Category: Regulation

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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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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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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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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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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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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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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MICROCAPITAL BRIEF: Book From Asian Development Bank (ADB)—Rural Finance in Poverty-Stricken Areas in the People’s Republic of China—Suggests Reform of China’s Microfinance Industry

A new book from Asian Development Bank (ADB)—Rural Finance in Poverty-Stricken Areas in the People’s Republic of China—pushes for reforms in China’s rural finance industry, including its microfinance industry, that it argues would help small businesses and alleviate poverty. Continue reading

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MICROCAPITAL BRIEF: Microinsurance Network Reviews 2010 Work on Performance Indicators, Technology, Standards Development

The Microinsurance Network, a member-based platform of approximately 60 organizations interested in advancing the development and distribution of insurance products for low-income households, has recently released an overview of its 2010 activities. These include the development and publication of 11 social performance indicators by the Performance Indicators Working Group; the launch of the Microinsurance Technology Inventory, an online database that provides insight into the use of technology for microinsurance; and enhancement of the organization’s website. Continue reading

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MICROCAPITAL SPECIAL REPORT: “Principles for Investors in Inclusive Finance” Launched at Responsible Finance Forum in The Hague, Netherlands

A group of 40 global investors in the microfinance industry, including US retirement planning firm TIAA-CREF and several microfinance investment vehicles (MIV), recently launched a set of guiding principles for investing in the microfinance industry at the Responsible Finance Forum in The Hague, Netherlands. The initiative – titled “Principles for Investors in Inclusive Finance” – is reportedly the brainchild of Her Royal Highness Princess Maxima, the United Nations Secretary General’s Special Advocate for Inclusive Finance for Development, and a core group of Dutch investors, including; Triodos, a microfinance investment vehicle (MIV); Goodwell, a for-profit social investment outfit; Oikocredit, a cooperative investment fund; PGGM, an investment and pension firm; and SNS Asset Management, an institutional investment group. The group and Her Royal Highness Princess Maxima developed the principles together with CGAP and the United Nations-backed Principles for Responsible Investment (PRI), a network of international investors created to promote the practice of responsible investing. Continue reading

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MICROCAPITAL BRIEF: Islamic Microfinance Network (IMFN) Launches in Pakistan, Will Serve Shariah Microlenders Worldwide

Islamic Microfinance Network (IMFN) has recently launched in Pakistan with the aim to provide a common platform for Islamic microfinance institutions (MFIs) around the world. Headquartered in Lahore, the network is also looking to establish regional offices in Ghana, Mauritius and the Middle East. Continue reading

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MICROCAPITAL BRIEF: Central Bank of Nigeria (CBN) Highlights Failings of Local Microfinance Industry, Outlines Strategy Going Forward

Femi Fabamwo, Director of the Other Financial Institutions Department at the Central Bank of Nigeria (CBN), reportedly has said that mission drift at some microfinance banks, weak capacity for lending, poor understanding of the microfinance concept and inefficient delivery methodologies are some of the reasons why 103 microfinance institutions (MFIs) are being liquidated by the Nigeria Deposit Insurance Corporation (NDIC). Mr Fabamwo cited MFIs “operating like ‘micro-commercial banks’ with flamboyance, fleets of branded cars and high expenditure profile; hard impact of the global financial turbulence of 2008/2009; weak capitalization; poor corporate governance…and weak internal controls” as additional reasons reform is needed in Nigeria’s microfinance sector. Continue reading

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MICROCAPITAL BRIEF: Indian Bank Receives Skoch Financial Inclusion Award 2011 for “Self-Help Group (SHG) Initiatives – Urban Financial Inclusion”

Skoch Consultancy Services Private Limited, a strategic planning and management consulting firm based in India, has presented Indian Bank, a bank owned by the government of India, with the Skoch Financial Inclusion Award 2011 for its work serving self-help groups (SHGs) in urban areas. Continue reading

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MICROCAPITAL BRIEF: Indian Rating Agencies, ICRA and Credit Rating and Information Services of India Limited (CRISIL), Predict Microfinance Institution (MFI) Consolidation Would Result From Reserve Bank of India (RBI) Proposals

According to Indian rating agencies Credit Rating and Information Services of India Limited (CRISIL) and ICRA Limited (formerly Investment Information and Credit Rating Agency of India), a recent proposal by the Reserve Bank of India (RBI), India’s central banking authority, to regulate the country’s microfinance industry will result in slower growth and smaller profits for microfinance institutions (MFIs) that will lead to a consolidation in the sector. Continue reading

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MICROCAPITAL BRIEF: International Finance Corporation (IFC) Invests $35m in Equity of Indian Microfinance Institution (MFI) Bandhan Financial Services

The International Finance Corporation (IFC), the investment arm of the World Bank Group, a multilateral development finance organization based in Washington DC, will make an INR 1.6 billion (USD 35.1 million) equity investment in Bandhan Financial Services, a microfinance institution (MFI) based in Kolkata, India, to expand its operations in the country. The deal is reportedly the largest equity investment in an Indian MFI since the turmoil in the microfinance industry in Andhra Pradesh began in late 2010. Continue reading

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MICROCAPITAL BRIEF: Reserve Bank of India (RBI) Subcommittee Proposes Regulation for Microfinance Institutions (MFI)

A committee headed by Y H Malegam, central board director of the Reserve Bank of India (RBI), India’s central banking authority, met last week and proposed that microfinance institutions (MFIs) should be allowed to charge a maximum interest rate of 24 percent to borrowers and that loans to a single microborrower should not exceed INR 25,000 (USD 548). Continue reading

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MICROCAPITAL BRIEF: Retail Microfinance Institution (MFI) Loans Taking Two Months to Process in Andhra Pradesh, India

Since the state government of Andhra Pradesh implemented a law in October 2010 that requires microfinance institutions (MFIs) to get approval from district officials before disbursing loans, it now reportedly takes approximately two months to process loans. Continue reading

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