Udaia Kumar, the managing director of SHARE Microfin Limited, a non-banking financial institution in India, was reportedly paid a salary of INR 74 million (USD 1.6 million) for the fiscal year ending March 2010. The salary exceeds the limit stipulated by the Companies Act, a law which regulates the operations of firms in India. The act states that a company is not allowed to pay more than 5 percent of its net profit to a director without government permission. A significant portion of Mr Kumar’s salary comprises “sweat equity”, which are shares issued at zero cost to the recipient [1]. The 2008-2009 salary of Mr Kumar of INR 81 million (USD 1.7 million) also exceeded the limit set by the Companies Act, but Share Microfin obtained approval from the Ministry of Corporate Affairs for the surplus pay.
Category: Regulation
MICROCAPITAL BRIEF: East African Community (EAC), World Bank Sign $16m Grant Agreement for Financial Sector Development and Regionalization Project
The East African Community (EAC), an intergovernmental organization whose members include Kenya, Uganda, Tanzania, Rwanda and Burundi, recently announced that it received a USD 16 million grant from the World Bank, a multilateral development finance organization based in Washington, DC, for its Financial Sector Development and Regionalization Project (FSDRP).
MICROCAPITAL BRIEF: International Finance Corporation (IFC) to Help Maldives Monetary Authority Establish Credit Information Bureau
The International Finance Corporation (IFC), the investment arm of the World Bank Group, a partnership of multilateral development organizations based in Washington, DC, recently announced that it has been helping the Maldives Monetary Authority set up the country’s first credit information bureau.
MICROCAPITAL BRIEF: Bangladeshi Government Asks Yunus to Step Down as Director of Grameen Bank
The finance minister of Bangladesh, Mr Ama Muhith, reportedly said that the government has asked Nobel laureate Dr Muhammad Yunus of Grameen Bank, a microfinance institution (MFI) based in Bangladesh, to transfer his authority as director of the MFI to the deputy director on the grounds that, at age 70, Dr Yunus’ age exceeds the retirement age limit by five years [1].
MICROCAPITAL BRIEF: Microfinance Banks Ask Central Bank of Nigeria for Six More Months to Meet Tightened Licensing Requirements
Microfinance banks in Nigeria have entered negotiations with the Central Bank of Nigeria (CBN) to extend by six months their grace period to operate with provisional licenses [1].
MICROCAPITAL BRIEF: MicroSave’s India Focus Notes Examines Microfinance Turmoil in Andhra Pradesh
MicroSave, a private consulting company that provides technical assistance to microfinance institutions (MFIs), recently published a series of papers that examine the trouble that has arisen in microfinance in the Indian state of Andhra Pradesh since late 2010.
MICROCAPITAL BRIEF: Microborrowers Past Due on $64m in Repayments to Microfinance Institutions (MFIs) in Lagos, Nigeria; National Association of Microfinance Banks Proposes Criminalization
Mr Olufemi Babajide, Chairman of the Lagos chapter of the National Association of Microfinance Banks (NAMB), a group of Nigerian microfinance institutions (MFIs), recently revealed that past due loans outstanding to MFIs in Lagos total NGN 10 billion (USD 64 million).
MICROCAPITAL BRIEF: United Nations Economic and Social Commission for Western Asia (ESCWA): Microfinance in Lebanon Suffers from Lack of Regulation
Byblos Bank, a Lebanese institution with operations in nine countries, has cited an unspecified report from the United Nations Economic and Social Commission for Western Asia (ESCWA) as arguing that the continued growth of the microfinance sector in Lebanon is hindered by inappropriate governmental regulation and a lack of reliable data on borrowers.
MICROCAPITAL BRIEF: Reserve Bank of India (RBI) Relaxes Rules in Effort to Ease Microfinance Institution (MFI) Liquidity Crunch
The Reserve Bank of India (RBI), India’s central banking authority, has temporarily relaxed asset classification rules for bank loans to the microfinance sector, allowing commercial banks to classify loans made to microfinance institutions (MFIs) as standard assets. Under the standard guidelines, banks had to classify loans made to MFIs as unsecured assets, which required a higher minimum provision than do standard assets [1].
MICROCAPITAL BRIEF: Government of India’s Andhra Pradesh Considers Requiring Microfinance Institutions (MFIs) to Compensate Families of Suicide Victims
The government of the Indian state of Andhra Pradesh (AP) is considering a bill that would make it compulsory for microfinance institutions (MFIs) to compensate the families of borrowers who commit suicide as a result of heavy debt burdens.
MICROCAPITAL BRIEF: Microfinance Institutions Network (MFIN) of India to Investigate Claims of Improper Handling of Mutual Benefit Trusts (MBTs) by SKS Microfinance, SHARE Microfin and Spandana Sphoorty
The Microfinance Institutions Network (MFIN), a trade association of Indian microfinance lenders, has set up a committee to investigate claims that SKS Microfinance, a for-profit microfinance institution (MFI); SHARE Microfin, a regulated non-banking finance company (NBFC); and Spandana Sphoorty, another for-profit MFI, took advantage of clients through the use of mutual benefit trusts (MBTs) to converting the institutions into for-profit entities.
MICROCAPITAL BRIEF: Participants at World Economic Forum Annual Meeting 2011 in Davos, Switzerland, Discuss Non-Payment in Andhra Pradesh, Consumer Protection, Microfinance Regulation
Participants of the World Economic Forum Annual Meeting 2011, which was held in Davos, Switzerland, from January 26 to January 30, discussed the future of financial services for poor people in a session called “Financial Inclusion: Beyond Microfinance.”
MICROCAPITAL BRIEF: Book From Asian Development Bank (ADB)—Rural Finance in Poverty-Stricken Areas in the People’s Republic of China—Suggests Reform of China’s Microfinance Industry
A new book from Asian Development Bank (ADB)—Rural Finance in Poverty-Stricken Areas in the People’s Republic of China—pushes for reforms in China’s rural finance industry, including its microfinance industry, that it argues would help small businesses and alleviate poverty.
MICROCAPITAL BRIEF: Microinsurance Network Reviews 2010 Work on Performance Indicators, Technology, Standards Development
The Microinsurance Network, a member-based platform of approximately 60 organizations interested in advancing the development and distribution of insurance products for low-income households, has recently released an overview of its 2010 activities. These include the development and publication of 11 social performance indicators by the Performance Indicators Working Group; the launch of the Microinsurance Technology Inventory, an online database that provides insight into the use of technology for microinsurance; and enhancement of the organization’s website.
MICROCAPITAL SPECIAL REPORT: “Principles for Investors in Inclusive Finance” Launched at Responsible Finance Forum in The Hague, Netherlands
A group of 40 global investors in the microfinance industry, including US retirement planning firm TIAA-CREF and several microfinance investment vehicles (MIV), recently launched a set of guiding principles for investing in the microfinance industry at the Responsible Finance Forum in The Hague, Netherlands. The initiative – titled “Principles for Investors in Inclusive Finance” – is reportedly the brainchild of Her Royal Highness Princess Maxima, the United Nations Secretary General’s Special Advocate for Inclusive Finance for Development, and a core group of Dutch investors, including; Triodos, a microfinance investment vehicle (MIV); Goodwell, a for-profit social investment outfit; Oikocredit, a cooperative investment fund; PGGM, an investment and pension firm; and SNS Asset Management, an institutional investment group. The group and Her Royal Highness Princess Maxima developed the principles together with CGAP and the United Nations-backed Principles for Responsible Investment (PRI), a network of international investors created to promote the practice of responsible investing.
MICROCAPITAL BRIEF: Islamic Microfinance Network (IMFN) Launches in Pakistan, Will Serve Shariah Microlenders Worldwide
Islamic Microfinance Network (IMFN) has recently launched in Pakistan with the aim to provide a common platform for Islamic microfinance institutions (MFIs) around the world. Headquartered in Lahore, the network is also looking to establish regional offices in Ghana, Mauritius and the Middle East.
MICROCAPITAL BRIEF: Central Bank of Nigeria (CBN) Highlights Failings of Local Microfinance Industry, Outlines Strategy Going Forward
Femi Fabamwo, Director of the Other Financial Institutions Department at the Central Bank of Nigeria (CBN), reportedly has said that mission drift at some microfinance banks, weak capacity for lending, poor understanding of the microfinance concept and inefficient delivery methodologies are some of the reasons why 103 microfinance institutions (MFIs) are being liquidated by the Nigeria Deposit Insurance Corporation (NDIC). Mr Fabamwo cited MFIs “operating like ‘micro-commercial banks’ with flamboyance, fleets of branded cars and high expenditure profile; hard impact of the global financial turbulence of 2008/2009; weak capitalization; poor corporate governance…and weak internal controls” as additional reasons reform is needed in Nigeria’s microfinance sector.
MICROCAPITAL BRIEF: Indian Bank Receives Skoch Financial Inclusion Award 2011 for “Self-Help Group (SHG) Initiatives – Urban Financial Inclusion”
Skoch Consultancy Services Private Limited, a strategic planning and management consulting firm based in India, has presented Indian Bank, a bank owned by the government of India, with the Skoch Financial Inclusion Award 2011 for its work serving self-help groups (SHGs) in urban areas.