Regulation | MicroCapital - Page 22
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Monday, March 7, 2011

MICROCAPITAL BRIEF: Central Bank of Nigeria (CBN) Directs Microfinance Banks to Adopt Technology and Shared Service Platforms, Hints at New Microfinance Policy Framework

The Central Bank of Nigeria (CBN) recently mandated that microfinance banks (MFBs) adopt information technology infrastructure and utilize shared service providers—organizations that provide services such as cash processing and currency sorting for multiple banks—by June 2011 as concerns over struggling MFBs persist. CBN reportedly will offer financial assistance to MFBs to facilitate compliance with the directive. Use of the shared service platforms is also expected to help MFBs reduce operating expenses. Continue Reading »

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Monday, March 7, 2011

MICROCAPITAL BRIEF: Eagle Flight Microfinance Bank Attempts to Reassure Clients After Mistakenly Being Included in List of Failed Nigerian Microfinance Banks (MFBs)

Eagle Flight Microfinance Bank, a financial institution licensed with Central Bank of Nigeria (CBN) and based in the city of Warri, reportedly was mistakenly included in a 2010 list of over 100 microfinance banks (MFBs) whose licenses were to be revoked by CBN. A week after the list of banks who could not repay debtors was released, CBN discovered that Eagle Flight Microfinance Bank was included in the list in error. In an effort to restore confidence in the bank, Eagle Flight hosted a party celebrating its fifth anniversary during which it gave away various gifts to clients including vehicles, plasma televisions, dining sets, electric generators and refrigerators. Continue Reading »

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Friday, March 4, 2011

MICROCAPITAL BRIEF: International Association of Microfinance Investors (IAMFI) Releases Report “Charting the Course: Best Practices and Tools for Voluntary Debt Restructuring in Microfinance”

The International Association of Microfinance Investors (IAMFI), a US-based NGO, recently released a report, “Charting the Course: Best Practices and Tools for Voluntary Debt Restructuring in Microfinance”, that aims to develop guidelines for debt restructuring for microfinance institutions (MFIs). Continue Reading »

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Wednesday, March 2, 2011

MICROCAPITAL BRIEF: Yunus Continues as Grameen Bank Managing Director after Bangladesh Bank Asks Him to Step Down

Bangladesh Bank, the central bank of Bangladesh, has reportedly attempted to remove Nobel laureate Dr Muhammad Yunus from his position as managing director of Grameen Bank, a microfinance institution (MFI) based in Bangladesh in which the government holds a 25-percent stake. Continue Reading »

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Friday, February 25, 2011

MICROCAPITAL BRIEF: Vikram Akula of SKS Microfinance Views Recommendations of Reserve Bank of India (RBI) Malegam Committee as Boost to Microfinance

Vikram Akula, chairman of SKS Microfinance, a for-profit microfinance institution (MFI) in India, has stated that the recommendations released by the “Malegam Committee” of the Reserve Bank of India (RBI) in response to unrest in microfinance in the Indian state of Andhra Pradesh, would give a boost to the microfinance sector by further encouraging bank lending to MFIs. Mr Akula also stated that the proposed microloan interest rate cap of 24 percent would not impact SKS Microfinance as its lending rate falls below the cap, but that it would impact smaller institutions that are yet to achieve efficiencies of scale. He viewed this recommendation as a measure to encourage consolidation within the sector. Continue Reading »

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Tuesday, February 22, 2011

MICROCAPITAL BRIEF: Malegam Committee Report on Microfinance Regulation in India Fails to Meet Expectations, Argues Sriram

On the website “livemint.com”, an Indian partner of the US-based Wall Street Journal, independent researcher MS Sriram presented his evaluation of the recommendations issued in response to the crisis in the microfinance sector in Andhra Pradesh by the Malegam Committee of the Reserve Bank of India (RBI). While he argues that the report has some positive aspects, he states that it largely fails to deliver. Continue Reading »

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Monday, February 21, 2011

MICROCAPITAL BRIEF: India’s SHARE Microfin Head Exceeds Limit Set by Companies Act With Salary of $1.6m

Udaia Kumar, the managing director of SHARE Microfin Limited, a non-banking financial institution in India, was reportedly paid a salary of INR 74 million (USD 1.6 million) for the fiscal year ending March 2010. The salary exceeds the limit stipulated by the Companies Act, a law which regulates the operations of firms in India. The act states that a company is not allowed to pay more than 5 percent of its net profit to a director without government permission. A significant portion of Mr Kumar’s salary comprises “sweat equity”, which are shares issued at zero cost to the recipient [1]. The 2008-2009 salary of Mr Kumar of INR 81 million (USD 1.7 million) also exceeded the limit set by the Companies Act, but Share Microfin obtained approval from the Ministry of Corporate Affairs for the surplus pay. Continue Reading »

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Friday, February 18, 2011

MICROCAPITAL BRIEF: East African Community (EAC), World Bank Sign $16m Grant Agreement for Financial Sector Development and Regionalization Project

The East African Community (EAC), an intergovernmental organization whose members include Kenya, Uganda, Tanzania, Rwanda and Burundi, recently announced that it received a USD 16 million grant from the World Bank, a multilateral development finance organization based in Washington, DC, for its Financial Sector Development and Regionalization Project (FSDRP). Continue Reading »

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Thursday, February 17, 2011

MICROCAPITAL BRIEF: International Finance Corporation (IFC) to Help Maldives Monetary Authority Establish Credit Information Bureau

The International Finance Corporation (IFC), the investment arm of the World Bank Group, a partnership of multilateral development organizations based in Washington, DC, recently announced that it has been helping the Maldives Monetary Authority set up the country’s first credit information bureau. Continue Reading »

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Tuesday, February 15, 2011

MICROCAPITAL BRIEF: Bangladeshi Government Asks Yunus to Step Down as Director of Grameen Bank

The finance minister of Bangladesh, Mr Ama Muhith, reportedly said that the government has asked Nobel laureate Dr Muhammad Yunus of Grameen Bank, a microfinance institution (MFI) based in Bangladesh, to transfer his authority as director of the MFI to the deputy director on the grounds that, at age 70, Dr Yunus’ age exceeds the retirement age limit by five years [1]. Continue Reading »

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Tuesday, February 15, 2011

MICROCAPITAL BRIEF: Microfinance Banks Ask Central Bank of Nigeria for Six More Months to Meet Tightened Licensing Requirements

Microfinance banks in Nigeria have entered negotiations with the Central Bank of Nigeria (CBN) to extend by six months their  grace period to operate with provisional licenses [1]. Continue Reading »

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Monday, February 14, 2011

MICROCAPITAL BRIEF: MicroSave’s India Focus Notes Examines Microfinance Turmoil in Andhra Pradesh

MicroSave, a private consulting company that provides technical assistance to microfinance institutions (MFIs), recently published a series of papers that examine the trouble that has arisen in microfinance in the Indian state of Andhra Pradesh since late 2010. Continue Reading »

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Monday, February 14, 2011

MICROCAPITAL BRIEF: Microborrowers Past Due on $64m in Repayments to Microfinance Institutions (MFIs) in Lagos, Nigeria; National Association of Microfinance Banks Proposes Criminalization

Mr Olufemi Babajide, Chairman of the Lagos chapter of the National Association of Microfinance Banks (NAMB), a group of Nigerian microfinance institutions (MFIs), recently revealed that past due loans outstanding to MFIs in Lagos total NGN 10 billion (USD 64 million). Continue Reading »

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Thursday, February 10, 2011

MICROCAPITAL BRIEF: United Nations Economic and Social Commission for Western Asia (ESCWA): Microfinance in Lebanon Suffers from Lack of Regulation

Byblos Bank, a Lebanese institution with operations in nine countries, has cited an unspecified report from the United Nations Economic and Social Commission for Western Asia (ESCWA) as arguing that the continued growth of the microfinance sector in Lebanon is hindered by inappropriate governmental regulation and a lack of reliable data on borrowers. Continue Reading »

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Tuesday, February 8, 2011

MICROCAPITAL BRIEF: Reserve Bank of India (RBI) Relaxes Rules in Effort to Ease Microfinance Institution (MFI) Liquidity Crunch

The Reserve Bank of India (RBI), India’s central banking authority, has temporarily relaxed asset classification rules for bank loans to the microfinance sector, allowing commercial banks to classify loans made to microfinance institutions (MFIs) as standard assets. Under the standard guidelines, banks had to classify loans made to MFIs as unsecured assets, which required a higher minimum provision than do standard assets [1]. Continue Reading »

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Tuesday, February 8, 2011

MICROCAPITAL BRIEF: Government of India’s Andhra Pradesh Considers Requiring Microfinance Institutions (MFIs) to Compensate Families of Suicide Victims

The government of the Indian state of Andhra Pradesh (AP) is considering a bill that would make it compulsory for microfinance institutions (MFIs) to compensate the families of borrowers who commit suicide as a result of heavy debt burdens. Continue Reading »

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Monday, February 7, 2011

MICROCAPITAL BRIEF: Microfinance Institutions Network (MFIN) of India to Investigate Claims of Improper Handling of Mutual Benefit Trusts (MBTs) by SKS Microfinance, SHARE Microfin and Spandana Sphoorty

The Microfinance Institutions Network (MFIN), a trade association of Indian microfinance lenders, has set up a committee to investigate claims that SKS Microfinance, a for-profit microfinance institution (MFI); SHARE Microfin, a regulated non-banking finance company (NBFC); and Spandana Sphoorty, another for-profit MFI, took advantage of clients through the use of mutual benefit trusts (MBTs) to converting the institutions into for-profit entities. Continue Reading »

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Monday, February 7, 2011

MICROCAPITAL BRIEF: Participants at World Economic Forum Annual Meeting 2011 in Davos, Switzerland, Discuss Non-Payment in Andhra Pradesh, Consumer Protection, Microfinance Regulation

Participants of the World Economic Forum Annual Meeting 2011, which was held in Davos, Switzerland, from January 26 to January 30, discussed the future of financial services for poor people in a session called “Financial Inclusion: Beyond Microfinance.” Continue Reading »

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