Posted by Michael Chasnow at 1:55pm on Sunday, October 12, 2008, available at: http://www.indiadevelopmentblog.com/

The following is an anecdote detailing the effect of the financial crisis on the business operations of one Indian microfinance institution (MFI).  Michael Chasnow does not provide any identifying information on the MFI, but the story is an interesting counter-balance to the claims of Yunus and Clinton on the balmy, if not ameliorative, effect of the credit crisis on microfinance.  For more information, please see Microcapitol’s recent coverage of the crisis’ effect on microfinance and Jerry Peloquin’s recent guest editorial on the credit crunch and socially responsible investment.  Continue Reading »

In early October, Citigroup Inc, a New York-based multinational financial services firm, announced that the China Banking Regulatory Commission (CBRC), a Chinese government agency responsible for regulating the banking sector, approved Citigroup’s plan to open two micro-credit firms in Hubei, a rural province in China. The two institutions will be established in Gong’an county and Chibi city sometime in the next few months.  China Daily implied that Citigroup’s move is meant to compete with the Chinese rural banking outlets of two London-based international banks, HSBC Holdings and Standard Chartered, in China’s financially underdeveloped regions. Continue Reading »

Written by Nimrah Karim, Michael Tarazi and Xavier Reille and based primarily on secondary research by the Consultative Group to Assist the Poor (CGAP), released in August 2008 as Number 49 of Focus Note, a publication of CGAP, 16 pages, available on October 27, 2008 at: http://www2.cgap.org/gm/document-1.9.5029/FocusNote_49.pdf. Continue Reading »

The Inter-American Development Bank (IADB) recently announced a projection that the value of remittances sent by migrant workers to their families in Latin America and the Caribbean will grow in 2008 by its slowest rate on record.  Migrants sent home about USD 66.5 billion last year but may increase that amount by about 1.5 percent in 2008, bringing the yearly total to USD 67.5 billion.   Despite the nominal increase, remittances in 2008 may for the first time contribute 1.7 percent less (p. 1) to household incomes after accounting for rising Latin-American inflation and the falling U.S. dollar.  Continue Reading »

Schwab Charitable Fund (Schwab), a national donor-advised fund based in San Francisco, has begun allowing donors to its Charitable Gift Accounts to apportion some their donations as microfinance loan guarantees in the hopes that this will magnify Schwab’s charitable impact among low-income entrepreneurs.  Schwab expects the multi-phase program to increase the number of microfinance loans available at lower costs in more than 25 developing countries.  In the near future, the program should provide USD 20 to 30 million in guarantees to over USD 100,000 micro-loans.  Continue Reading »

Remittances, the portion of international migrant workers’ earnings sent back from the country of employment to the country of origin, play an important role in the economies of many developing countries. An annual statistical report done by the World Bank shows that remittances account for 5% of the GDP for low-income developing countries as of 2006. Although this figure might seem small, many countries in particular have a much higher percentage of their GDP based in Remittances; Guyana, Haiti and Honduras are all close to 25%.  The Philippines, Nicaragua, Nepal, Guatemala and El Salvador are all in the 10-20% range. Jack Kimball of Reuters points out that “remittance cash may be as much as 50 percent higher than current estimates due to informal transfers.” Global remittances from foreign workers make up an estimated $300 billion a year, three times as much as the foreign aid paid out by governments in the developed world. The biggest share of this, over $42 billion, comes from immigrants working in the United States. But what these numbers really reflect is that millions of families and individuals in these countries have come to depend on remittances as a vital source of income. Continue Reading »

As financial markets struggle internationally, some microfinance institutions (MFIs) have begun to see downstream effects in the form of rising lending rates. Royston Braganza, chief executive officer of Grameen Capital India observed “the demand for funds is high because microfinanciers have drawn up aggressive growth plans” and “the cost of funds remains a concern due to the 2 percent increase in just the last quarter.” These factors could make fundraising very difficult for microfinance institutions in cases where they have not built up proper reserves according to K. Vinod Kumar, Assistant Vice-President of member services at SKS Microfinance. Continue Reading »

MICROFINANCE PAPER WRAP-UP: “The Microfinance Sector: Its Success Could be its Biggest Risk”, Fitch Ratings

Produced by Fitch Ratings, June 2008, 20 pages, available at: http://microfinancegateway.org/files/49914_file_Microfinance_Success_Could_Be_its_Biggest_Risk1206.pdf

This paper presents what Fitch Ratings believes to be the key risk factors of commercial microfinance. While the title of the report suggests that the paper presents risk factors directly associated with the sector’s rapid growth, the report actually includes a wide array of perceived risks that may not necessarily be a result from the sector’s success. Below are summaries of the risk factors that Fitch seems most concerned with in its report. For the complete report containing all risk factors, please click here. Continue Reading »

Fitch Ratings has assigned the Micro Finance Bank of Azerbaijan (MFBA) a long-term issue default rating of BB+, a short-term issue default rating of B and a long-term outlook of ‘stable.’ This rating qualifies MFBA as investment grade and makes it the highest rated private bank in Azerbaijan. Continue Reading »

Following violent protests at the offices of Fundación para el Desarrollo de Nueva Segovia (Fundenuse), a microfinance organization in Nuevo Segovia, Nicaragua, five police officers were injured and a protester was blinded in one eye by a rubber bullet, reports the Tico Times. In addition, a Fundenuse worker was kidnapped for five hours and threatened with bodily harm, according to a statement by the Nicaraguan Association of Microfinanciers (ASOMIF).  Continue Reading »

Written by Kate Lauer, lawyer and a policy advisory consultant to Consultative Group to Assist the Poor (CGAP), published in June 2008 as Number 13 of Occasional Papers, a publication of CGAP, 28 pages, available at http://www.cgap.org/gm/document-1.9.4213/OccasionalPaper_13.pdf Continue Reading »

Source: Times Online. Continue Reading »

The Government of India’s National Housing Bank (NHB) in partnership with the Repco Foundation for Micro Credit (RFMC), a subsidiary of the Indian Government’s Repco Bank that organizes the banks Micro Credit Scheme, recently launched a “Housing Micro Finance Initiative”. The initiative will provide loans to assist members of rural self-help groups in renovations and additional construction on their homes. NHB began providing housing micro-loans in 2004, yet they were mainly directed towards urban slum dwellers. Now, NHB and RFMC have the equivalent of USD 23.3 million to invest in a rural housing microfinance program and plan to use the equivalent of USD 2.3 million in credit to launch the program this year. The initiative will initially run as a pilot program in the state of Tamil Nadu. Continue Reading »

Source: MasterCard Foundation. Continue Reading »

Taking place in New York from May 14 to 16, the Global Microfinance Investment Congress brought together delegates from microfinance institutions (MFIs), microfinance investment vehicles (MIVs), commercial banks, financial institutions, and government agencies. While the congress tackled microfinance investments and the industry’s future, this article will summarize a few themes addressed during the presentations and panels. Continue Reading »

This 4-page paper discusses the subprime credit market collapse and the comparable forces that could apply to microfinance. Written by Cecelia Beirne, a portfolio manager at global microfinance intermediary MicroVest Capital Management, the paper concludes with recommendations for the microfinance industry. One can find the full version here. Continue Reading »

In an interview with the Financial Times, Muhammad Yunus, the founder of pioneering microfinance institution (MFI) Grameen Bank of Bangladesh, says that the bank is seeing a sharp increase in problems associated with the repayment of debts by poor borrowers as a result of rising food prices.

Continue Reading »

This 13-page study thoroughly details Morgan Stanley’s internal rating methodology and approach to assessing credit risks. Morgan Stanley provides investment banking, securities, and investment management services. Developed by the firm’s microfinance-oriented business unit, the Microfinance Institutions Group (MFIG), the paper was written by Miguel Arvelo, Ju-Lie Bell, Christian Novak, Juliette Rose, and Shally Venugopal. One can find the article in the subscription-only International Corporate Governance issue of Morgan Stanley’s Journal of Corporate Finance or free of charge at the Microfinance Gateway. Continue Reading »