PAPER WRAP-UP: Accelerating Rural Financing Process by Banks in India, Need for Creating Enabling Environment

Written by Dr. Amrit Patel, consultant to the World Bank and the International Fund for Agricultural Development (IFAD), and Dr. Gopal Kalkoti, economic consultant for the All India Association of Educational Research (AIAER),  this nine-page study of the Indian rural microfinance sector was released in November 2007. Based on government surveys conducted over the past two decades, the publication evaluates the current state of rural finance in India and suggests improvement measures. Available at: http://microfinancegateway.org/content/article/detail/39605/

The two major factors affecting the success of Rural Finance Institutions (RFIs) are the lack of efficient, low-cost operational solutions and India’s overall weak agricultural infrastructure. Continue reading

MICROCAPITAL STORY: SKS Microfinance Raises $37 Million in Equity Sale

SKS Microfinance of Hyderabad, India, recently raised 147 Crore Rupees, the equivalent of over USD 37 million, through its third round of equity sales in recent months. Investors include Silicon Valley Bank (SVB) of California, Columbia Pacific, Sequoia Capital of California, Vinod Khosala of California, and Odyssey Capital. Continue reading

PAPER WRAP-UP: MIX Microfinance Information Exchange: Benchmarking African Microfinance 2006

Written by Anne-Lucie Lafourcade, and based on research conducted by the MIX: Microfinance Information Exchange on 119 African institutions from 24 countries. This report was released in November 2007 as a 12-page publication of MIX Microfinance Information Exchange Inc. available here.

The growth in microfinance in Africa was inconsistent in 2006 with some regions experiencing dramatic growth in credit while others experienced decline. Kenya experienced the highest growth in credit clientele with an average loan portfolio increase of fifty percent. MFIs in Southern Africa experienced a 59 percent growth in their loan portfolio due to an increase in loan sizes and expansion of services in urban areas. Benin experienced the most declines, with a loss of thirty thousand loan clients in twelve months. Continue reading

MICROCAPITAL STORY: International Financial Corporation (IFC), a Member of the World Bank Group, Supports Creation of Banco Popular Covelo (Bancovelo), a Microfinance Institution in Honduras

In a press release, the International Finance Corporation (IFC), a member of the World Bank Group, announced that it has completed a package to provide up to USD 2 million (11.8 percent of total new capital) of financing and over USD 400,000 of advisory services to create Banco Popular Covelo (Bancovelo), a microfinance institution (MFI) in Honduras. The announcement of the package last year, enabled Bancovelo, the creation of a 2007 merger of Grupo Microfinanciero Covelo’s (GMC’s) Popular Covelo, and its two sister organizations, Fundacion Covelo and Popular Asociacion de Ahorro y Prestamo AAP, to receive its banking license in December of 2007. Other funders and advisers of the newly created bank include ACCION International, the Belgian Investment Company for Developing Countries (BIO), the Netherlands Development Finance Company (FMO) and Banco Centroamericano de Integracion Economica (CABEI), all with equal equity shares of 11.8 percent. Continue reading

MICROCAPITAL STORY: Governor Segun Oni of Ekiti State, Nigeria Announces Microfinance Plans

At a recent stakeholders’ meeting, Governor Segun Oni of the state of Ekiti, Nigeria made several announcements pertaining to the development of the microfinance sector in the state. He disclosed that by next month, an Economic Team would be established in all sixteen local governments of the state to manage a new micro-credit fund. The fund will be comprised of a state government contribution of N50 million (USD 424,502) and local council contributions of N10 to N25 million (USD 84,900 to USD 212,251). It will be used to “develop the economic strategies of each of the local government areas”. Members of the Economic Team will be nominated by traditional rulers and will serve as volunteer servants of their community. Continue reading

MICROCAPITAL STORY: Indian Finance Minister Chidambaram to Inaugurate Microfinance Self-Help Initiative: Janasree Sustainable Development Mission

The Janasree Sustainable Development Mission, a non-governmental self-help initiative promoting small and micro-enterprises (SMEs) in India, will be officially inaugurated by Indian Finance Minister Palaniappan Chidambaram on February 2, 2008 at the Janasree Microfinance Summit. Continue reading

PRESS RELEASE: African Development Bank (AfDB) Approves $1.1m Equity Investment in Microfinance Institution Advans Bank Congo (ABC)

Micro-enterprises and SMEs in the Democratic Republic of Congo will benefit from an equity investment of USD 1.1 million in Advans Bank of Congo and a technical assistance grant of EUR 650,000 (USD 970,000), approved by the Board of Directors of the African Development Bank. Continue reading

MICROCAPITAL STORY: CGAP Releases Notes on Regulation of Branchless Banking in India

CGAP has partnered with the UK Department for International Development (DFID) and the GSM Association, a global trade association representing over 700 mobile phone operators from 218 countries, to conduct diagnostic reviews of the regulatory environment for branchless banking approaches in Pakistan, Kenya, South Africa, the Philippines, India, Russia and Brazil. The report on India, summarized here, was released this month. MicroCapital covered the release of the Kenya report in a story dated November 26. 2007, and the Pakistan report can be downloaded from CGAP. Continue reading

PAPER WRAP-UP: Foreign Exchange Rate Risk in Microfinance: What Is It And How Can It Be Managed?, A Focus Note by the Consultative Group to Assist the Poor (CGAP)

Published by CGAP, January 2006, 16 pages, available for viewing here.

Because most microfinance institutions operate in developing countries where risk of currency depreciation is high and debt restructuring occurs periodically, they are particularly vulnerable to foreign exchange rate risk. A recent CGAP survey not only revealed that 50 percent of MFIs have no protection mechanisms in place, but also indicated a general lack of understanding of both foreign exchange risk and the extent to which MFIs are exposed. This paper seeks to raise awareness of the issue of foreign exchange rate risk within the microfinance sector first, by providing a brief overview of the different components of risk, second, by looking at current techniques employed by microfinance institutions (MFIs) and investors to manage these risks, and finally, by making recommendations on mitigating or avoiding exposure to exchange risk. Continue reading

MICROCAPITAL STORY: Standard Chartered of England, and China Foundation for Poverty Alleviation (CFPA) of China, Sign Loan and Co—Operation Agreements to Provide Microfinance Loan Facilities in China

In a press release, Standard Chartered’s China division announced that they will provide the China Foundation for Poverty Alleviation (CFPA), a China-based non-profit organization, with a local currency loan facility of 20 million Yuan, equivalent to over 2.75 million USD. According to the press release, this credit will be used to “finance the Microfinance projects aiming to provide financial support to farmers and owners of micro-enterprises in ten counties of seven provinces in China…” This will be the first loan facility by an international bank to a Microfinance Institution (MFI) in China. Continue reading