Salil Tripathi, director of policy at the British nonprofit Institute for Human Rights and Business, argues through the “Poverty matters blog” on the website of the UK’s Guardian newspaper that, while recent Reserve Bank of India (RBI) regulation is a positive step for the future of microfinance, the legislation passed by the state government of Andhra Pradesh reflects a monopolistic tendency. Mr Tripathi states that the move by local officials favors its own lending activities through self-help groups (SHGs) while it restricts the role of the private sector. On the other hand, he argues that the regulation suggested by RBI, while reducing choice and access to finance for the poor to a certain extent, is actually intended to protect the interests of the poorest [1].
Category: Interest Rates
MICROCAPITAL BRIEF: SKS Microfinance Announces Interest Rate Slash in India
SKS Microfinance, a for-profit microfinance institution (MFI) in India, has announced a universal cut in “effective” interest rates charged to microfinance borrowers from 26.7 percent to 24.6 percent.
MICROCAPITAL BRIEF: Reserve Bank of India (RBI) Indicates No Interest in Rate Cap, States It Has No Solution For Microfinance Institutions (MFIs) Whose Clients Won’t Repay Their Loans
The Reserve Bank of India (RBI) recently stated that it has no solution for microfinance institutions (MFIs) whose clients refuse to repay their loans amidst the recent turmoil in India’s microfinance industry.
MICROCAPITAL BRIEF: MFTransparency Launches Transparent Pricing Initiative in Rwanda Aiming to Reduce Interest Rates on Microfinance Loans
MFTransparency, a US-based nongovernmental watchdog that focuses on interest rates in the microfinance industry, recently expanded its Transparent Pricing Initiative to Rwanda to educate citizens in that country on interest rates in an effort to impel microfinance institutions (MFIs) in the country to lower microfinance interest rates. Plans for this expansion were announced on this website in October.
MICROCAPITAL BRIEF: Founder of Grameen Bank and Nobel Peace Prize Winner Dr Muhammad Yunus Speaks Out Against the Commercialization of Microfinance Institutions (MFIs)
Dr Muhammad Yunus, founder of Grameen Bank and winner of the Nobel Peace Prize for his work in microcredit, has again spoken out against the commercialization of microfinance institutions (MFIs) and their deviation from the mission of poverty alleviation.
MICROCAPITAL BRIEF: responsAbility Global Microfinance Fund Reopens for Subscription
responsAbility Global Microfinance Fund, a microfinance investment vehicle (MIV) operated by Swiss-based social investment company responsAbility Social Investments AG, announced that it would resume the acceptance of applications for shares.
MICROCAPITAL BRIEF: Microfinance Dominates Shariah Lending in Indonesia, Commercial Banks Take Notice
The market for Shariah loans, those that are in compliance with Islamic law, has reportedly been dominated by microloans, prompting several of Indonesia’s commercial banks to focus on offering the small loans in underserved areas.
MICROCAPITAL BRIEF: Bangladesh Microcredit Regulatory Authority (MRA) to Restrict Fees, Cap Microloan Interest Rates at 27%, Discourage Flat Interest Rates
Bangladesh’s Microcredit Regulatory Authority (MRA) has enacted a new regulation capping microfinance institution (MFI) loan rates at 27 percent per year as of July 2011.
MICROCAPITAL BRIEF: Under Pressure from State Government of Andhra Pradesh, Indian Microfinance Institutions Agree to Cap Interest Rates at 24%
Several major microfinance institutions (MFIs) in the Indian state of Andhra Pradesh have agreed to cap interest rates at 24 percent per year after a series of politically-triggered freezes on bank lending to MFIs that followed an uproar regarding debt collector harassment that was linked to a number borrower suicides.
MICROCAPITAL BRIEF: Five Indian Microfinance Institutions (MFIs) Agree to Cut Interest Rates to 24%
The CEOs of Indian microfinance institutions (MFIs) SKS Microfinance, BASIX, Spandana, Share Microfin and Asmitha Microfin have agreed to reduce interest rates charged to borrowers to 24 percent on an annual basis. The announcement came after a meeting with financial services secretary, Mr R Gopalan.
MICROCAPITAL BRIEF: CEO of Indian Microfinance Institution BASIX Denies Charging Interest Rates of More than 24%
Sajeev Viswanathan, CEO of Indian group BASIX, which provides microfinance services through its microfinance institution (MFI) Bhartiya Samruddhi Finance Limited (BSFL), was recently interviewed by CNBC India, at which time he denied that BSFL charges interest rates as high as 60 percent on microloans.
MICROCAPITAL BRIEF: SKS Microfinance Lowers Interest Rates in Andhra Pradesh to 24.55%
SKS Microfinance, a publicly traded microfinance institution (MFI) based in India, recently announced that it will lower interest rates to for new borrowers borrowers in the state of Andhra Pradesh from 26.69 percent to 24.55 percent.
MICROCAPITAL BRIEF: Indian Microfinance Institutions (MFIs) in Andhra Pradesh Offer Debt Restructuring
Microfinance institutions (MFIs) in Andhra Pradesh, India, are offering many of their estimated 6.7 million borrowers the option of restructuring their outstanding loans in an effort to defuse recent popular and political hostility towards microfinance in the area.
MICROCAPITAL BRIEF: Indian Microfinance Institution Equitas Securitizes $22m in Loans, Arranged by IFMR Capital, Subscribed to by IFMR Capital, UTI Mutual Fund, HDFC Bank and Reliance Capital
Microfinance institution (MFI) Equitas Microfinance India Private Limited has announced that it has securitized loans totaling INR 1 billion (USD 22 million).
MICROCAPITAL BRIEF: Social Investment Company responsAbility Invests $5.5m in Microfinance Institutions (MFIs) Prasac of Cambodia and Credit Mongol of Mongolia
responsAbility Social Investments AG (responsAbility), an investment manager founded in 2003 in Switzerland, reported to MicroCapital that it recently made five debt investments totaling USD 5.5 million in microfinance institutions (MFIs) Prasac of Cambodia and Credit Mongol of Mongolia.
MICROCAPITAL BRIEF: Microfinance Investment Vehicle European Fund for Southeast Europe Makes Investments Totaling $17m in Banka Kombetare Tregtare of Albania
The European Fund for Southeast Europe (EFSE), a microfinance investment vehicle (MIV), has announced to MicroCapital that it made two debt investments in Banka Kombetare Tregtare (BKT) ShA (Joint Stock Company), a private commercial bank in Albania, in September 2010.
MICROCAPITAL BRIEF: Social Investment Company responsAbility Makes Debt Investments Totaling $2.8m in Microfinance Institutions (MFIs) Pearl Microfinance Limited of Uganda and fondiBESA of Albania
responsAbility Social Investments AG (responsAbility), a social investment company founded in 2003 in Switzerland, reported to MicroCapital that it made two debt investments during the month of September totaling EUR 1 million (USD 1.3 million) in microfinance institution (MFI) fondiBESA of Albania and a third debt investment of USD 1.5 million in Pearl Microfinance Limited of Uganda.
MICROCAPITAL BRIEF: Indian Microfinance Institution Sanchetna Financial Services Lowers Interest Rate on Samridhi Loan Product from 15% to 12.5% with a 45-Week Term
Sanchetna Financial Services, a Lucknow-based microfinance institution, recently announced that it will lower interest rates on its flagship loan product, Samridhi, from a flat interest rate of 15 percent over 46 weeks to 12.5 percent over 45 weeks.