Category: Regulation

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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MICROCAPITAL BRIEF: Nigeria Deposit Insurance Corporation (NDIC) Begins to Repay Customers of Failed Microfinance Banks

In 2010, the Central Bank of Nigeria (CBN) revoked the operating licenses of 224 microfinance banks (MFBs) in the country that were “terminally distressed and technically insolvent.” After receiving fresh tranches of capital, new operating licenses were given to 121 of those outfits, but the remaining 103 institutions are being liquidated by the Nigeria Deposit Insurance Corporation (NDIC) and their depositors are now being repaid in stages. Continue reading

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MICROCAPITAL BRIEF: Small Enterprise Education and Promotion (SEEP) Network Releases “Pocket Guide to the Microfinance Financial Reporting Standards: Measuring Financial Performance of Microfinance Institutions”

The Small Enterprise Education and Promotion (SEEP) Network recently released new financial performance reporting standards for microfinance institutions (MFIs) that are intended to help microfinance stakeholders evaluate MFI performance based on a universal set of criteria. Continue reading

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MICROCAPITAL BRIEF: Kenyan Microfinance Start-Up Remu DTM Limited Acquires Deposit-Taking License

The Central Bank of Kenya (CBK), Kenya’s central banking authority, has granted a license to start-up microfinance institution (MFI) Remu DTM Limited (Remu). The Microfinance Act of 2008 allows the CBK to license, regulate and supervise DTMs—institutions that provide loans to micro- or small enterprises and low-income households, and that receive money by way of deposits. Previously, MFIs could issue loans but were not allowed to take money from the public. Continue reading

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MICROCAPITAL BRIEF: Pakistani Microinsurance Providers Unveil Draft Regulation to Help Growth of Industry

A round table of microinsurance experts organized by the Securities and Exchange Commission of Pakistan (SECP) and the US-based Center for International Private Enterprise (CIPE) came together recently to address issues, such as frequent claims against existing microinsurance plans and high administrative costs, that are preventing the expansion of microinsurance in Pakistan. Continue reading

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MICROCAPITAL BRIEF: Founder of Grameen Bank and Nobel Peace Prize Winner Dr Muhammad Yunus Speaks Out Against the Commercialization of Microfinance Institutions (MFIs)

Dr Muhammad Yunus, founder of Grameen Bank and winner of the Nobel Peace Prize for his work in microcredit, has again spoken out against the commercialization of microfinance institutions (MFIs) and their deviation from the mission of poverty alleviation. Continue reading

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MICROCAPITAL BRIEF: Japan, Asian Development Bank (ADB) Aim to Help Mongolia Strengthen Financial Regulations, Improve Financial Education for Poor through Television Drama

A USD 2.5 million grant from Japan’s Fund for Poverty Reduction, which is financed by the Japanese government and administered by Asian Development Bank (ADB), will be used to attempt to strengthen the regulation of Mongolia’s savings and credit cooperative market. Continue reading

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