Source: Common Ground News

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The Grameen Trust of Bangladesh, a member of the Grameen Family that helps build new microfinance institutions (MFIs) around the world, plans to open a new MFI in Mexico. Fundacion Carlos Slim, the charitable organization of Mexican billionaire Carlos Slim, will provide an initial donation of USD 5m and guarantee another USD 40m in loans, which will create the total capital base for the new MFI. The new MFI will be modeled after the Grameen Bank. It will be a non-profit using the ‘social business‘ model, which implies that it will reinvest all profits back into the operation of the company. The new MFI, which will initially target 80,000 borrowers, will be named Grameen Carso after the Mr. Slim’s business conglomerate, Grupo Carso. The company will initially be managed by the Grameen Trust, but eventually they hope to turn the company over to Mexican operators. Continue Reading »

Source: Turkish Daily News.
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Recent increases in the cost of borrowing for many organizations around the world and new capital adequacy requirements are putting pressure on Indian Microfinance Institutions. According to The Times of India, both Equitas Micro Finance India (Equitas) and Madura Micro Finance ltd (Madura) are raising interest rates due to increases in the cost of borrowing. Also, SKS Microfinance (SKS) has begun looking for new sources of private equity funding, citing both the reserve requirements and increased interest rates. Continue Reading »

Written by Joshua Zacharias, Glucksman Institute for Research in Securities Markets at The Leonard N. Stern School of Business, New York University, Faculty Advisor: David Backus, April 16, 2008, available at: http://archive.nyu.edu/handle/2451/25936.

‘Economies of scale’ refers to increased efficiency (lower average costs per unit produced) experienced by firms as they increase the overall size (total units produced) of their operations. For financial institutions, this measurement measures cost savings realized from increasing the size of its loan portfolio in terms of both number of loans and overall value of loan portfolios. Continue Reading »

HSBC Turkey, the Turkish arm of the global bank HSBC, announced the allocation of USD 5 million toward microcredit loans until 2010 in Turkey. According to Piraye Antika, the CEO of HSBC Turkey, the microcredit loans will be evenly split between urban areas, rural areas and young university-graduate entrepreneurs. In disbursing the loans, HSBC will work with three non-government organizations: the Turkish Waste Prevention Foundation, the Community Volunteers, and the Female Labor Assessment Foundation. Continue Reading »

The Reserve Bank of India (RBI) recently tightened capital adequacy standards governing microfinance institutions (MFIs) in India, and several local MFIs worry the change may lead to the need to raise additional capital and increase interest rates.  Continue Reading »

A new United States non-profit organization, MicroFinance Transparency (MF Transparency), will publish the interest rates and other basic information about the lending practices of microfinance institutions (MFIs) worldwide. Supported by many throughout the world of microfinance, the founding of this new organization comes at a time of fierce debate over the role of commercial microfinance. Continue Reading »

Source: Business Week.

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The government of Uganda has set interest rates for Savings and Credit Cooperative Organizations (SACCOs) at 9 to 13 percent. SACCOs became regulated in June 2008 after a rash of investigations into illegal behavior and fraud. These microfinance institutions are now controlled by the The Uganda Cooperative Savings and Credit Cooperative Union, a newly established government regulatory agency. Continue Reading »

As first reported in an Economic Times article on inflation and microfinance in India, a number of Indian microfinance institutions appear on track to experience growth of over 100% in 2008, even as the rest of the Indian economy suffers from rising inflation. Analysts predict that Indian inflation will remain in the double-digits until at least December and current rates are at a 13-year high. India’s current inflation (11.05% as of June 2008) has been caused mainly by the continued rise in oil prices coupled with the weakening rupee. Cost of imports has become more expensive and the government is expected to continue to raise fuel prices. Continue Reading »

Source: Microfinance Gateway. Continue Reading »

Prepared by the Russian Microfinance Center (RMC), an organization supporting microfinance institutions (MFIs) by providing knowledge management, policy advocacy, and technical services since July 2002, in cooperation with the Microfinance Information eXchange (MIX), released February 2008, 20 pages, available at http://www.microfinancegateway.org/files/48948_file_Microfi_nance_in_Russia___Benchmarks_and_Analysis_2006.pdf

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The government of India and the Asha Community Health and Development Society, in conjunction with the Life insurance Corporation of India (LIC), and public sector banks Andhra Bank, Bank of India, Canara Bank, Indian Overseas Bank, Punjab National Bank, State Bank of India, Syndicate Bank, UCO Bank and Vijaya Bank recently launched a Pilot Microcredit Scheme. The plan will allow slum dwellers in southern Delhi’s Ekta Vihar slum to apply for loans from the participating banks, with a fixed interest rate. It will also start an initiative that aims to connect every family in the area with a “no frill” bank account, extended financial services and affordable life insurance from LIC. MicroCapital recently reported on the LIC’s initiatives in expanding its micro-insurance services here. Continue Reading »

On March 10-11, 2008, ACCION International and Credit Suisse held the third Cracking the Capital Markets conference on microfinance investment. The conference brought together hedge fund managers, institutional and private investors, leading rating agencies, and microfinance institutions (MFIs) to discuss the challenges, successes, and future of microfinance investments. The first and second articles of this series can also be found on the MicroCapital website.

As a follow up to a presentation at last year’s conference, Nicolas Krauss presented an update to an initial study on the correlation of microfinance to other emerging markets investments. In addition, he discussed whether the correlation (or lack there of) position microfinance as an attractive investment for portfolio diversification. Presentations from this panel can be found here. Continue Reading »

Philippine government has directed microfinance lending agencies to look into the possibility of lowering interest rates to micro and small businesses. The government believes this will make microfinance more attractive and increase activity within the sector. The directive came from Cerge Remonde, the oversight official for the government’s micro, small, and medium enterprise (MSME) program, but is not an obligation nor did it specify if or when it would require MFIs to do so. Continue Reading »

African Alliance, a group which provides investment banking services across the African continent, recently released a report on Uganda’s construction sector which found that, despite unprecedented growth, the industry is being threatened by financial risk. To mitigate the likelihood of default, most financial institutions charge construction firms high interest rates coupled with short repayment periods. However, the increasing number of players, particularly microfinance institutions (MFIs), is expected to help drive down interest rates. Continue Reading »

Following an article in the December 13 edition of Business Week entitled “The Ugly Side of Microlending,” Business Week’s website now features a point-counterpoint which asks the question: Does microfinance helps low-income entrepreneurs in developing economies more than it hurts them? Vikram Akula of Indian microfinance bank SKS Microfinance Private Ltd. argues in favor of the proposition, while Chuck Waterfield of Microfin argues that the banks are generally more harmful than beneficial to low-income entrepreneurs. The core issue of the debate centers on whether the banks are usurious in the interest rates they charge. Continue Reading »