The Wall Street Journal Online has reported on the comments of Robert Annibale, global director of Citi Microfinance, the arm of the financial services company dedicated to fostering microfinance through funding and support [1,2]. Mr. Annibale believes that more microfinance institutions (MIFs) will begin to “seek banking licenses to broaden their sources of funding” . He sees the lack of liquidity caused by the financial crisis as creating a situation in which MFIs need “diversified funding” and that deposits are one source that MFIs should draw from. In Mr. Annibale’s opinion, deposits have more stable sources of funding in the financial crisis than “selling debt on the capital markets or loans from public and private sector banks” . As debt and credit markets have slowed down during the financial crisis, these sources of funding have been more difficult to obtain, which Mr. Annibale says has not been the case with deposits . He cites the trajectories of MFIs such as Peru’s MiBanco and Mexico’s Banco Compartamos SA, “which started as non-government organizations and later became banks in order to offer a wider range of products” as being indicative of a greater trend to come in microfinance [1,3,4,5,6]. Continue Reading »
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MICROCAPITAL.ORG STORY: Citi Microfinance Executive, Robert Annibale, Says Financial Crisis Will Spur Microfinance to Move Toward a Banking Model
MICROCAPITAL PAPER WRAP-UP: Financial Infrastructure: Building Access Through Transparent and Stable Financial Systems by the World Bank
By International Finance Corporation, published by World Bank, September 2009, 31 pages, available at:
The International Finance Corporation has recently published a report on payments and securities settlement systems, remittances, credit reporting and secured transactions and collateral registries, with recommendation for reform to create greater efficiency and reliability for the system, while reducing costs and increasing access to financial services.
The report notes that financial infrastructure touches at least every 5th person in emerging markets. While credit bureaus cover 390 million people with remittances of over 700 million and payment systems at 1 billion, the IFC belives that a new more efficient financial infrastructure allows for cost reduction of up to 75 percent or more in transactions costs for credit evaluations, collateralizing loans, remittances and payments. Improvements in financial infrastructure have the potential to enable access to financial services for half the population in emerging markets in the next 10 years. Continue Reading »
MICROCAPITAL PAPER WRAP-UP: Microfinance Investment Vehicle (MIV) Performance and Prospects: Highlights from the CGAP 2009 MIV Benchmark Survey by CGAP
By CGAP, published by CGAP, September 2009, 6 pages, available at:
Consultative Group to Assist the Poor (CGAP) has recently published a Benchmark Survey which illustrated that while MIVs grew by 31 percent in 2008, overall MIV performance may deteriorate in 2009 as increased credit risks persist. The survey also revealed MIVs efforts to include environment, social and governance considerations in their investment policies, due diligence, and monitoring.
The survey represents 103 MIVs (90 percent of total MIV assets within the MIV investment universe) with an estimated USD 6.6 billion in assets under management. Growth in MIV assets were supported by both public and private investors as retail investors continued to invest in MIVs as well. Continue Reading »
MICROCAPITAL.ORG STORY: Introduction Of Microfinance Scheme In Northern Malaysian State Of Penang – To Help The Poor Or Gain Political Mileage?
In a recent report entitled ‘Microcredit boon for Penang’s poor’ in Malaysia’s ‘Sun2Surf’ online publication  , Penang-based freelance journalist Mr Himanshu Bhatt discusses the recent introduction of a ’microcredit aid’ scheme in Penang. Penang is a state in the North of Western Peninsula Malaysia. Sun2Surf is the web companion to Malaysia’s widely read ‘The Sun’ newspaper. Dubbed the ’People’s equality bridging project’, the microcredit scheme was announced last month as a joint effort between the Penang Development Corporation (PDC)  and Universiti Sains Malaysia . The PDC is a semi-governmental organisation focused on the socio-economic development of residents in the Penang state. University Sains Malaysia is a Penang-based tertiary institution that focuses on scientific education. The report by Mr Bhatt refers to the benefits of the scheme but highlights the use of the scheme by opposition politicians in the country to gain political mileage. Continue Reading »
PRESS RELEASE: Microfinance Information Exchange Adds Features to MIX Market: Customizable Reports, Aggregated Data by Country
MICROCAPITAL.ORG STORY: Exclusive Interview On The Current State Of Microfinance In Malaysia And Challenges Facing The Sector: Observations From The Assistant Governor Of Bank Negara Malaysia
In a recent Microcapital.Org exclusive written interview with the Malaysian central bank, Bank Negara Malaysia , the Assistant Governor Mr Muhammad bin Ibrahim provided the following responses to a series of questions about the current state of microfinance in Malaysia and challenges facing the sector. Previous Microcapital.Org stories on microfinance in Malaysia have been set out in the Bibliography section below  – . Continue Reading »
MICROCAPITAL.ORG PAPER WRAP-UP: Microfinance and Small Deposit Mobilization: Fact or Fiction?, Adrian Gonzalez and Richard Meyer
Written by Adrian Gonzalez and Richard Meyer, published June 2009 in the MIX Market Data Brief No. 2, 20 pages, available at:
This study aims to determine whether or not “deposit-mobilizing microfinance institutions (MFIs) are actually serving small depositors”. This question is answered by determining the ratio of the “Average Deposits per Depositor to Average Loan Balances per Borrower”, with average deposits and average loans balances each expressed as a percentage of gross national income (GNI) per capita in each respective country. The authors assume that smaller average deposits compared to average loan size indicates that a low income clientele is being served. Additionally, taking average deposits and loans as a percentage of per capita income in each country allows for a comparison between countries. Data was taken mostly from 2007. 298 deposit-mobilizing MFIs were used. These MFIs were selected only from countries with at least two MFIs that mobilize deposits, and two that do not. Continue Reading »
NEWS WIRE: United States: Boston Globe Reports “It Looks Like ‘Microlending’ Doesn’t Actually Do Much to Fight Poverty”
MICROFINANCE EVENT: Clinton Global Initiative (CGI) Fifth Annual Meeting September 22-25, 2009, New York City, U.S.
Event Name: Clinton Global Initiative (CGI) Fifth Annual Meeting
Event Date: September 22-25, 2009
Event Location: Sheraton New York Hotel and Towers, New York City, NY, U.S.
MICROCAPITAL.ORG STORY: Venture Capital and Private Equity Firms Invest Millions in India, but is there Risk in Microfinance Funding?
According to Arun Natarajan, CEO of Venture Intelligence (a provider of analysis and information on private equity (PE), Venture Capital (VC) and Mergers and Acquisition deals (M&A) in India), Venture Capital firms invested USD 117 million in over 27 deals in India during the six months ending June 2009 . Microfinance Institutions (MFIs) raised roughly USD 68 million in India from venture capital (VC) and private equity (PE) firms in May through July 2009 . While this increase in capital bodes well for MFIs, it brings forth a necessity for greater level of due diligence. According to Deepti Chauhary of Livemint, (an Indian provider of global, financial and economic headline news), such high cash inflows may bring new risk to MFIs such as over-indebtedness and malpractices in pre-loan disbursal . Does this pose a barrier for MFIs to obtain future funding from outside investors? Continue Reading »
A recent article from LiveMint.com reported that MFIs are now reaching beyond their traditional role of supplying enterprise loans and have begun consumer-lending initiatives.  These new schemes involve offering consumer credits by allowing the poor to buy products such as mobile phones and pay in installments. Since consumer lending does not directly serve to finance the poor’s income-generating endeavors , many have raised skepticism as to whether these strategies fall within scope of MFIs’ roles. Continue Reading »
MICROCAPITAL.ORG STORY: The Scope For Microinsurance And The Importance Of Best Practices: Observations by ACCION International, Zurich Financial Services And Risk Management Solutions Inc.
A recent report by Mr Matthew Brodsky on the Risk and Insurance portal entitled ‘Microinsurance Has Big Upside’  discusses the vast potential of the microinsurance market. Monica Brand, principal director of the Gateway Microfinance Innovation Fund at Boston-based ACCION International , was quoted as stating that microinsurance ‘is taking off in the sense that the commercial insurance is seeing what the commercial banking industry saw … that there’s a huge gap’ in the market. Continue Reading »
MICROCAPITAL.ORG STORY: Cambodian MFIs Cut Interest Rates: Observations From Phnom Penh-Based MFIs Hattha Kaksekar Limited, Prasac MFT Ltd and CHC Limited
A recent report in the Phnom Penh Post  states that microfinance lenders have cut interest rates by 0.2 to 0.5 percent in order to ‘attract customers amid an intensely competitive market’, according to the chairman of the Cambodian Microfinance Association (CMA) . The cut in interest rates comes after Cambodian MFIs were criticised for applying high rates to their clients. Some MFIs stated that these high rates were necessary to cover their costs. According to Mr Hout Ieng Thong who is the CEO of Phnom Penh-based MFI Hattha Kaksekar Limited (Hattha) , the rate cut would not adversely affect the profitability of Cambodian MFIs nor expose them to possible bankruptcies. Mr Hout was quoted as stating that Hattha was not able to reduce rates earlier in the year due to operational costs but that they are now able to do so. Hattha reduced their rates from around 3 percent per month to 2.5 percent. Continue Reading »
MICROCAPITAL.ORG PAPER WRAP-UP: Group versus Individual Liability: Long Term Evidence from Philippine Microcredit Lending, Xavier Giné and Dean Karlan
Written by Xavier Giné and Dean Karlan published May 2009 as a cooperative effort by Financial Access Initiative and Innovations for Poverty Action, 37 pages, available at:
This study, which took place in Caraga, Philippines, used two separate experiments to perform a comparative analysis of the respective merits of a group-liability lending scheme in contrast to an individual-liability one. A group-liability scheme is thought to be a “collateral replacement” in that members put social pressure on each other and even help each other repay if necessary for the reason that no one in the group can receive further loans from the bank if even one person defaults. An individual-liability scheme has no such mechanism, thus making people without collateral, like those in this experiment, seem like credit risks. Continue Reading »