In an effort to broaden access to microfinance and encourage lending by private banks, the Brazilian government is expanding its National Program of Oriented Productive Microcredit (PNMPO in Portuguese), an initiative through which the government provides funding to microfinance institutions (MFIs) and other financial service providers for on-lending to small businesses and microentrepreneurs.
Category: Interest Rates
MICROCAPITAL BRIEF: MFTransparency Announces First Microfinance Data Submissions for Transparent Pricing Initiative in the Philippines
MFTransparency, a US-based nongovernmental organization (NGO) that collects and publishes information on microcredit products and pricing, recently received the first data submissions from Filipino microfinance institutions (MFIs) that are participating in its “Transparent Pricing Initiative.”
MICROCAPITAL BRIEF: Association of Microfinance Institutions in Rwanda (AMIR) Cautions Microfinance Institutions (MFIs) Against “One-Size-Fits-All” Approach, Particularly in Rural Areas
The Association of Microfinance Institutions in Rwanda (AMIR), an 84-member organization that was established in 2007 to build the capacity of the microfinance industry in Rwanda, has cautioned microfinance institutions (MFIs) in Rwanda regarding the risks of offering the same financial products to all clients.
MICROCAPITAL BRIEF: Myanmar’s (Burma’s) Banned Opposition Party, National League for Democracy (NLD) to Launch Microfinance Program
The National League for Democracy (NLD), a banned political opposition party in Myanmar (formerly known as Burma), is reported to be planning the launch of a microcredit program to provide small, interest-free-loans in South Okkalapa Township of Burma’s capital city, Rangoon.
MICROCAPITAL BRIEF: Journalist Lewis Mwanangombe Argues Microfinance Institutions, Banks Fail to Provide Adequate Financial Services in Zambia
A recent article published by Inter Press Service (IPS), an Italy-based global news agency, written by Lewis Mwanangombe, a Zambian journalist who writes for the Associated Press and the Pan-African News Agency, highlights the limited availability of financial services in Zambia. Referencing a World Bank report, Mr Mwanangombe points out, “less than eight percent of Zambian adults have bank accounts. For the millions who make their living in the informal economy, this prevents them from earning interest on any savings they have or securing credit needed to expand small businesses beyond mere survival” [1].
MICROCAPITAL BRIEF: MFTransparency Launches Microfinance Transparent Pricing Initiative in Guinea Bissau, Tanzania
MFTransparency, a US-based nongovernmental organization that provides information on credit products and pricing, recently announced plans to expand its Transparent Pricing Initiative to Guinea Bissau and Tanzania with the objective of collecting and publishing pricing data for microfinance products offered in each country and providing training on financial literacy for microfinance clients.
MICROCAPITAL BRIEF: CGAP (Consultative Group to Assist the Poor) Microfinance Blog Explores Impact of Tunisian Revolution on Microfinance Regulation
The CGAP Microfinance Blog, which is operated by US-based think tank CGAP (Consultative Group to Assist the Poor), recently posted an article by Mohammed Khaled, CGAP representative for the Middle East-North Africa Region, that explores the impact of the recent leadership change in Tunisia on microfinance regulation in the country.
MICROCAPITAL BRIEF: Small Industries Development Bank of India (SIDBI) Chairman Sushil Munhot Discusses Financing Small- and Medium-Sized Enterprises (SMEs), Hold On New Lending to Microfinance Institutions (MFIs)
Mr Sushil Munhot, chairman and managing director of the government-owned Small Industries Development Bank of India (SIDBI), recently argued in an interview with Indian newspaper The Economic Times that SIDBI complements commercial banks while also offering the added value of providing equity funding to small- and medium-sized enterprises (SMEs).
MICROCAPITAL BRIEF: Reserve Bank of India (RBI) Enacts Most of Microfinance Guidelines Proposed by Malegam Committee
The Reserve Bank of India (RBI), India’s central banking authority, recently announced that it has accepted – with some modifications – the framework of recommendations issued by the Malegam Committee for the country’s microfinance industry.
MICROCAPITAL BRIEF: MFTransparency Updates Pricing Data for Cambodia’s Microfinance Industry
MFTransparency, a US-based nongovernmental organization (NGO) that provides information on credit products and pricing, has published updated pricing data for Cambodia. The updated data builds on the original data published in 2009 as part of its collection of international microloan product pricing data.
MICROCAPITAL BRIEF: Representatives of Cambridge, Care, Center for Global Development, SKS Microfinance Discuss “Does Microfinance Help People Escape Poverty?”
Associate director Ms Madeleine Bunting of British newspaper The Guardian recently facilitated a discussion to address the question of whether microfinance helps reduce poverty with Mr Ha-Joon Chang, Cambridge University economist; Mr Ajaz Khan, microfinance advisor for Swiss nonprofit organization Care International; Mr David Roodman, senior fellow at US-based, nonprofit think tank Center for Global Development; and Mr Vikram Akula, chairperson and founder of Indian microfinance institution (MFI) SKS Microfinance [1].
MICROCAPITAL BRIEF: Nigerian Microfinance Institutions (MFIs) Continue to Require Collateral, Other Conditions for Loans; Lift Above Poverty Organisation (LAPO) to Cut Interest Rates
Most Nigerian microfinance institutions (MFIs) reportedly continue to place conditions on borrowers who are seeking to take out loans, despite the stated policy of the Central Bank of Nigeria (CBN) to de-emphasize such requirements.
MICROCAPITAL BRIEF: Indian Banks Collaborate on Restructuring Loans to Microfinance Institutions (MFIs), SKS Opts Out
Indian banks that have disbursed loans to microfinance institutions (MFIs) have reportedly prepared a blueprint for restructuring these loans. Under the proposal, Indian microfinance institutions (MFIs) would be given a maximum of ten years to repay loans to financial institutions at an interest rate of 12 percent. The loans that would be restructured under the proposal are estimated to total INR 130 billion (USD 2.8 billion) [1].
MICROCAPITAL BRIEF: Microfinance Information Exchange (MIX) Updates Review of Yunus’s Classification of Interest Rates, Argues Against Interest Rate Caps
The US-based nonprofit data provider Microfinance Information Exchange (MIX) recently published an updated review of the methodology for categorizing microcredit interest rates proposed by Nobel laureate Dr Muhammad Yunus in his book “Creating a World Without Poverty”. The review, which uses 2009 data from approximately 1,020 microfinance institutions (MFIs) covering approximately 88 million borrowers, updates the findings of the previous review presented by MIX that uses 2008 data.
MICROCAPITAL BRIEF: India’s Andhra Pradesh State to Tighten Local Microfinance Institutions (Regulation of Moneylending) Act
The government of the Indian State of Andhra Pradesh reportedly is set to alter the Andhra Pradesh Microfinance Institutions (Regulation of Moneylending) Act, which was enacted December 2010 in response to complaints of high interest rates and coercive loan recovery, by replacing the term “self-help group (SHG) women” with “below poverty line (BPL) households” [1] [2]. According to unspecified sources at the Andhra Pradesh Chief Minister’s Office, the purpose of the replacement is “to ensure that MFIs adhere to the existing stringent rules” by “bringing all kinds of MFI loan products, existing and future, under the purview of the Act [1].”
MICROCAPITAL BRIEF: Vikram Akula of SKS Microfinance Views Recommendations of Reserve Bank of India (RBI) Malegam Committee as Boost to Microfinance
Vikram Akula, chairman of SKS Microfinance, a for-profit microfinance institution (MFI) in India, has stated that the recommendations released by the “Malegam Committee” of the Reserve Bank of India (RBI) in response to unrest in microfinance in the Indian state of Andhra Pradesh, would give a boost to the microfinance sector by further encouraging bank lending to MFIs. Mr Akula also stated that the proposed microloan interest rate cap of 24 percent would not impact SKS Microfinance as its lending rate falls below the cap, but that it would impact smaller institutions that are yet to achieve efficiencies of scale. He viewed this recommendation as a measure to encourage consolidation within the sector.
MICROCAPITAL BRIEF: Indian Microfinance Leaders Comment on $250m Asian Development Bank (ADB) Guarantee Initiative for Asia and the Pacific
Representatives of the Indian microfinance industry recently commented on the likely impact of the USD 250 million Asian Development Bank (ADB) initiative that will offer guarantee facilities to banks that loan to microlenders in the Asia-Pacific region, as was covered by MicroCapital.org on December 22, 2010 [2].
MICROCAPITAL BRIEF: Malegam Committee Report on Microfinance Regulation in India Fails to Meet Expectations, Argues Sriram
On the website “livemint.com”, an Indian partner of the US-based Wall Street Journal, independent researcher MS Sriram presented his evaluation of the recommendations issued in response to the crisis in the microfinance sector in Andhra Pradesh by the Malegam Committee of the Reserve Bank of India (RBI). While he argues that the report has some positive aspects, he states that it largely fails to deliver.