MICROFINANCE PUBLICATION ROUND-UP: Financial Behavior in Latin America; Microfinance Reporting Technology; Evaluation of India’s Kshetriya Gramin Financial Services (KGFS)

“The Financial Behavior of Rural Residents: Findings from Five Latin American Countries;” by Jacqueline Urquizo; published by Accion; March 2012; 45 pages; available at: http://centerforfinancialinclusionblog.files.wordpress.com/2012/03/the-financial-behavior-of-rural-residents_march-2012.pdf

This document is a summary of the results of research from the years 2009 and 2010 intended to learn about the financial behavior of rural residents who had the potential to become clients of microfinance institutions partnering with Accion in Colombia, Dominican Republic, Ecuador, Nicaragua and Peru. The study found that working capital credit and savings are the best known and most used financial services. While 80 percent of study participants knew about these services, 40 percent used them. Products that are least known about and used are debit cards, consumer credit and life insurance. Approximately half of respondents had some form of savings, which was meant to be used for emergencies. However, the study shows that business investments are often made from emergency savings. Between 50 percent and 70 percent of respondents in each country borrow money, with the most common form being individual credit. Many respondents expressed dissatisfaction with credit and a desire for more financial training.

“Information Overload: Can Technology Address MFIs’ Reporting Burden?” by Blaine Stephens; Published by Microfinance Information Exchange; April 2012; available at: http://www.themix.org/publications/microbanking-bulletin/2012/04/technology-address-MFI-reporting-burden#ixzz1saZGb6PA

This publication summarizes the findings of a study undertaken to understand data reporting by microfinance institutions (MFIs). The study found that MFIs must report under various formats, making reporting a tedious process. The study also shows an overlap in the data being requested of MFIs, which covers approximately 100 variables. Study respondents in Africa prepared approximately 40 reports each year, spending 60 days filling in forms. The publication recommends the creation of a technology such as the “common application,” which allows students to apply to many universities with one application, or online tax preparation software that allows a tax filer to enter each piece of information once. According to the author, this type of technology could help MFIs to respond to report requests much more efficiently than can be done at present.

“The Pursuit of Complete Financial Inclusion: The KGFS Model in India;” by Bindu Ananth, Gregory Chen, and Stephen Rasmussen; published by CGAP (Consultative Group to Assist the Poor); May 2012; 20 pages; available at: http://www.cgap.org/gm/document-1.9.57523/Forum4.pdf

This report examines the Kshetriya Gramin Financial Services (KGFS) model, a network of financial institutions that provide a range of financial products to rural households in India. The document explains KGFS’s three main principles: (1) complete coverage of the population in a focused geographic area; (2) customized client wealth management services; and (3) client access to a broad range of products. At the time of publication there are five KGFS institutions that collectively have 110 branches and a loan portfolio of USD 10 million. Some branches have become profitable, but none of the five institutions has broken even on a consolidated basis. Client response shows approximately 50 percent of the population enroll within the first 18 months of branch opening. Of those enrolled, approximately 60 percent use insurance services and approximately 55 percent access loan products.

By Charlotte Newman, Research Associate

About Accion
Accion is a private, US-based nonprofit organization with the mission of alleviating poverty by providing financial products such as microenterprise loans and business training. Accion was founded in 1961 and issued its first microloan in 1973 in Brazil. Accion’s partner microfinance institutions provide loans to men and women entrepreneurs in 22 countries in Latin America, Asia, Africa and the United States. As of 2010, Accion’s network serves 3.18 million active clients and has an active loan portfolio of USD 3.81 billion.

About Microfinance Information Exchange
The Microfinance Information Exchange (MIX) is a US-based nonprofit provider of performance data and analysis on microfinance institutions (MFIs), funders, networks and service providers dedicated to serving the financial needs of low-income clients. The mission of MIX is to strengthen the microfinance sector and financial inclusion in general by promoting transparency. The organization’s MIX Market website offers access to financial and social performance information covering approximately 2,000 MFIs. MIX publications include the MicroBanking Bulletin and MIX Microfinance World, which feature periodic research and data analysis. Incorporated in 2002, MIX is headquartered in Washington, DC, with regional offices in Azerbaijan, India, Morocco and Peru. Its supporters include the Bill & Melinda Gates Foundation, CGAP (Consultative Group to Assist the Poor), Omidyar Network, The MasterCard Foundation, the UN’s International Fund for Agricultural Development, the Michael & Susan Dell Foundation, Citi Foundation, Ford Foundation and Deutsche Bank.

About CGAP (Consultative Group to Assist the Poor)
CGAP (Consultative Group to Assist the Poor) is a US-based nonprofit policy and research center dedicated to providing financial access to poor people worldwide. CGAP is supported by approximately 30 development agencies and private foundations. Its mission is to provide market intelligence, to promote standards and to offer advisory services to governments, microfinance providers, donors and investors. CGAP reports taking in USD 20.9 million in total revenue for fiscal year 2010.

Sources and Additional Resources:

“The Financial Behavior of Rural Residents: Findings from Five Latin American Countries,” http://centerforfinancialinclusionblog.files.wordpress.com/2012/03/the-financial-behavior-of-rural-residents_march-2012.pdf

“Information Overload: Can Technology Address MFIs’ Reporting Burden?” http://www.themix.org/publications/microbanking-bulletin/2012/04/technology-address-MFI-reporting-burden#ixzz1saZGb6PA

“The Pursuit of Complete Financial Inclusion: The KGFS Model in India,” http://www.cgap.org/gm/document-1.9.57523/Forum4.pdf

MicroCapital.org story, April 27, 2012, “MICROFINANCE PUBLICATION ROUND-UP: Disclosure Regimes for Responsible Financial Inclusion; The Thailand Village and Urban Revolving Fund; ‘Microsavings Works Much Better’,” https://www.microcapital.org/microfinance-publication-round-up-disclosure-regimes-for-responsible-financial-inclusion-the-thailand-village-and-urban-revolving-fund-microsavings-works-much-better/

MicroCapital Universe Profile: Accion
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Accion

MicroCapital Universe Profile: Microfinance Information Exchange
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Microfinance+Information+Exchange+%28MIX%29

MicroCapital Universe Profile: CGAP
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=CGAP+%28Consultative+Group+to+Assist+the+Poor%29

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