nonprofit organization established in 1949 to represent the interest of banks throughout thePhilippines. BAP works in collaboration with local legal entities and the Philippines Chamber of Commerce to advocate regarding laws that relate to banking. Members of BAP include Asia United Bank, Development Bank of the Philippines, Philippine Veterans Bank and Union Bank of thePhilippines.

MicroCapital Universe Profile: Bankers Association of the Philippines, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Ban…

Sources and Additional Resources:

[1] Philippine Daily Inquirer, business.inquirer.net: “Credit Bureau for Microfinance Formed” by Michelle V. Remo, 1/10/2012. http://business.inquirer.net/39021/credit-bureau-for-microfinance-formed

[2] phildevfinance.com: “A Credit Bureau for Microfinance” by Carlos Ani, Seedfinance Corporation, http://phildevfinance.posterous.com/a-credit-bureau-for-microfinance

[3] BusinessWorld Online, www.bworldonline.com “Microfinance Firms Set Up Credit Bureau”, by N.J.C. Morales.1/10/2012. http://www.bworldonline.com/content.php?section=Finance&title=Microfinan…

[4] MicroCapital.org article, December 12, 2011: “MICROCAPITAL BRIEF: Philippine Central Bank May Raise Microfinance Loan Ceiling, Roll Out Central Credit Information Corporation (CCIC) by Year End”, http://www.microcapital.org/microcapital-brief-philippine-central-bank-m….

[5] MicroCapital.org article, January 19, 2011: “MICROCAPITAL BRIEF: Bankers Association of the Philippines – Credit Bureau Incorporated (BAP-CB) Offers Rural Banks, Microfinance Providers Access to Credit Information System”, http://www.microcapital.org/microcapital-brief-bankers-association-of-th…

[6] CGAP: “Implementing Rules and Regulations of the Credit Information System Act No. 9510” http://www.cgap.org/p/site/c/template.rc/1.9.46127/

[7] MicroCapital.org article, April 12, 2011, “MICROCAPITAL BRIEF: Bankers Association of the Philippines (BAP) to Launch Online Credit Information Bureau Run by Microfinance Institutions (MFIs)”, http://www.microcapital.org/microcapital-brief-bankers-association-of-th…

Browse the MicroCapital Universe and add your entry to the wiki at: http://www.microcapital.org/microfinanceuniverse/

MICROCAPITAL BRIEF: Indian Finance Ministry Clears Draft Microfinance Bill, Considers Engaging Post Office Banks to Promote Financial Inclusion

Kristha Abores — Wed, 08 Feb 2012 13:53:10 +0000

India’s finance ministry reportedly has cleared the draft of a microfinance bill following its public circulation for comments in July 2011 [1].The finance ministry has sent the draft to the law ministry for approval and is planning for the bill to be considered in the budget session of Parliament scheduled for mid-March [2]. The proposed legislation, which was covered in an August 2011 MicroCapital article, identifies the Reserve Bank of India as the sole regulator for the microfinance sector in the country, mooting state legislation such has been in effect in Andhra Pradesh since 2010 [3]. The bill is intended to help restore investor confidence in the sector [1].

In other news, the Indian government reportedly has drafted a plan to utilize India’s 155,000 post offices as banks, in an effort to support financial inclusion goals. A proposal has been sent to the finance ministry for approval and is expected to be implemented within the year. The proposal has the potential to significantly increase the coverage of the country’s banking network, particularly in the rural areas where 90 percent of post office branches are located [4]. The plan will add banking services such as loans and cheque facilities to India Post’s existing services, which include savings schemes which have reached a total outstanding balance of about INR 600,000 crore (USD 117 billion) [5].

By Kristha Abores, Research Associate

About Reserve Bank of India (RBI):

Established in 1935, the Reserve Bank of India (RBI) undertakes consolidated supervision of the financial sector comprising commercial banks, financial institutions and non-banking finance companies (NFBCs). The current focus of RBI is to supervise financial institutions, consolidate accounting standards, resolve legal issues in cases of banking fraud, monitor non-performing assets and supervise the rating model for the banking sector. In 1979, the National Bank for Agriculture and Rural Development (NABARD) was formed at the behest of RBI to provide regulatory oversight to regional rural banks (RRBs) and to promote the development of agricultural lenders: tasks that had been the responsibility of RBI. While all microfinance institutions (MFIs) and non-banking financial companies still operate under RBI regulations, the responsibility for inspecting nonprofit MFIs, agricultural lenders, RRBs, state cooperative banks, district central cooperative banks and state cooperative agricultural and rural development banks was transferred to NABARD. RBI maintains these responsibilities for for-profit MFIs. Although RBI was originally the parent organization of NABARD and until October 2010 held a 72.5 percent stake in the outfit, RBI owns a one-percent stake in NABARD as of 2011.

Sources and Additional Resources:

[1] LiveMint: “Finance ministry clears proposed national microfinance law,” http://www.livemint.com/2012/01/22225124/Finance-ministry-clears-propos….

[2] Business Today: “Budget 2012-13: Govt may introduce microfinance Bill,” http://businesstoday.intoday.in/story/budget-2012-13-microfinance-bill/1…

[3] MicroCapital Article, August 15, 2011, “MICROCAPITAL BRIEF: Indian Government Publishes Draft of Microfinance Institutions Bill, Would Make Reserve Bank of India (RBI) Sole Regulator, Establish Microfinance Development Council, Microfinance Development Fund,” http://www.microcapital.org/microcapital-brief-indian-government-publish…

[4] The Economic Times: “Eyes set on Post Office banks and liberalisation of sector,” http://articles.economictimes.indiatimes.com/2012-01-03/news/30584829_1_…

[5] The Hindu Business Line: “Banking on India Post,” http://www.thehindubusinessline.com/opinion/editorial/article2863226.ece

MicroCapital.org article, October 25, 2011, “MICROCAPITAL BRIEF: Indian Finance Ministry Proposes Microfinance Bill Allowing Deposit-Taking, Reserve Bank of India Opposed,” http://www.microcapital.org/microcapital-brief-indian-finance-ministry-p…

MicroCapital.org article, June 11, 2011: “MICROCAPITAL BRIEF: New Draft Bill From Ministry of Finance Would Expand Role of Reserve Bank of India (RBI) to Regulate Entire Indian Microfinance Sector, Cutting Roles of NABARD, State Governments”, http://www.microcapital.org/microcapital-brief-new-draft-bill-from-minis…

MicroCapital.org article, March 15, 2011, “MICROCAPITAL BRIEF: Federal Microfinance Bill May Replace Existing State Microfinance Legislation in India,” http://www.microcapital.org/microcapital-brief-federal-microfinance-bill…

MicroCapital Universe Profile: Reserve Bank of India (RBI), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Res…

Browse the MicroCapital Universe and add your entry to the wiki at: http://www.microcapital.org/microfinanceuniverse/

MICROCAPITAL BRIEF: Australia Funds Financial Education Curriculum Development Project (FinED) to Serve Fiji’s Primary and Secondary Schools

Natalie Baer — Mon, 06 Feb 2012 18:03:48 +0000

In 2012, the Financial Education in the Curriculum Development Project in Fiji (FinED Fiji) will be piloted at twelve local primary schools. FinED Fiji was launched January 18, 2011, and will be mainstreamed into the primary and secondary school education system by 2013 [1] [2].

FinED Fiji aims to integrate financial education material into current courses, as well as train teachers to teach the new curriculum. The program is operating in partnership with the nonprofit Pacific Financial Inclusion Program, Fiji’s Ministry of Education, and it is financed by a donation of FJD 2.3 million (USD 1.2 million) from the Australian government [1].

By Natalie Baer, Research Associate

About the Pacific Financial Inclusion Program (PFIP): The nonprofit Pacific Financial Inclusion Program (PFIP) aims to deliver financial services to poor Pacific islanders who have limited or no access to banks. It was established with funding from the United Nations Capital Development Fund, the European Union and the United Nations Development Programme. Financial data on the organization is not available.

Sources and Additional Resources:

[1] “Financial education, a first for Fiji,” http://www.fijitimes.com/story.aspx?id=191776

[2] Pacific Financial Inclusion Program, “Fiji Financial Education Curriculum Development Project Launch 2011,”
http://www.pfip.org/media-centre/photo-gallery/fiji-financial-education-curriculum-development-project-launch-2011.html

MicroCapital Universe Profile: Pacific Financial Inclusion Program (PFIP),
http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Pacific+Financial+Inclusion+Program+%28PFIP%29

Browse the MicroCapital Universe and add your entry to the wiki at: http://www.microcapital.org/microfinanceuniverse/

MICROCAPITAL BRIEF: Hong Kong Mortgage Corporation (HKMC) to Launch Pilot Microfinance Program in China

Natalie Baer — Mon, 06 Feb 2012 17:25:25 +0000

The Hong Kong Mortgage Corporation Limited plans to launch a three-year pilot microfinance program in mid-2012. The program would offer three types of loans: (1) micro-business start-up loans, with a maximum amount of HKD 300,000 (USD 38,700); (2) self-employment loans with a maximum amount of HKD 200,000 (USD 25,800); and (3) “self-enhancement” loans for education with a maximum amount of HKD 100,000 (USD 12,900). The maximum loan tenor will be five years [1].

The Hong Kong Mortgage Corporation was established in 1997 and is owned by the government of China’s Hong Kong Special Administrative Region. As of December 31, 2010, HCMC had total assets of HKD 55 billion (USD 7.1 billion) and return on assets of 2.2 percent [2].

By Natalie Baer, Research Associate

Sources and Additional Resources:

[1] Press Release “Microfinance Pilot Scheme” February 2, 2012, http://www.hkmc.com.hk/eng/ceo/…/20120202e_Microfinance_FINAL

[2] The Hong Kong Mortgage Corporation Limited website, http://www.hkmc.com.hk/

MicroCapital.org story, January 24, 2012, “MICROCAPITAL BRIEF: Microfinance Institutions in China Report $58b in Outstanding Loans,” http://www.microcapital.org/microcapital-brief-microfinance-institutions-in-china-report-58b-in-outstanding-loans/

Browse the MicroCapital Universe and add your entry to the wiki at http://www.microcapital.org/microfinanceuniverse/

MICROCAPITAL BRIEF: Indian Microfinance Institution Ujjivan Financial Services Raises $25m in Equity from FMO, Wolfensohn, LOK, IFIF, Sequoia, Unitus, Elevar

Kristha Abores — Mon, 06 Feb 2012 05:03:09 +0000

Indian microfinance institution (MFI) Ujjivan Financial Services has raised INR 127.9 crore (USD 25 million) in its fifth round of equity financing. The additional capital will allow Ujjivan to increase its loan book from its current INR 600 crore (USD 117 million) to around INR 1,600 crore (USD 313 million), given the Reserve Bank of India’s requirement for MFIs to maintain a 15-percent capital adequacy ratio.

While existing investors including Lok Capital, India Financial Inclusion Fund, Sequoia Capital, Mauritius Unitus Corporation and Elevar Equity have participated in this round of funding, the majority of the new funds came from two institutions that are investing in Ujjivan for the first time: INR 326 million (USD 6.37 million) from the Netherlands Development Finance Company (FMO in Dutch) and INR 400 million (USD 7.82 million) from Wolfensohn Capital Partners (WCP) Mauritius Holdings III. FMO, a public-private development bank, supports financial institutions and countries through “loans, participations, guarantees and other investment promotion activities.” WCP Maurituis Holdings III is an affiliate of Wolfensohn Capital Partners, a US-based private investment fund that specializes in growth equity investments in emerging markets.

Sanjiv Kapur, managing director of Wolfensohn India Advisors, said, “This is the first investment for Wolfensohn in the Indian microfinance sector, endorsing our faith in the sector and in Ujjivan’s financial inclusion model.”

Mohit Bhatnagar, managing director of Sequoia Capital, Ujjivan’s largest stakeholder, said, “India continues to be a preferred investment destination for [foreign institutional investors,] and it is heartening to see that fundamentally strong organisations in the microfinance sector are a key focus.”

As of September 30, 2011, Ujjivan reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 129 million, a gross loan portfolio of USD 121 million, return on assets (ROA) of -1.86 percent and 744,000 active borrowers.

By Kristha Abores, Research Associate

About Ujjivan Financial Services:

Ujjivan Financial Services is a microfinance institution (MFI) based in Bangalore, India, that offers loans and insurance products. It was founded in 2004 and focuses on low-income women in urban and semi-urban areas. Its products include business loans, educational loans, emergency loans and life insurance. As of September 30, 2011, Ujjivan reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 129 million, a gross loan portfolio of USD 121 million, return on assets (ROA) of -1.86 percent and 744,000 active borrowers.

About Nederlandse Financierings-Maatschappijvoor Ontwikkelingslanden N.V. (Netherlands Development Finance Company, FMO):

The Netherlands Development Finance Company (FMO in Dutch) is a public-private development bank which supports financial institutions and countries through “loans, participations, guarantees and other investment promotion activities.” It was founded in 1970 by the “Dutch government, private sector, employers and employee organizations.” It has access to government funds and therefore can take higher risks with its investments including long-term finance. It also specializes in local-currency finance. In 2010, FMO distributed approximately EUR 2.5 million (USD 3.3 million) in loans.

About Wolfensohn Capital Partners:

Wolfensohn Capital Partners is a New York-based private investment fund that specializes in growth equity investments in emerging markets. Founded in 2005 by James D Wolfensohn, who served as president of the World Bank from 1995 to 2005, it seeks to provide financial returns to its clients while supporting sustainability and poverty alleviation. Financial information on the organization is not available.

Sources and Additional Resources:

[1] “Ujjivan raises Rs.127.9 Crores (USD 25.5 Mn.) equity ,” http://www.ujjivan.com/news_ujjivan_raises_127_crores_equity.htm

MicroCapital.org article, September 16, 2011, “MICROCAPITAL BRIEF: Indian Microfinance Institution (MFI) Ujjivan Looking to Raise $138m from Private, Public Sector Banks,” http://www.microcapital.org/microcapital-brief-indian-microfinance-institution-mfi-ujjivan-looking-to-raise-138m-from-private-public-sector-banks/

MicroCapital.org article, January 10, 2011, “MICROCAPITAL BRIEF: Ujjivan Financial Services Raises $8.8m of Debt Capital Through Non-Convertible Debenture (NCD) Issuance to Developing World Market’s Member Company DWM (Cyprus) Limited,” http://www.microcapital.org/microcapital-brief-ujjivan-financial-service…

MicroCapital Universe Profile: Ujjivan Financial Services, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Ujj…

MicroCapital Universe Profile: Nederlandse Financierings-Maatschappijvoor Ontwikkelingslanden N.V. (Netherlands Development Finance Company, FMO), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Nederlandse+Financierings-Maatschappijvoor+Ontwikkelingslanden+N.V.+%28Netherlands+Development+Finance+Company%2C+FMO%29…

MicroCapital Universe Profile: Wolfensohn Capital Partners (WCP), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Wolfensohn+Capital+Partners

MicroCapital Universe Profile: Lok Capital LLC, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Lok+Capital+LLC…

MicroCapital Universe Profile: The India Financial Inclusion Fund (IFIF), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=India+Financial+Inclusion+Fund+%28IFIF%29…

MicroCapital Universe Profile: Sequoia Capital, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Seq…

MicroCapital Universe Profile: Unitus Equity Fund I, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Uni…

MicroCapital Universe Profile: Elevar Equity Advisors, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Ele…

MicroCapital Universe Profile: Reserve Bank of India, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Reserve+Bank+of+India+%28RBI%29…

Browse the MicroCapital Universe and add your entry to the wiki at: http://www.microcapital.org/microfinanceuniverse/

MICROCAPITAL BRIEF: Malaysian Chinese Association Launches $16.4m Microloan Fund to Train, Finance Entrepreneurs in Malaysia

Courtney Snelling — Fri, 03 Feb 2012 20:36:47 +0000

In an effort to promote and train entrepreneurs, the Malaysian Chinese Association (MCA), a political party in Malaysia, launched a MYR 50 million (USD 16.4 million) microloan fund in January 2012. The 1MCA Micro Credit for Youth Fund is for Malaysian citizens looking to fund an existing or new business [1]. Two cooperatives affiliated with MCA, Koperasi Jayadiri Malaysia Berhad (KOJADI) and Koperasi Serbaguna Malaysia (KSM), will service the microloans [2]. Malaysian citizens between the ages of 21 and 45 are eligible to apply and 1MCA will give priority to MCA members, members of non-governmental organizations as well as single parents [3].

Individuals may apply for microloans ranging from MYR 5,000 (USD 1,642) to MYR 20,000 (USD 6,566) via the website of MCA or KOJADI [4]. After submission of the application forms, MCA projects the disbursement of approved loans will take no longer than 21 days [5]. The loans will carry terms of three to five years at an annual interest rate of seven percent. The program will also provide successful applicants with business development training free of charge. The project is open to all qualifying Malaysian citizens regardless of political or ethnic affiliation [2].

By Courtney Snelling, Research Associate

About the Malaysian Chinese Association (MCA): Founded in 1949, The Malaysian Chinese Association (MCA) is a political party in Malaysia that represents the interests of Malaysians of Chinese origin. MCA is one of twelve members of the Malaysian Barisan Nasional, a political coalition in Malaysia.

About Koperasi Jayadiri Malaysia Berhad (KOJADI): Established in 1981, Koperasi Jayadiri Malaysia Berhad (KOJADI) is a Malaysian cooperative with the primary objective of extending educational loans to needy students to pursue higher education. KOJADI also offers microentrepreneurial loans in conjunction with the Malaysian Chinese Association. KOJADI has approximately 64,000 members with total assets of MYR 110 million (USD 36.1 million). Since 1981, KOJADI has provided MYR 180 million (USD 59.1 million) in education loans to approximately 8,800 students for their studies in Malaysia and abroad.

About Koperasi Serbaguna Malaysia Berhad (KSM): Malaysian Chinese Association (MCA) youth initiated the formation of Koperasi Serbaguna Malaysia Berhad (KSM) in 1968. The objective of the organization is to pool resources to assist KSM members through cooperative financial intermediation. KSM is open to all Malaysian citizens over the age of 18. Currently, KSM has approximately 265,000 members. Approximately 97 percent of the members are from the Chinese community.

Sources and Additional Resources:

[1] New Straits Times: “Malaysia: RM50m Micro-Credit Fund for the Business-Savvy”, 1/18/2012. http://www.nst.com.my/local/general/rm50m-micro-credit-fund-for-the-busi…

[2] Microdinero.com: “Microloan program targets young entrepreneurs in Malaysia”, January 18, 2012. http://www.microdinero.com/nota_eng.php?subseccion=¬Id=4410

[3] MicroWorld.org: “A Microcredit Fund for “Young” 45-year Olds”, 1/24/2012. http://www.microworld.org/en/news-from-the-field/article/microcredit-fund-%E2%80%9Cyoung%E2%80%9D-45-year-olds

[4] Malaysian Chinese Association http://www.mca.org.my/cn/files/2012/01/MicroCreditForm.pdf

[5] TheMalaysianInsider.com: “MCA Launches Microcredit Fund for Youths”, by Shazwan Mustafa Kamal, January 17, 2012. http://www.themalaysianinsider.com/malaysia/article/mca-launches-microcredit-fund-for-youths

[6] http://en.wikipedia.org/wiki/Malaysian_Chinese_Association

Browse the MicroCapital Universe and add your entry to the wiki at: http://www.microcapital.org/microfinanceuniverse/

MICROCAPITAL BRIEF: ICRA Raises Rating for Arohan Financial Services Pass Through Certificates For $1.4m Securitization of Microfinance Loans

Charlotte Newman — Fri, 03 Feb 2012 15:30:58 +0000

ICRA, an Indian investment information and credit rating agency, has conditionally raised the rating of a pool of pass through certificates (PTCs) for loans provided by Arohan Financial Services Private Limited, an India-based microfinance institution. The upgrade from A2(SO), which indicates a low credit risk, brings the rating to A1(SO), which is reserved for instruments with the lowest credit risk. “SO,” which stands for standard obligation, indicates that the rating is specified to the rated issue, its terms and its structure [2].

The increase in the rating is a reflection of the good performance thus far of the PTCs, as no delinquencies have been reported. The PTCs are the result of a securitization transaction backed by receivables of unsecured group microloans, each of which has a maximum value of INR 17,500 (USD 354) and a maximum repayment period of 15 months [1]. The initial amount of the loan was INR 71.8 million (USD 1.4 million), and the outstanding amount as of December 2011 is INR 17.4 million (USD 357,619).

The US-based Microfinance Information Exchange (MIX) reports that in 2010 Arohan had total assets of USD 23.4 million and a gross loan portfolio of USD 20.2 million outstanding to approximately 214,000 borrowers.

About Arohan Financial Services Private Limited
Arohan is a microfinance institution (MFI) based in Kolkata, India. Founded in 2006, it offers loans and life insurance primarily in urban areas of eastern India. In 2010, Arohan reported total assets of USD 23.4 million and a gross loan portfolio of USD 20.2 million reaching 214,059 borrowers in India. It also reported return on assets of 0.32 percent and return on equity of 1.63 percent.

About ICRA
Formerly known as the Investment and Credit Rating Agency of India Limited, ICRA Limited was established in 1991 as a public limited company. Its shares are listed on the Bombay Stock Exchange and the National Stock Exchange of India. Moody’s Investors Service of the US is the largest shareholder in ICRA .

By Charlotte Newman, Research Associate

Sources and Additional Resources:

[1] ICRA Report: “Arohan Financial Services Private Limited (Arohan),” http://www.icra.in/Files/Reports/Rationale/Arohan%20Financial%20Services%20Priv-r-11012012.pdf

[2] ICRA: “ICRA’s Ratings Scale and Definitions,” http://icra.in/Files/Content/RatingsScale.pdf

MicroCapital story, September 27, 2011, “MICROCAPITAL BRIEF: Indian Rating Agency ICRA Assigns “A2(SO)” Rating to $1.45m in Pass Through Certificates from Microfinance Institution Arohan,” http://www.microcapital.org/microcapital-brief-indian-rating-agency-icra-assigns-%E2%80%9Ca2so%E2%80%9D-rating-to-1-45m-in-pass-through-certificates-from-microfinance-institution-arohan/

MicroCapital Universe Profile: Arohan
http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Arohan

MicroCapital Universe Profile: ICRA
http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=ICRA

Browse the MicroCapital Universe and add your entry to the wiki at http://www.microcapital.org/microfinanceuniverse/

MICROCAPITAL BRIEF: Credit Bureau Cambodia Launched to Facilitate Information Sharing Among Banks, Microfinance Institutions

Nisha Koul — Thu, 02 Feb 2012 08:30:27 +0000

The Association of Banks in Cambodia (ABC) and the Cambodian Microfinance Association (CMA), two trade associations with a combined membership of 64 financial institutions, have formed a joint venture with New Zealand-based credit bureau developer Veda Advantage to launch the Credit Bureau (Cambodia) Company Limited (CBC), which will maintain a database of credit information intended to help banks and microfinance institutions (MFIs) in making “accurate loan decisions based on borrower’s positive and negative credit history” [1]. The bureau expects to benefit borrowers with faster processing times, lower interest rates for those with positive credit histories and protection from over-indebtedness. The credit bureau has been in the planning stages since 2008 and was originally envisioned to be launched in 2010.

Under an existing law intended to facilitate credit reporting and information sharing among banks and MFIs, a code of conduct has been developed that outlines what information banks and MFIs must share with CBC and enumerating the rights of consumers to ensure that all credit data is accurate. CBC estimates that the first consolidated credit reports will be available to member institutions in February.

By Nisha Koul, Research Associate

About Association of Banks in Cambodia (ABC): The Association of Banks in Cambodia (ABC) was formed in 1994 to represent Cambodia’s private banking sector. According to its website, as of January 30, 2012, ABC’s membership includes 29 commercial banks, 7 specialized banks and the members of the Cambodia Microfinance Association (CMA).

About Cambodian Microfinance Association (CMA): The Cambodian Microfinance Association (CMA) is a nongovernmental organization (NGO) that was established in 2004 by seven microfinance institutions (MFIs). According to its website, as of January 30, 2012, CMA has 28 active members. Its main function is to strengthen communication between MFIs and other groups such as government authorities, donors, creditors and investors.

About Veda Advantage: Veda Advantage is a private company that provides business solutions, data analytics and risk management tools for individuals and companies. Veda Advantage was established in New Zealand in 1967 and provides credit-related services, focusing on the development of credit bureaus. Through its international division, Veda Advantage has supported credit bureaus in Cambodia, New Zealand, Saudi Arabia, Singapore and Malaysia. Financial information on Veda Advantage is not currently available.

About National Bank of Cambodia (NBC): Established in 1954, the National Bank of Cambodia (NBC) is the country’s central bank. Among its functions, the NBC establishes and monitors the country’s monetary policy, supervises and regulates the financial sector and issues currency.

Sources and Additional Resources:

[1] Credit Bureau Cambodia, News, “New Credit Bureau to make Cambodia more competitive,” http://www.creditbureaucambodia.com/cambodian-credit-news/new-credit-bureau-to-make-cambodia-more-competitive.html

MicroCapital.org story, May 10, 2011, “MICROCAPITAL BRIEF: National Bank of Cambodia (NBC), Supported by International Finance Corporation (IFC), Targets Multiple Borrowing by Microfinance Clients, Expects to Launch National Credit Bureau in 2011,” http://www.microcapital.org/microcapital-brief-national-bank-of-cambodia-nbc-supported-by-international-finance-corporation-ifc-targets-multiple-borrowing-by-microfinance-clients-expects-to-launch-national-credit-bureau-2/

MicroCapital.org story, May 27, 2011, “MICROCAPITAL BRIEF: Microfinance in Cambodia Grows 10%, Described as “Trap,” http://www.microcapital.org/microcapital-brief-microfinance-in-cambodia-grows-10-described-as-%E2%80%9Ctrap%E2%80%9D/

MicroCapital.org story, October 27, 2008, “MICROCAPITAL STORY: Cambodian Credit Bureau To Be Launched for Regulating Banking and Microfinance,” http://www.microcapital.org/microcapital-storycambodian-credit-bureau-to-be-launched-for-regulating-banking-and-microfinance/

MicroCapital Universe Profile: Association of Banks in Cambodia (ABC), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Association+of+Banks+in+Cambodia+%28ABC%29

MicroCapital Universe Profile: Cambodian Microfinance Association (CMA), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Cambodian+Microfinance+Association+%28CMA%29

MicroCapital Universe Profile: Veda Advantage, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Veda+Advantage

MicroCapital Universe Profile: National Bank of Cambodia (NBC), http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=National+Bank+of+Cambodia+%28NBC%29

Browse the MicroCapital Universe and add your entry to the wiki at http://www.microcapital.org/microfinanceuniverse/