In recent articles published on the websites of newspapers The Guardian of the UK and The Wall Street Journal of the US, journalists, academics and practitioners express concerns about various topics in the microfinance sector including social performance measurement, commercialization and changing methodologies.
Category: Regulation
MICROCAPITAL BRIEF: Indian Microfinance Institutions (MFIs) May Become Business Correspondents (BCs) for Commercial Banks
Indian microfinance institutions (MFIs), which have seen a downturn in business and portfolio quality since the Andhra Pradesh crisis that began in late 2010, are considering a business model that would make them intermediaries between commercial banks and poor people in rural areas.
MICROCAPITAL BRIEF: Myanmar Plans Microfinance Expansion in Rural Communities
Myanmar President Thein Sein’s public endorsement in May 2011 for the development of a microfinance sector in the country has triggered interest among aid workers and those already involved in the country’s sprouting microfinance sector.
MICROCAPITAL BRIEF: Central Bank of Nigeria (CBN) Looking to Set New Capital Base Requirements for Microfinance Banks (MFBs)
The Central Bank of Nigeria (CBN), Nigeria’s central banking authority, reportedly plans to announce new capital base minimums for microfinance banks (MFBs) by the end of June. A new capital requirement is expected to be established for those operating at the national level at NGN 2 billion (USD 12.8 million); the minimum for those at the regional level will decrease to NGN 100 million (USD 640,000) from NGN 1 billion (USD 6.4 million); and the minimum for those at the rural level, with one branch, will remain unchanged at NGN 20 million (USD 128,000).
MICROCAPITAL BRIEF: Bangko Sentral ng Pilipinas (BSP) Places New Restrictions on Lending to Related Parties by “Microfinance-Oriented Banks” in the Philippines
Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, has imposed a conflict-of-interest restriction on 18 thrift and rural banks that have added microfinance operations through affiliated nongovernmental organizations (NGOs) and foundations in an effort to limit the credit available to directors, owners, stockholders and related interests (DOSRIs).
MICROCAPITAL BRIEF: Government of Ghana Budgets $10m to Support Ghana Interbank Payment and Settlement System (GHIPSS) to Reach Rural Customers Through “E-Zwich” Biometric Identification System
The government of Ghana has budgeted EUR 7.5 million (USD 10.6 million) to support the Ghana Interbank Payment and Settlement System (GHIPSS) in an effort to ensure high-quality delivery of financial services and to better serve the under-banked population of Ghana. Ghana’s Finance Minister, Dr Kwabena Duffuor, has been quoted as stating “the funds would allow GHIPSS to implement a countrywide biometric system as well as undertake a rural banking project that uses the National Switch and Smart card payment system, branded as e-zwich…This technology will permit offline transaction and fingerprint recognition making it highly suitable for rural areas and for the uneducated people in our country” [1]. Goals regarding the number of people to be reached and schedule of the project have not been disclosed.
MICROCAPITAL BRIEF: Frankfurt School of Finance and Management, Protestant University of Congo Accepting Applications for Masters Degree in Microfinance
Frankfurt School of Finance and Management, a private German university, in partnership with Protestant University of Congo, a post-secondary college based in the Democratic Republic of the Congo, is issuing a call for applications for a Masters in Microfinance offered at the Protestant University of Congo.
MICROCAPITAL BRIEF: Microfinance Regulatory Authority (MRA) of Bangladesh to Maintain Interest Rate Cap of 27%, Reduce Grace Period, Number of Loan Instalments
Reportedly at the request of microfinance institutions (MFIs) in the country, Bangladesh’s Microcredit Regulatory Authority (MRA) has agreed to lower the number of instalments for microloans and reduce the grace period allowed, so that MFIs may begin collecting repayments 15 days after loan disbursement.
MICROCAPITAL BRIEF: SKS Microfinance Reconsidering Business Strategy to Rebuild Reputation
SKS Microfinance, a microfinance institution (MFI) that serves groups of impoverished women in India, is reportedly considering new business growth avenues in an attempt to increase revenue and improve its reputation. Along with collateral-free loans, four new products would be offered: loans using gold as collateral, housing loans, loans to buy mobile phones and loans to local grocery stores in a supply arrangement with the cash-and-carry chain, Metro. “The pilot projects have been yielding very encouraging results,” says Vikram Akula, chairperson and founder of SKS Microfinance.
MICROCAPITAL BRIEF: Central Bank of Nigeria’s (CBN’s) Cash Withdrawal Limit Expected to Impact Microfinance Institutions (MFIs)
The Central Bank of Nigeria (CBN) recently issued limits on daily cash withdrawals by individuals and corporate customers of NGN 150,000 (USD 962) and NGN 1 million (USD 6,417), respectively, effective June 1, 2012.
MICROCAPITAL BRIEF: Ministry of Planning and International Cooperation (MoPIC) Announces New Policy Framework for Expansion of Microfinance Industry in Jordan
The Ministry of Planning and International Cooperation (MoPIC) in Jordan, with assistance from KfW, a German government-owned development bank, recently developed a new policy framework for the microfinance industry.
MICROCAPITAL BRIEF: Reporting Tepid Growth, State Bank of Pakistan (SBP) Permits Microfinance Institutions (MFIs) to Accept Gold as Collateral
The State Bank of Pakistan (SBP) is reported to be permitting microfinance institutions (MFIs) to accept gold as collateral to secure microfinance loans. International: The News, a Pakistan-based news source, speculates that SBP has changed its stance on the issue in an effort to boost the issuance of loans following the floods that greatly affected Pakistan in 2010. In a circular reportedly issued to all MFIs in the country, SBP stated, “the negative growth [in 2010] was mainly due to the devastating floods during the third quarter of 2010 that gripped most parts of the country…Moreover, an overall difficult macroeconomic environment continues to challenge the credit growth of microfinance players” [1].
MICROFINANCE PAPER WRAP-UP: Rural and Microfinance in the Lower Mekong Region: Policies, Institutions, and Market Outcomes: by Binh T Nguyen, Robert Vogel; Published by Asian Development Bank (ADB)
By Binh T Nguyen and Robert Vogel, published by Asian Development Bank (ADB), 2011, 126 pages, available at: http://www.microfinancegateway.org/p/site/m/template.rc/1.9.51104/
MICROCAPITAL BRIEF: New Draft Bill From Ministry of Finance Would Expand Role of Reserve Bank of India (RBI) to Regulate Entire Indian Microfinance Sector, Cutting Roles of NABARD, State Governments
The Indian Ministry of Finance is in the final stages of drafting a new microfinance bill that would transfer all regulatory power over microfinance to the Reserve Bank of India (RBI), the country’s central bank, in an effort to create a uniform framework for all microfinance institutions (MFIs), according to Indian news website Moneycontrol.com.
MICROCAPITAL BRIEF: Reserve Bank of India (RBI) to Allow Urban Cooperative Banks to Lend to Self-Help Groups (SHGs), Joint Liability Groups (JLGs) in Effort to Increase Microfinance Activities
The Reserve Bank of India (RBI), the country’s central banking authority, has recently begun permitting urban cooperative banks (UCBs), commonly known as credit unions, to lend directly to self-help groups (SHGs) and joint-liability groups (JLGs) in an effort to facilitate financial inclusion by increasing the availability of microfinance in India.
MICROCAPITAL BRIEF: G20 SME (Small and Medium-Sized Enterprise) Finance Online Consultations Being Held Through June 17, 2011
The G20 SME (Small and Medium-Sized Enterprise) Finance Online Consultations are now ongoing through June 17 to help shape the policy recommendations of the SME Finance Sub-Group, which was launched as part of the G20 Global Partnership for Financial Inclusion to improve access to financial services for the poor. The Group of Twenty (G20) was established in 1999 to bring together finance ministers and central bank governors of “systematically important” industrialized and developing economies to discuss key issues in the global economy.
MICROCAPITAL BRIEF: Reserve Bank of India (RBI) Mandates Personal Guarantees from Promoters of Microfinance Institutions (MFI) Looking to Restructure Debt
The Corporate Debt Restructuring (CDR) cell of the Reserve Bank of India (RBI), after a unanimous decision, declared that promoters of microlenders will be required to provide personal guarantees in order for their institutions to refinance their debt in the wake of the microfinance turmoil in the Indian state of Andhra Pradesh that began in 2010.
MICROCAPITAL BRIEF: Equifax India to Launch Microfinance Credit Bureau In Partnership with Bank of Baroda, Bank of India, Kotak Mahindra Prime, ReligareFinvest, Sundaram Finance, Union Bank of India
The Indian unit of Equifax Credit Information Services, a US-based consumer credit reporting agency, has partnered with the following six Indian banks to launch a credit bureau devoted to transactions in the microfinance sector: Bank of Baroda, Bank of India, Kotak Mahindra Prime, ReligareFinvest, Sundaram Finance and Union Bank of India.