Event Name: National Conference on Microinsurance

Event Description: The goal of this conference is to facilitate discussions between practitioners, regulators, actuaries, and researchers on issues related to the provision of microinsurance in India, while especially focusing on more vulnerable states with lower Human Development Indices (HDI). Specific topics to be discussed include: (1) Microinsurance issues and innovations regarding weather, health, and other livelihood products, (2) Distribution models: relevance and operational challenges, (3) Role of microinsurance in financial inclusion, and (4) Role of policy makers in facilitating proper environment. Continue Reading »

About:
Belstar Investment and Finance Limited

Description
Belstar Investment and Finance Limited is a non-bank finance company based in Bangalore, India. It is the “microfinance delivery arm” of Hand in Hand, a nongovernmental charitable organization that “aims to reduce poverty through creating jobs in microfinance, education, health, and information.” Hand in Hand acquired Belstar in 2008. Its primary products are loans used for creating microenterprises. Continue Reading »

Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, will review its rules and regulations concerning the disclosure of interest rates, fees, and charges on microfinance loans with the goal to enhance consumer protection. At this stage, Pia M. Roman, the Director of BSP’s Inclusive Finance Advocacy department, states that the focus is to gather information through consultations with banks on the adoption of uniform standards for computing interest rates. Ms. Roman supports the use of “declining balance method” in which “interest charges are computed based on the balance of a loan and not the original size of the loan.” It contrasts with the “flat rate method” which calculates rates based on the amount of the loan at the beginning regardless of any amount that the borrower has already repaid. Continue Reading »

The micro-loan securitization with pass-through certificates (PTCs or securities), completed by the Institute for Financial Management and Research (IFMR) Capital and Equitas Micro Finance India Pvt Ltd, has created an opportunity for mutual funds to invest in the Indian microfinance sector. IFMR Capital is a non-banking finance company based in Chennai, India, and Equitas is a microfinance institution (MFI) also based in Chennai. Continue Reading »

International Finance Corporation (IFC), a member of the World Bank Group, has agreed to provide equity of USD 1.15 million to Hand in Hand’s microfinance arm, Belstar Investment and Finance Limited. Hand in Hand is an NGO that is involved in efforts such as reducing child labor and malnutrition and improving solid waste management. The financing is intended to enable Belstar to obtain support from other investors and IFC Advisory Services will help Belstar improve risk management, staff training and product range. Continue Reading »

All 11,500 workers under the National Rural Employment Scheme (NREGS) in the Saikul area of Manipur, India, are now registered microinsurance policyholders under the Life Insurance Corporation of India (LIC). NREGS, enacted by the Indian Parliament in 2005, works to improve financial inclusion in rural areas, especially for people living below the poverty line. The 11,500 workers, spanning across 255 villages, will receive a total of Rs 150 million (USD 3.2 million) upon maturity of the insurance policies, which range between 5 to 15 years. Continue Reading »

The French Development Agency (AFD) recently signed an agreement with the Ministry of Finance (MOF) of Vietnam to loan an equivalent of USD 44.7 million (€ 30 million), which is to be allocated towards a government project titled “Supporting private sector for People’s Credit Fund.” Continue Reading »

BASIX Group, which consists of several companies based in India that participate in microfinance and business services to the poor, has begun to provide technical assistance to microfinance institutions (MFIs) in various African nations such as South Africa, Ethiopia, and Rwanda [1,2]. This comes after BASIX has already provided technical services to MFIs in Papua New Guinea, Timor Leste and Sri Lanka [1]. MicroCapital reported on Basix’s role as a “technical partner” for a USD 1 million equity investment by the International Finance Corporation (IFC), the investment arm of the World Bank, in the MFI ‘Papua New Guinea (PNG) Microfinance’ [3]. BL Parthasarathy, the Senior Group Vice-President of BASIX, has stated that “To meet the needs of global customers, it is necessary to foray into the least developed countries and emerging [markets]” [1]. He also says that BASIX will begin to “interact with MFIs” in Kenya, Tanzania and Zambia this month [1]. In the following three years, BASIX “[hopes] to reach out to over 10 countries” [1]. Continue Reading »

The India Financial Inclusion Fund (IFIF), an equity fund that invests in companies that provide financial services to low-income clients, has, after its final closing, raised USD 90 million worth of capital in the last fifteen months, according to Mona Kachhwaha, the Director of Investments at Caspian Advisors Private Limited, the adviser to IFIF [1,2,3]. The fund will be used to invest in microfinance institutions (MFIs), companies that provide low-cost housing, and other “firms that enable the provision of financial services to the poor” such as “business correspondents to banks and technology companies in [the] sector” [1]. It includes commitments from companies such CDC Group, a “UK government-owned fund” that invests in funds intended for emerging markets [1,4,5,6]. MicroCapital reports on early IFIF fund-raising from CDC Group and other sources can be found in the bibliography [5,6]. Continue Reading »

Eighteen banks in South Korea have donated a total of 255.5 billion won, the equivalent of over USD 221.4 million, to the Microfinance Foundation, a program led by the South Korean Government to provide unsecured micro loans [1]. These banks will also, over the next 10 years, invest 700 billion won, the equivalent of over USD 603.9 million, in the Microfinance Foundation [1]. The funds for this investment will come from “‘dormant deposits’ – small accounts that have been idle for years at the contributing banks” [1]. Some of these banks are Korean banks including the state-run Korea Development Bank and the commercial bank, Hana Bank [1,2,3]. Other banks, such as Citi from the United States, are foreign commercial banks operating in South Korea [1,4]. The Microfinance Foundation intends to “open 20 to 30 regional units [to service the microloans] by May 2010 and raise that to 200 to 300 [units] in the next two or three years” [1]. Continue Reading »

The Reserve Bank of India (RBI) published a report on the research findings about whether there is a need to establish a national umbrella trade association for Urban Cooperative Banks (UCBs), commonly known as credit unions. The report also discovered that the broad range of UCBs in terms of type, range of services and economic viability leads to a lack of cohesion in the industry resulting in their relative inability to compete against commercial banks. The recommendation of the report is that an umbrella trade association would provide a shared infrastructure, such as a common ATM network, which would enable UCBs to achieve economies of scale. In addition, an umbrella trade association would provide an emergency liquidity facility and a “Revival Fund” for struggling UCBs. Continue Reading »

Poor people in India looking to buy a home may face many obstacles, such as having no history of filing tax returns. Because traditional lenders are often unwilling to lend to customers in such situations, housing developers are partnering with microfinance institutions to provide mortgages to small shop owners, taxi driver, vegetable vendors and others who might earn around USD 200 per month. Continue Reading »

The India-based microfinance institution (MFI), Bhartiya Samruddhi Finance Ltd, which is part of BASIX, a group of companies that participate in microfinance and other services to the poor, is planning to raise USD 20 to 25 million in equity capital in the next two to three weeks [1,2,3]. This comes after Bhartiya Samruddhi raised USD 9.87 million in equity capital in April of 2009 [1]. This investment was covered by Microcapital and investors included Lok Capital LLC, Aavishkaar Goodwell India Microfinance Development Company, and Small Industries Development Bank of India (SIDBI) [4]. S Ramachandran, Bhartiya Samruddhi’s Chief Financial Officer, has stated that the MFI is “in talks with mainstream [private equity] players” [1]. He has also stated that the MFI may turn to raising debt after this round of equity capital, and may raise even more equity in June [1]. Intellectual Capital Advisory Services (Intellecap), “a social-sector advisory firm” that advised the last round of equity capital for Bhartiya Samruddhi, will advise the coming round as well [1,5]. Continue Reading »

Muang Thai Life Assurance (MTLA), which is among the top five insurance companies in Thailand, is planning to expand access to its microinsurance program in rural areas of Thailand. The program has already been running for four years. Annual premiums range from 1,200 to 10,000 baht (USD 36 to USD 301) for coverage of 50,000 to 150,000 baht (USD 1,506 to 4519). Premiums are calculated based on factors such as the types of crops grown, the number of harvests per year, and the size of a client’s potential income. According to Mr. Sara Lamsam, president of MTLA, “at this preliminary stage, we have yet to expect [the program] to boost sales, but in the future our brand would definitely be in the forefront of their minds once the communities are financially strong enough and have a better understanding of the importance of savings.” As part of its microinsurance program, MTLA also educates people on money management and savings. Continue Reading »

The Reserve Bank of India (RBI) publishes a circular which memorializes changes to India’s Micro, Small and Medium Enterprises Development (MSMED) Act of 2006.  Last month, RBI published several circulars which detailed changes to several aspects of MSMED Act.  The first change is that rural loans granted by India’s Regional Rural Banks (RRBs) are subject to the MSMED Act and its priority treatment of microfinance industry.  The second change incorporates the provision of credit to MFIs for the “investment in plant and machinery.”  The final change is that loans granted by RRBs for “retail trade” are subject to MSMED Act. The MSMED Act provides for special treatment of MFIs with the goal of promoting, developing and enhancing competition in the microfinance industry.  Continue Reading »

Microfinance Council of the Philippines (MCPI) President Ruben de Lara backs the passage of House Bill 4243 or the “MicroEnterprise Development Institution Act of 2008,” which focuses on development of microfinance sector by encouraging the establishment of MicroEnterprise Development Institutions (MEDIs). Once passed into law, existing non-profit organizations that provide microfinance lending would become accredited as a MEDI by the Securities and Exchange Commission (SEC). Once accredited, MEDIs would be subject to a 2% tax on their gross income, the proceeds of which will be deposited into a trust fund which will be used by the government to pursue poverty alleviation programs. Under the legislation, MEDIs would be subject to regulation by relevant regulatory agencies before they are permitted to undertake deposit-taking activities, engage in insurance business, or carry out fund management. Mr. de Lara hopes that under the bill, MEDIs would offer Filipino families access not only to credit but also to all related micro-finance services, such as insurance, health care, education and housing. Continue Reading »

ACCION International recently invested USD 500,000 for a 49.5 percent equity stake in Saija Finance Pvt Ltd, [4] a microfinance institution (MFI) based in Northern India that started in April 2008. The investment was made through ACCION International’s ACCION Gateway Fund. [3] Saija is the fund’s fourth investment in India. Other recent investments in Indian MFIs include Swadhaar FinServe, [5] which caters to the urban poor, Lok Capital, [6] which serves social enterprises, and United Villages, [7]  which focuses on the rural poor. Continue Reading »

A collaborative, countrywide microfinance survey in Sri Lanka performed by the German Agency for Technical Cooperation (GTZ GmbH) and the Promotion of the Microfinance Sector (ProMis) Program, organizations from the German and Sri Lankan governments, respectively, has reached several conclusions about Sri Lankan microfinance [1,2,3,4]. It found that there are over 10,800 outlets through which microfinance providers operate in Sri Lanka [1]. In total, microfinance providers have amassed Rs. 126 billion in savings and deposits, the equivalent of over USD 1.1 billion [1]. There are also 26 million savings accounts with microfinance providers in the country [1]. Additionally, the ratio of loan volume to savings volume is one to 2.6, while the ratio of loans to savings accounts is one to 5.9 [1]. Lastly, the report drew some more general conclusions about Sri Lankan microfinance. For example, Sri Lanka has a “diverse range of institutions” that provide microfinance services, but the industry is “lacking innovative approaches which could overcome the inherent barriers in access to microfinance” [1]. Continue Reading »