India Microfinance

Janalakshmi Financial Services raises USD 10 Million(Approx 45 Crore)

Microfinance Business — Thu, 11 Mar 2010 02:23:19 +0000

Janalakshmi Financial Services (JFS) which is promoted by former Citigroup Inc banker Ramesh Ramanathan has raised $10 million (Rs45.8 crore) in its second round of funding.

The funding round was led by Singapore-based hedge fund Tree Line Asia Master Fund and Bellwether Microfinance Fund which has been an initial investor in the firm. Narayan Ramachandran who previously worked with Morgan Stanley has also joined Janalakshmi’s board and invested in his personal capacity.

SKS Microfinance – Sequoia becomes promoter to file DRHP within a month

Microfinance Business — Thu, 11 Mar 2010 02:15:31 +0000

SKS Microfinance

Private equity firm Sequoia Capital is set to become a promoter of the country’s largest microfinance institution, SKS Microfinance Ltd.Sequoia, which currently owns 24% in SKS, will lead three other venture capital firms in the move. This is the first time in India that venture capital investors are becoming promoters of a company that is going in for a public offer.

Vikram Akula, who holds a 6% stake in the firm, failed to satisfy the Securities and Exchange Board of India’s (Sebi) norms for a promoter of a company making an IPO.

UnPLuGGd on March 6th, An Event for Entrepreneurs | Be There

Microfinance Business — Wed, 03 Mar 2010 04:05:29 +0000

By now, most of you might have heard of these statements (from startups/VCs/media etc)

You can’t build a global technology company from India without spending a fortune [read: cash strapped startups cannot build one]
You always need funding to make it big.
Consumer Internet is just not happening in India (i.e. one cannot build a profitable Internet company from India)

Wrong! Several startups have defied these conventional way of thinking and have built a strong business. It’s not that they succeeded in their first venture – some of them tried out whole lot of different businesses, before they tasted success.

“We started a similar business in 1999, went bust and restarted in 2006. – Rudrajeet, Founder of Ideacts [an Indian Tech Startup that serves 10 million Internet sessions/month]

We didn’t plan the consumer service, it was meant to be an enterprise service! And now, TringMe serves 22 million calls a month even though we never ever marketed the service. - Yusuf Motiwala, Founder of TringMe.

So how did they do it? Did they raise cash? How did they get their first customer?

Some of the event speakers include successful entrepreneurs (including the first IP exit from India !)

Hear them share their story/failure/challenges @ UnPluggd Event [www.unpluggd.org] and mingle with fellow entrepreneur, angel investors and VCs.

Event Details

Date: March 6^th, 2010 [9 AM – 6 PM]

Peer Attendees: Angels, VCs and Entrepreneurs.

Venue: Honeywell Office, Outer Ring Road [Near Intel Office], Bangalore

Contact Details: Ashish , +91 98452 06443. ; info@unpluggd.org

URL: http://www.unpluggd.org

Here are the confirmed speakers for the event

- Sachin Bansal, Founder [Flipkart]

- Yusuf Motiwala, Founder [TringMe]

- Rudrajeet Desai, Founder [Ideacts]

- Sunil, Founder [Mango Technologies]

- Mukund, Founder [BuzzGain]

- Gaurav Jain, Founder of MastKalandar

- Sony Joy, Founder of MobMe

- Ashwin Naik, Founder of Vaatsalya Hospitals

Book your seat today -Rs 500 only

Two questions that could change your career,business ?

Microfinance Business — Wed, 03 Mar 2010 04:03:10 +0000

A video excerpt from Daniel Pink’s book DRIVE: The Surprising Truth About What Motivates Us

Two questions that can change your life

The above video is adapted from an extract from Daniel Pink’s new book Drive

About the book – Drive

Most of us believe that the best way to motivate ourselves and others is with external rewards like money—the carrot-and-stick approach. That’s a mistake, Daniel H. Pink says in, Drive hisnew book. The secret to high performance and satisfaction—at work, at school, and at home—is the deeply human need to direct our own lives, to learn and create new things, and to do better by ourselves and our world.

Drawing on four decades of scientific research on human motivation, Pink exposes the mismatch between what science knows and what business does—and how that affects every aspect of life. He demonstrates that while carrots and sticks worked successfully in the twentieth century, that’s precisely the wrong way to motivate people for today’s challenges.

More Reviews and Buy the book

Microfinance – 10 Lessons from the International Experience

Microfinance Business — Wed, 24 Feb 2010 06:46:28 +0000

MICRO-FINANCE: LESSONS FROM INTERNATIONAL EXPERIENCE

Given below are 10 major lessons learned from the worldwide experience with mF which summarises an experience of roughly 30 years. Though country-wise experience may vary, the lessons provide a sound basis for understanding the role limitations of mF.

Microfinance India - Pic-credit:knowledge.allianz.com

Lesson One –The Poor Are Bankable

There is enough evidence that the poor are capable of using credit profitably and repaying loans out of the proceeds from the use of funds. The poor have always borrowed money for a multiplying of purposes from informal sources and repaid most of these loans. They do not comprise an extraordinarily high-risk segment. Lending to the poor does not necessarily have a high moral hazard, provided such credit is not given by an organization perceived to be either a government or donor agency, which could afford to give hem he finances as a gift.

A participatory involvement and realization that repayment enhances their long-term borrowing capacity ensures the proper attitude onwards repayment. At the same time, mFIs should have effective methods for monitoring the loans and ensuring repayment at convenient times.

Lesson Two – Micro-credit Benefits the Poor

There is clear evidence that mF benefits the poor by providing them savings opportunities and credit. Barrowers often increase their incomes and improve their livelihood because of micro-credit. The employment impact is, however more limited. mF leads to changes in the use of technology only of the less poor as adoption of new technology is risky and the poorer borrowers are more risk averse. The poor also benefit from mF a sense of involvement and dignity. Where wide gender disparities abound, mF catering to women raises their sense of participation and increases their empowerment. There is however little evidence that mF succeeds in transforming a community from poverty to prosperity.

Microfinance in Peru,South America. Pic-credit:Pro-Mujer

Lesson Three – Penetration of the Poorest of the Poor is Difficult

While some mFIs have penetrated the poorest of the poor, most mFIs have concentrated their focus on the less poor. This is partly due to difficulties of administering loans, the needs of the poorest being mainly for consumption possibly perceived as a higher risk. The poorest of the poor would require greater support in the form of advisory services, skill development and marketing support to make effective use of credit. These support service require to be provided by either other organizations or the capacity of mFIs has to be strengthened to provide such services.

Lesson Four – A Realistic Interest Rate is Vital

Micro-credit should not be disbursed at below commercial rates of interest. This statement may find a mixed response among micro-finance practitioners in India. The disadvantages of cheap credit have been amply demonstrated. Yet the case against subsides can defeat the objectives of mF. While in the long run the interest charged by mFIs should cover their total costs, there appears to be a good case for subsidising cost of risk, as otherwise the interest cost could be prohibitive.

In the initial years of an mFI’s operations, the administration costs could be high owing to the scale of operations and due to ‘learning by doing’. Since the enhancement of repayment of loans is also closely related to knowledge of borrowers, development of peer pressure and group responsibilities, these take time. Therefore while sustainability can be achieved only with interest cost meeting the total costs of lending, this is an objective that can be achieved only after a gestation period. During this gestation period, mFIs should charge the cost of financial funds plus a margin it deems sufficient to cover part of the other costs. This rate of interest would be higher than commercial bank lending rates, but much lower than interest rates of informal lenders. The additional administration costs would require to be subsidised.

Lesson Five – Saving Mobilisation Strengthens MFIs

There is indisputable evidence that mFIs which mobilise savings enhance their sustainability. Micro-finance should be viewed as having two complementary components, micro-credit and savings. There is a close correlation between he success in savings mobilisation of mF organizations and heir overall success. Apart from the advantages of enhancing is fund base, a clientele which has a stake in he mFI is more accountable, and savings could form an important foundation for participatory involvement in he mFI. Saving mobilisation strengthens the asset base of the mFI, provides a basis for asset-based lending, reduces risk, enhances financial viability and can even provide opportunities of supplementary earnings from investments outside.

Lesson Six – Governance and Financial Systems Require Strengthening

When the scale of operations of the mFI expands there is a need to ensure good governance as large sums of money is involved. This is especially important when mFIs mobilise deposits. The issues of governance that require to be addressed include greater transparency in their activities and finances, the determination of the lines of responsibility and accountability and control of mFIs. These issues remain largely unresolved at present owing to the difficulties of transforming small-scale informal visionary movements into larger institutionalised ventures. The main issues resolve around the composition of the boards of management, accounting systems and regulatory conformity.

Many mFIs have weak accounting systems. Consequently they are sometimes unaware of their own financial situation. This has resulted in mFIs not realising their financial weaknesses. Good accounting practices, especially performances accounting, are essential to ensure accountability and continuous evaluation of performance.

A microcredit customer in Africa Pic-credit:thp.org

Lesson Seven – Strong Regulatory Framework

With an expansion in the number of mFIs and many of then accepting savings, it is generally argued that mFIs should be subjects to a regulatory framework in the interest of both the poor, as also the long-term viability and sustainability of mFIs. Given the situation described above, compliance with such a regulatory framework could be difficult and developing the capacity for reporting to the regulator costly. A cost effective or subsidized reporting/regulatory mechanism may be necessary. While most analysts are of the view that a proper regulatory framework is a prerequisite for the expansion of mF, this is a tricky issue as the informal character of mFIs could be jeopardised, and voluntary and visionary efforts could be discouraged.

Lesson Eight – No Single Model of mFI

The vast differences in mFIs make it very clear that there is no single model of successful mfIs. Each mFI would requires to be oriented to the needs of the particular community and find ways and means of enlisting participatory involvement, develop group actions and collective responsibilities, find innovative means of reducing administration and transaction costs and increase outreach. The extent of participatory decision-making has to be decided on he basis of whether collective decision-making is a realistic option. While participatory involvement is generally desired, many of he successful mFIs have adopted a ‘top-down’ approach. Therefore, each mFI would require to be designed according o be context and environment it operates in and be willing to respond to changes in the light of its own experience.

Lesson Nine – Most mFIs Require Outside Funding

While financial viability should be the objective of mFIs, the experience indicates that most mFIs would require outside finances for commencement and a gestation period. Such assistance should be in the form of seed capital, funds for expanding activities and to defray administrative expenditure. Other expenditure is likely to be so high in the beginning that a relatively high interest rate above the average of market rate but below he informal moneylender rates is not likely to cover costs. Therefore, substantial outside assistance would be needed to enlarge the number of mFIs and their outreach. Yet, the ultimate and only sustainable strategy is one where mFIs are solidly grounded in local resources.

Lesson Ten – Credit Alone Cannot Achieve Objectives

Micro-credit attempts to address a genuine need of credit for the poor for consumption needs, working capital and sometimes-fixed capital of small enterprises. Yet these only facilitate small entrepreneurs. Those without a capacity to use such funds profitably would not benefit. Both the expansion and effectiveness of micro-credit requires a number of other pre-requisites. These include a macro economic policy framework conducive to mE, improvements in physical and economic infrastructure, opportunity for education and skill development, and marketing opportunities for products of mEs.

Capital Trust Microfinance stock hits upper circuit on BSE after announcing its microfinance venture

Microfinance Business — Wed, 24 Feb 2010 06:27:33 +0000

Capital Trust Ltd, a Delhi-based financial services firm which used to provide two wheeler auto loans for Kinetic in North India, yesterday announced that it has now forayed into the country’s booming microfinance sector.

The company which is listed on the BSE and is non-banking finance company (NBFC) has altered a clause so that Capital Trust can undertake the business of microfinance.

The share price of the firm, seems to have over reacted to the news and is up by more than 10% in the last two days and has hit the upper circuit again today with a demand for 10,784 shares with no sellers at 11:45 PM.23/02/2010.

Capital Trust's Price Chart on BSE.

Todays price of Rs 44.35 is a new 52 week high for this scrip.The same stock was trading at Rs 5.82 on 28 Apr 2009 which is it’s 52 week low.

Latest BSE Stock price of Capital Trust

SKS Microfinance raises more than Rs 100 Crore(USD-21.5 Million Approx) from NCD’s

Microfinance Business — Wed, 24 Feb 2010 06:26:56 +0000

SKS Microfinance

Bajaj Allianz Life Insurance Company and Religare AMC have subscribed to these NCD’s

SKS Microfinance, India’s largest microfinance company has raised Rs 100 crore by issuing Non Convertible Debentures worth Rs 75 crore to insurance major Bajaj Allianz Life Insurance Company Ltd and another tranche of Rs 25 crore on February to Religare Asset Management Company.

The unique transaction has enabled the country’s first Non Convertible Debenture (NCD) issued by a microfinance institution to an insurance company. Both the NCDs and Commercial Papers are rated a high PR 1+ by CARE. The PR1 + rating indicates highest degree of safety with regard to timely payment of interest and principal on the instrument is strong.

Microfinance Links Digest 18/02/2010

Microfinance Business — Thu, 18 Feb 2010 04:12:54 +0000

Reserve Bank of India

RBI issues veiled threat to MFIs: Microfinance could soon lose priority sector lending status

India’s booming microfinance segment is under the scanner, with the Reserve Bank of India (RBI) issuing a veiled warning that it could be taken off the priority sector lending list of banks if the industry fails to improve its governance standards.

This was spelt out at a meeting in late January between senior RBI officials, representatives of Sa-Dhan—the association of Indian microfinance institutions (MFIs)—and some senior MFI managers from Karnataka, West Bengal and Andhra Pradesh.Rest of the article

Management practices at many MFIs a cause for concern

Trouble at Grameen Bank ? Repayment rates have fallen at the world’s most famous MFI

MFI body Sa-Dhan plans code of conduct for members

Venture funds upbeat on MFIs

New micro-finance bill does away with lending rate cap

Budget 2010: Government must give MFIs its due

Rickshaw Bank spells financial security for the poor

Is Social Entrepreneurship an Oxymoron ?

L&T Finance to expand microfinance biz in Guj, Orissa

Nabard staff threatens mass leave over privatization and delay in release of pay

India and Denmark sign Social Security Agreement

Enhance your productivity by tracking and categorizing your computer time.

Microfinance Business — Thu, 18 Feb 2010 04:04:45 +0000

Free Software to monitor your productivity on your computer

Fruitful Time Productivity Meter tracks the active versus idle time, how your active time is split among applications, which applications were used the most, and which websites you browsed and for how long. You can review the stats for the last day, week, month or a user defined block of time. One of the most useful features is the ability to tag programs, windows, and domains.

The Business Edition allows users to track activity on several computers so now you can know exactly how much time your employees spend on facebook.

From december 2009 fruitful time has made this product available for free, for both commercial and private use. To use the software just download the personal or business edition as per your requirements and then license the product using the respective license key from the following list.

Download Fruitful Time Productivity Meter

MIT Economist Esther Duflo on ending poverty

Microfinance Business — Thu, 18 Feb 2010 03:41:14 +0000

Prof Esther Duflo in action on the IFMR Campus Pic-credit:ifmrblog.com

Esther Duflo, MIT economist and co-founder of the Poverty Action Lab, asks why the world’s poorest people tend to stay poor.

Duflo’s pioneering research applies randomized trials, used extensively in drug discovery research, to development economics. What she discovers are strategies for transforming current approaches to development policy.

In July 2009 Prof. Esther Duflo had presented her study The miracle of microfinance – An evaluation.

Given below is the video talk on ending poverty

Esther Duflo: Ending Poverty

Document management software helps Equitas process loans three times faster

Microfinance Business — Thu, 18 Feb 2010 03:28:57 +0000

As with any financial services company, a large volume of paperwork was generated daily at Equitas. The greatest challenge faced by the company was verifying the accuracy of the data given the manual document creation and processing mechanisms. Manual checking of application forms also meant lower employee productivity levels. This led to delays in responding to customer requirements, and had a negative effect on the overall customer experience.

Faster Loan Processing
To overcome the above challenge, the organization adopted a DMS from Newgen Software, comprising a document management software and optical mark recognition scanners. Mahalingam explains that scaling up the operations without additional costs meant increasing the throughput without increasing the number of seats in back office operations. Implementing the DMS has allowed Equitas to exactly do so. Prior to the implementation, every loan document-processing operator processed up to 80 documents in a single shift per day.

After implementing the solution, the company has achieved a three-fold increase in productivity. The same operator processes up to 250 documents per day in a single shift. As a requirement, while only around 75 percent of the data is captured through the DMS, the organization has been able to achieve almost 100 percent data accuracy for its loan documents.

More – Newgen Software Press Release

Microfinance Equity Raising Workshop-Feb 25-26,2010-Hyderabad

Microfinance Business — Mon, 08 Feb 2010 07:11:10 +0000

Understand, Learn, Improve

Workshop on Capital Structuring and Equity Raising in Microfinance

February 25-26, 2010 | Hyderabad

Course Faculty:
Vineet Rai- Co-Founder, Aavishkaar Goodwell and Intellecap
Anurag Agarwal- Investment, Valuation Expert and Sr.VP, Intellecap
Atreya Rayaprolu- Deal Expert and VP, Intellecap
Satish Pai- Valuation Expert and Associate VP, Intellecap
MV Narendra Prasad- Subject Matter Expert-Microfinance, Intellecap
Sanjib Jha- Legal Expert and Head of Finance & Legal, Intellecap

Now is your chance to:
1. Understand the opportunities and challenges involved in equity investments
2. Learn to recognize key factors that drive sound valuation
3. Hone your negotiation skills to garner maximum investment value.

Book soon, limited seats available.

Course Fees: INR 16, 545, per person (INR 15,000 plus 10.3% tax)

For further information contact

Rashmi Pillai

Intellectual Capital Advisory Services Pvt. Ltd

512 Palmspring Link Road Malad West Mumbai 400064

Email: rpillai@intellecap.com

Online Registration Form

http://intellecap.com/registration-mfi-workshop2

Lok Capital invests in Rural Shores BPO

Microfinance Business — Mon, 08 Feb 2010 07:02:18 +0000

Lok Capital LLC, a Mauritius-based venture capital fund, has invested an undisclosed sum in RuralShore Business Services Pvt Ltd, a Bangalore-based company. HDFC Ltd is a strategic investor in RuralShores holding 26% equity in the company.

Reuters has more information about the deal

Lok Capital invests in RuralShore Business Services

Sequoia buys 10% in Equitas for 44 Crore

Microfinance Business — Mon, 08 Feb 2010 06:57:50 +0000

Sequoia capital which already has investments in SKS and Ujjivan has now acquired a 10% stake in Equitas for 44 crore from one Kalpathi Suresh who is the founder of SSI Education. Kalpathi Suresh had invested Rs3.5 crore to acquire the 10% stake in Equitas in 2007-08 and it did not include any management rights or board seat.

Livemint has more details of the deal

Sequoia buys 10% in Equitas from Kalpathi

The Future of Credit Card Payment is Square

Microfinance Business — Sat, 23 Jan 2010 13:29:37 +0000

Last month Jack Dorsey the creator of Twitter unveiled his new device and service to make bulky and expensive credit card swiping machines – History.

The Solution goes by the name Square and is being funded by Vinod Khosla of Khosla Ventures fame.(Editors Note – Vinod Khosla is also an investor in SKS Microfinance and Grama Vidiyal Microfinance)

Square - Easy way to recieve credit card payments

Twitter co-founder Jack Dorsey announced his new company in appropriate fashion: with a tweet on the network he created in 2006. His new company, Square, allows merchants and individuals to accept secure payment from credit (and other) cards using a mobile phone.

According to Square’s website, payees can start accepting payments via Square in under 60 seconds, with “no contracts, monthly fees, or hidden costs.” The company donates one cent from every transaction to the charity of the payer’s choice. In order to streamline the process, payees can register for Square and upload a photo, so that payees can verify that you are who you say you are.

Given below is a CNBC Interview with Jack Dorsey, founder of Twitter who explains what Square is about and demonstrates how this credit card swiping system works

Link To Video