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Monday, September 21, 2009

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 [1]. Microfinance Institutions (MFIs) raised roughly USD 68 million in India from venture capital (VC) and private equity (PE) firms in May through July 2009 [2]. 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 [2].  Does this pose a barrier for MFIs to obtain future funding from outside investors? Continue Reading »

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Monday, September 21, 2009

PRESS RELEASE: CGAP Releases Focus Note: AML/CFT: Strengthening Financial Inclusion and Integrity

Source: CGAP. Continue Reading »

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Friday, September 18, 2009

MICROCAPITAL.ORG STORY: Varying Views on Microfinance Institutions’ Expansion into Consumer Lending

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. [1] 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 [5], many have raised skepticism as to whether these strategies fall within scope of MFIs’ roles. Continue Reading »

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Wednesday, September 16, 2009

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’ [1] discusses the vast potential of the microinsurance market. Monica Brand, principal director of the Gateway Microfinance Innovation Fund at Boston-based ACCION International [2], 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 »

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Tuesday, September 15, 2009

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 [1] 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) [2]. 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) [3], 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 »

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Tuesday, September 15, 2009

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:
http://financialaccess.org/sites/default/files/GroupversusIndividualLend…
and
http://poverty-action.org/sites/default/files/GroupversusIndividualLendi…

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 »

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Thursday, September 10, 2009

NEWS WIRE: Japan: Music Securities to Accept Retail Investments in Cambodian Microfinance

Source: Breitbart. Continue Reading »

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Wednesday, September 9, 2009

MICROFINANCE EVENT: Financial Analysis for Microfinance Institutions organized by The Microfinance Association; December 7-11, 2009 in Canary Wharf, London

MICROFINANCE EVENT: Financial Analysis for Microfinance Institutions organized by The Microfinance Association; December 7-11, 2009 in Canary Wharf, London.

Event Name: Financial Analysis for Microfinance Institutions

Event Description: This is a one week residential training course hosted by The Microfinance Association on strategic management in microfinance.

See Our Comprehensive Event Calendar Here: http://microfinanceassociation.ning.com/events Continue Reading »

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Wednesday, September 9, 2009

PRESS RELEASE: Microfinance Information Exchange (MIX) Asks: Are Microfinance Institutions Serving Smaller Savers?

Source: Microfinance Information Exchange. Continue Reading »

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Tuesday, September 8, 2009

MICROCAPITAL.ORG PAPER WRAP-UP: Expanding Microenterprise Credit Access: Using Randomized Supply Decisions to Estimate the Impacts in Manila, Dean Karlan and Jonathan Zinman

Written by Dean Karlan and Jonathan Zinman published July 2009 as a cooperative effort by Financial Access Initiative and Innovations for Poverty Action, 33 pages, available at:
http://financialaccess.org/sites/default/files/Expanding%20Credit%20Access%20Manila.pdf
and
http://poverty-action.org/sites/default/files/expandingaccess_manila_jul09.pdf

This paper examines the effect of the extension of micro credit in Manila, Phillipines. The people who received loans, or the treatment group, were selected randomly from a group of first-time applicants deemed “marginally creditworthy” based on personal financial data. Those not randomly selected, the control group, did not receive loans. Loans ranged from 5,000 to 25,000 Philippines Pesos (PHP), the equivalent of over USD 100 to over USD 500, and were of individual-liability. The survey took place at the end of one year, and referenced the month just prior. Continue Reading »

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Tuesday, September 8, 2009

MICROCAPITAL.ORG STORY: India-Based IFMR Trust ‘Debunks’ Myths About The Poor And Financial Services In The Wall Street Journal

In an article entitled ‘Debunking Myths About The Poor And Financial Services’ in the Wall Street Journal [1], Mr Suyash Rai, a Senior Manager with IFMR Trust [2], and Ms Sona Varma, Senior Advisor with IFMR Trust, attempt to address what they perceive to be ‘a number of popularly held misconceptions about role of finance in the lives of the poor’. IFMR Trust is a private trust with the mission of ensuring complete access to financial services for individuals and enterprises in India. It does not supply data to the MIX Market portal, an online database that houses financial and other information on MFIs around the world [11]. Continue Reading »

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Monday, September 7, 2009

MICROCAPITAL.ORG STORY: Not Just Microfinance for Rural Borrowers But Market Literacy: Observations From India In The Wall Street Journal

A recent report on the Wall Street Journal entitled ‘Market Literacy: A Key to Unleashing Rural Consumption and Entrepreneurship’ [1] by Professor Madhu Viswanathan, a Professor at the Department of Business Administration, College of Business, University of Illinois, and Mr Srinivas Sridharan, an Assistant Professor at the Richard Ivey School of Business, University of Western Ontario, Canada, observes that ‘marketplace literacy’ is a crucial tool that can be employed to help the rural poor. In addition to facilitating access to markets and the provision of microcredit facilities, which both authors acknowledged were important, market literacy is stated to be a useful technique that will help the poor ‘overcome the debilitating effects of low literacy and rigid social hierarchies’. The report goes on to explain what constitutes ‘market literacy’ and how it can be used in conjunction with microfinance to help the rural poor ‘confidently pursue economic progress’. Continue Reading »

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Friday, September 4, 2009

MICROCAPITAL.ORG STORY: Caribbean MFI Map Financial Group Reports Increase In Microfinance Demand As A Result Of Declining Remittances From The US

It was recently reported [1] on the Reuters news wire that the sustained deterioration in the US economy has had adverse effects on remittances from the country back to the Caribbean. The report refers to research undertaken by the Caribbean MFI, Map Financial Group [2]. According to Map, remittances from American family members to relatives in the Caribbean islands have fallen by approximately 9 percent and this has had a severe impact on a region already suffering from declining tourism revenues and commodity prices. Remittances are stated to be among the top five sources of income for Caribbean residents. Continue Reading »

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Wednesday, September 2, 2009

MICROCAPITAL.ORG STORY: Social Fund For Development and UNDP Meet To Establish Microfinance Network In Yemen

It was recently reported in the Yemen Observer [1] that a microfinance network or trade association will be established in Yemen with a view to promoting best practices, good governance and accountability in the country’s growing microfinance sector. A meeting was held by the Social Fund for Development (SFD) [2] and the United Nation Development Program (UNDP) [3] to select the board of directors for the network and to deal with preliminary matters. The report in the Yemen Observer stated that the establishment of a microfinance network is ’an integral part of the national strategy to develop the microfinance industry’ in Yemen and that the network will focus on providing the technical assistance, increasing the abilities of MFI officers as well as setting up and supporting a centre for exchanging information, experiences and techniques within the Yemeni microfinance industry. Continue Reading »

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Monday, August 31, 2009

MICROCAPITAL.ORG STORY: The Importance Of Taking Deposits And A Return To Community Based Microfinance? Views From The Gates Foundation, Grameen Bank And Oxfam America In Time Magazine

In an article entitled ‘The Next Step for Microfinance: Taking Deposits’ in a recent issue of Time magazine [1], writer Ms Barbara Kiviat highlights the importance of deposit taking in the field of microfinance or what has been referred to by some development experts as the “forgotten half of rural finance.” Ms Kiviat, a staff writer for Time magazine, reiterates the point that whilst microloans are important, the service that a lot of the poor need ‘more than business loans, is a safe place to save their money’. Continue Reading »

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Monday, August 31, 2009

MICROCAPITAL.ORG STORY: Article in US Banker Magazine Refers To Microfinance Banana Skins Report 2009 And Analyses The Impact Of Global Financial Crisis On Microfinance Sector Based On Observations By Citi Microfinance, CGAP And ShoreBank International Ltd.

A recent article in the US Banker journal [1] sets out some observations about the much discussed topic of the impact of the global financial crisis on the microfinance sector. Reporter Mr Joseph Rosta makes references to the ‘Microfinance Banana Skins 2009′ [2], a publication by British-based think tank CFSI [3] that measures the risks facing the microfinance sector, and reiterates the view held by some market participants that the sector ‘could face a fall in growth and funding because of the global recession and declining investor confidence’. The survey, which forms the basis of the Banana Skins 2009 report, is based on interviews with more than 400 microfinance lenders, investors, regulators and analysts in 82 countries. The report states that of the top 10 risks now facing the microfinance sector, nine are directly or indirectly related to the economic meltdown, including the two biggest: credit risk and liquidity. Continue Reading »

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Monday, August 31, 2009

MICROCAPITAL.ORG STORY: CGAP Blogger Analyses Ongoing Problem Of Poor Repayment And Multiple Lending By Microfinance Institutions In Indian State Of Karnataka

In a CGAP blog entitled ‘Multiple borrowing or multiple lending – who is to blame for debt fatigue?’ [1] Mr N Srinivasan explores the microloan repayment problem that has affected some districts in the Indian state of Karnataka. The issue has been covered in a previous article on the Wall Street Journal, which became of the subject of a recent Microcapital.Org Story [2]. Continue Reading »

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Monday, August 31, 2009

MICROCAPITAL.ORG STORY: State Bank Of Pakistan Amends Prudential Regulations Applicable To Microfinance Banks to Remove ‘Regulatory Bottlenecks’, Cap Microloan Sizes And Reduce The Risk Of Borrower Over-Indebtedness

It was recently reported that the State Bank of Pakistan (SBP) [1] has amended the Prudential Regulations applicable to Microfinance Banks (MFBs). According to a report posted on the website of the Dawn Media Group [2], the amendments are intended to remove ‘regulatory bottlenecks’ which have been brought to the attention of SBP by the microfinance community in Pakistan recently. Continue Reading »

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