Banks think small to achieve big; focusing on microfinance
India's Microfinance sector is doing well, so well that the leading private and foreign banks in the country are planning to increase their MFI operations.
This article from the Hindu, MFI institutions are usually "fund-starved" in even the best of times due to the incredible demand that is unleashed as soon micro-credit becomes available to dis-enfranchised poor working within the context of a extra-legal economy.
"Despite the financial crisis, MFIs have been the least affected as they have managed to maintain the quality of the business. RBS will continue to expand its MFI portfolio and expects to grow the size to Rs 450 crore by the fiscal-end," RBS Vice-President Moumita Sen Sarma said.
Additionally the lender does not expect any deterioration in the asset quality of MFI units in 2009-10.
The question I ask to those interested in starting a discussion is how long can the Microfinance sectors in developing nations go unaffected by the greater global recession and continue to grow?
Microfinance generally targets the poor people in countries where poor do not have access to modern financial instruments like loans, savings accounts. Many times they lack access to even the most simple of modern technologies, like a cell phone.
Is it possible for Microfinance to "feed itself?"
Consider this cycle. A poor migrant has just emigrated from the Andes mountains to Lima, Peru. After years of struggling to make ends meet, living in a hut constructed out of garbage on a sand dune in the Atacama desert, this woman secures a loan to buy a blender. She can now make tasty juices from all of Peru's delicious fruits that she can sell to people waiting for the bus in her shanty town (Pueblo Jovenes as they are called in Lima).
Technically speaking wealth and economic activity have been produced in this corner of Peru's extralegal sector. This woman is able to pay back her loan with interest so that the lender makes money, she is able to earn a new stream of revenue which she can then spend in the greater economy on goods and services and maybe, just maybe she will eventually be able to afford something like schooling for her children.
How long can this last? Even if money is made available for Microfinance, how long will those workers waiting for the bus in the Shantytown remain employed? If they do lose their jobs does this mean the demand for juice will disapear? Or is there such a high demand for simple services like cold juice in the extra-legal economy that this woman who took out a micro-loan will continue to be able to do business?
Is demand from the underbelly of the world's developing nations so great that it can support itself and continue to grow even in the face of declining growth in the official economy in these countries (ie: the export, financial and real estate sectors)?
In the article from the Hindu it seems Indian banks remain confident growth in the microfinance sector will remain robust.
"We could nearly double our MFI portfolio over the last year. We have been working closely with 30 top MFIs to finance their projects and look forward for more such tie-ups in the future," ICICI Bank General Manager (Agri, Rural and Micro Banking) Kumar Ashish said.
Foreign banks too...
"We are shortly launching a project in rural Maharashtra with a leading MFI... HSBC assists the MFIs to build up a strong business model in a number ways," HSBC Group General Manager and CEO Naina Lal Kidwai said.
What do you think?
About the Hindu
The Hindu, started in 1878 as a weekly, became a daily in 1889 and from then on has been steadily growing to the current circulation of around 11,80,000 copies and a readership of about 4.05 million.
The Hindu's independent editorial stand and its reliable and balanced presentation of the news have over the years, won for it the serious attention and regard of the people who matter in India and abroad.
The Hindu uses modern facilities for news gathering, page composition and printing. It is printed in twelve centres including the Main Edition at Chennai (Madras) where the Corporate Office is based. The printing centres at Coimbatore, Bangalore, Madurai, Hyderabad, New Delhi, Vizag, Thiruvanathapuram, Kochi, Vijayawada, Mangalore and Tiruchirapalli are connected with high speed data lines for news transmission across the country.
Showing posts with label MFI. Show all posts
Showing posts with label MFI. Show all posts
Wednesday, April 29, 2009
Wednesday, March 18, 2009
Investment in Microfinance Industry remains robust
OVER 80 PERCENT OF INVESTORS HAVE NOT REDUCED THEIR MICROFINANCE INVESTMENT PORTFOLIO DUE TO THE GLOBAL RECESSION
Microfinance Insights Survey Reveals Views of 160 Microfinance Stakeholders; Latest issue features KIVA, Citi India, Kashf-Pakistan, Unitus, Grameen, Koota
MUMBAI, India, March 13, 2009 - As the recession spreads to developing countries around the world, and the effects of the crisis set in, Microfinance Insights explores how the microfinance sector is coping with the global recession. In the March/April 2009 issue, Global Crisis & Microfinance, sector stakeholders, from institutional investors to microfinance institutions and their clients, reveal how they have been affected by the liquidity crisis and speculate on when it will end.
Microfinance clients, many of whom are below the poverty line, have felt the squeeze with rising food and energy prices, decreases in remittances and less availability of loans. Many microfinance institutions (MFIs), particularly those not permitted to mobilize deposits, have struggled to maintain the liquidity to continue loan cycles without interruption. As the situation worsens, equity investors continue to show interest in investing in large microfinance institutions, confident that many established MFIs will weather the crisis.
Click here to read more about this from einnews
Microfinance Insights Survey Reveals Views of 160 Microfinance Stakeholders; Latest issue features KIVA, Citi India, Kashf-Pakistan, Unitus, Grameen, Koota
MUMBAI, India, March 13, 2009 - As the recession spreads to developing countries around the world, and the effects of the crisis set in, Microfinance Insights explores how the microfinance sector is coping with the global recession. In the March/April 2009 issue, Global Crisis & Microfinance, sector stakeholders, from institutional investors to microfinance institutions and their clients, reveal how they have been affected by the liquidity crisis and speculate on when it will end.
Microfinance clients, many of whom are below the poverty line, have felt the squeeze with rising food and energy prices, decreases in remittances and less availability of loans. Many microfinance institutions (MFIs), particularly those not permitted to mobilize deposits, have struggled to maintain the liquidity to continue loan cycles without interruption. As the situation worsens, equity investors continue to show interest in investing in large microfinance institutions, confident that many established MFIs will weather the crisis.
Click here to read more about this from einnews
Friday, March 6, 2009
Empowerment through Microfinance: Pro Mujer Gives Women in Peru “the confidence to keep moving forward”
Elsa Gómez Mamani sits on the ruins of a stone wall on a cold but sunny morning in a field high on the Andean altiplano. We are in southern Peru, on the shores of Lake Titicaca. Elsa wears the traditional full skirts and bowler hat of the Aymara culture, and tells me in halting Spanish about her experience with poverty and entrepreneurship.
Elsa Gómez Mamani in her store. A Pro Mujer Peru client, she uses her
earnings to support her family and build up a personal savings account.
Photograph by Jenna Mulhall-Brereton
Thirty years old, married and the mother of one son, Elsa has lived in Perca, a small rural community, her entire life. Because her mother died when she was just two years old, Elsa and her seven brothers and sisters lived with their father, and had to care for the family’s cows and sheep from an early age. She recalls that it was a difficult childhood. “We often did not have enough money for food.”
When Elsa married, she stayed in the community, tending the cows and goats she and her husband kept outside of their small mud brick home. Together they sold the milk, cheese and wool from their livestock in the central plaza of a town several miles away. Although she had left her father’s home, Elsa’s adult life was not that different from her childhood. But two years ago, she decided to make a change.
Elsa had heard of Pro Mujer in Peru, a microfinance institution (MFI) based in Puno, an urban community about an hour’s bus ride from her village. When representatives from Pro Mujer visited Perca, Elsa did not hesitate to become a client, and encouraged other women to do the same. As a result, she became one of the founders of her communal bank - a group of 20 women who guarantee each other’s microloans, and who come together every two weeks to make payments and encourage each other’s ventures. Most of the women in Elsa’s bank use their loans of US$100-$300 to purchase livestock or raw materials for making traditional crafts. Elsa, however, saw a need for a store in their isolated community and opened one in the front room of her house.
Click here to read the rest of Elsa's story
Elsa Gómez Mamani in her store. A Pro Mujer Peru client, she uses her earnings to support her family and build up a personal savings account.
Photograph by Jenna Mulhall-Brereton
Thirty years old, married and the mother of one son, Elsa has lived in Perca, a small rural community, her entire life. Because her mother died when she was just two years old, Elsa and her seven brothers and sisters lived with their father, and had to care for the family’s cows and sheep from an early age. She recalls that it was a difficult childhood. “We often did not have enough money for food.”
When Elsa married, she stayed in the community, tending the cows and goats she and her husband kept outside of their small mud brick home. Together they sold the milk, cheese and wool from their livestock in the central plaza of a town several miles away. Although she had left her father’s home, Elsa’s adult life was not that different from her childhood. But two years ago, she decided to make a change.
Elsa had heard of Pro Mujer in Peru, a microfinance institution (MFI) based in Puno, an urban community about an hour’s bus ride from her village. When representatives from Pro Mujer visited Perca, Elsa did not hesitate to become a client, and encouraged other women to do the same. As a result, she became one of the founders of her communal bank - a group of 20 women who guarantee each other’s microloans, and who come together every two weeks to make payments and encourage each other’s ventures. Most of the women in Elsa’s bank use their loans of US$100-$300 to purchase livestock or raw materials for making traditional crafts. Elsa, however, saw a need for a store in their isolated community and opened one in the front room of her house.
Click here to read the rest of Elsa's story
Wednesday, January 28, 2009
A world without poverty -- ACCION & LendtoEndPoverty.org
Microfinance is a topic i've touched upon before on this site (See June 17, 2008 post). In this turbulent time, Microfinance borrowers believe it or not but are still paying back their loans despite the credit crisis.
Microfinance is an effective, long-term solution to ending poverty that empowers poor families with the financial resources they need to improve their lives.
But there is an urgent need to expand these services. Right now, microfinance is only reaching 10-20% of the estimated 500 million people who would benefit from these life-changing opportunities.
As you'll see in the two-minute video, microfinance has the power to improve the lives not just of individuals, but of families and entire communities around the world.
~ ACCION Video Link courtesy of Youtube
Microfinance is an effective, long-term solution to ending poverty that empowers poor families with the financial resources they need to improve their lives.
But there is an urgent need to expand these services. Right now, microfinance is only reaching 10-20% of the estimated 500 million people who would benefit from these life-changing opportunities.
As you'll see in the two-minute video, microfinance has the power to improve the lives not just of individuals, but of families and entire communities around the world.
~ ACCION Video Link courtesy of Youtube
Friday, June 20, 2008
The growth of the Micro-Finance Industry in Peru: Mi Banco of Peru helps thousands overcome poverty
Microfinance, is a economic development tool which aims to reduce poverty and empower the global poor with the skills and means to generate sustainable development through, providing small "micro-loans" and other financial services to poor entrepreneurs whom otherwise lack the knowledge or means to acquire them from the formal sectors in their home countries.
In 2006, over 10,000 Micro-finance Institutions where in active operation within 85 countries; financing 150 million micro-entrepreneurs all over the world and offering an array of financial services otherwise inaccessible for poor people in the developing world.
(Note decided to re-publish, or in this case change the publication time of this post with editions / update from yesterday June 19 to today June 20.)
ACCION International, Established in 1961 and a leader in microfinance since 1973, ACCION has over 45 years of experience in the field of international economic development. Please visit the following pages to learn more about who we are, what we do, and how we do it.
In Peru, ACCION International is partnered with a local Peruvian bank called Mi Banco, which serves as ACCION's main avenue in which to access the Peruvian market on a wide scale, would ordinarily be impossible or very difficult to say the least due to the restrictions in place by formal Peruvian Institutions which at the moment impede many smaller MFI's from evolving into a official bank which can accept deposits and make loans.
I would like to especially extend my gratitude, to a dear professor of mine, whom I was fortunate enough to have on multiple occasions while attending American University, who was a true inspiration. A charismatic and energized teacher who drew upon his real world experience in business, international development and financial management/ investments in over 20 countries-- and a individual whom I truely respect a great deal: Dr. Ghiyath Nakshbendi. International Business Professor at American University Kogod School of Business, he single handedly created and organized the first course to be offered in the Washington D.C area focusing on Micro-Finance. To that I give him my most esteemed gratitude and respect for his forward thinking of mentoring students in what is a very fast growing and continuously more influential field of study and work.
The video below truely describes the power of Microfinance and micro-credit. Consider these ladies, who relied and used micro-credit through to survive... Having to cope with 3 currencies, 4 presidential elections, 1 dictator, hyper inflation, terrorism, violence, abusive husbands... and still prospered beyond what would have in any other shape or matter have been possible.
I use the word prosper loosely here, for they are will working hard, in a hard world and face adversity and challenges on a daily basis. No less it is a incredible example of the power of micro-credit and MFI's and the inspirational ability of such individuals to persevere through such difficult times.
Last, they are a success story so to speak, many examples persist which are sad case studies. Despite this all, progress through the use of Microfinance institutions is being made, especially in comparison to past methods of poverty alleviation.
Great Video below describing what is one of the first cities in the America's... Special thanks to Five Talents International, helping with international development around the world.
And to end this post -- a bit of mixing modern pop culture with helping the dis-empowered, historically ignored, people of the 3rd world.
The power and capabilities of Microfinance to help the global poor is truely unimaginable. I'll personally be investing assets of my own in the Microfinance / Bank / public traded traded company-- Compartamos.
Described here in Businessweek
Summed up in a nice poppish music video / footage from this youtube video
In 2006, over 10,000 Micro-finance Institutions where in active operation within 85 countries; financing 150 million micro-entrepreneurs all over the world and offering an array of financial services otherwise inaccessible for poor people in the developing world.
(Note decided to re-publish, or in this case change the publication time of this post with editions / update from yesterday June 19 to today June 20.)
ACCION International, Established in 1961 and a leader in microfinance since 1973, ACCION has over 45 years of experience in the field of international economic development. Please visit the following pages to learn more about who we are, what we do, and how we do it.In Peru, ACCION International is partnered with a local Peruvian bank called Mi Banco, which serves as ACCION's main avenue in which to access the Peruvian market on a wide scale, would ordinarily be impossible or very difficult to say the least due to the restrictions in place by formal Peruvian Institutions which at the moment impede many smaller MFI's from evolving into a official bank which can accept deposits and make loans.
I would like to especially extend my gratitude, to a dear professor of mine, whom I was fortunate enough to have on multiple occasions while attending American University, who was a true inspiration. A charismatic and energized teacher who drew upon his real world experience in business, international development and financial management/ investments in over 20 countries-- and a individual whom I truely respect a great deal: Dr. Ghiyath Nakshbendi. International Business Professor at American University Kogod School of Business, he single handedly created and organized the first course to be offered in the Washington D.C area focusing on Micro-Finance. To that I give him my most esteemed gratitude and respect for his forward thinking of mentoring students in what is a very fast growing and continuously more influential field of study and work.
The video below truely describes the power of Microfinance and micro-credit. Consider these ladies, who relied and used micro-credit through to survive... Having to cope with 3 currencies, 4 presidential elections, 1 dictator, hyper inflation, terrorism, violence, abusive husbands... and still prospered beyond what would have in any other shape or matter have been possible.
I use the word prosper loosely here, for they are will working hard, in a hard world and face adversity and challenges on a daily basis. No less it is a incredible example of the power of micro-credit and MFI's and the inspirational ability of such individuals to persevere through such difficult times.
Last, they are a success story so to speak, many examples persist which are sad case studies. Despite this all, progress through the use of Microfinance institutions is being made, especially in comparison to past methods of poverty alleviation.
Great Video below describing what is one of the first cities in the America's... Special thanks to Five Talents International, helping with international development around the world.
And to end this post -- a bit of mixing modern pop culture with helping the dis-empowered, historically ignored, people of the 3rd world.
The power and capabilities of Microfinance to help the global poor is truely unimaginable. I'll personally be investing assets of my own in the Microfinance / Bank / public traded traded company-- Compartamos.
Described here in Businessweek
Summed up in a nice poppish music video / footage from this youtube video
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