Microfinance

Microfinance India News Digest – 20/10/2009

Crime, inaccessibility impede spread of microfinance activity in India

Safatullah is 22 years old and runs a bakery from his home. He needs Rs8,500 to buy equipment and ingredients to increase biscuit production, so that he can sell more cookies to tea vendors. For three months, he’s been running around to raise the money, but has failed.“No one gives me money. Banks ask for collateral, which I do not have. Where can I go but to the local mahajan (moneylender)?” he said.While banks may not find Safatullah worth lending to, he looks an apt candidate for microfinance institutions (MFIs).

He’s young, earns a livelihood, has the means to repay and can be a part of a cluster for group lending.Nearly 80% of the MFI business is concentrated in the three southern states of Karnataka, Andhra Pradesh and Tamil Nadu.Safatullah, however, lives in Uttar Pradesh’s Bahraich town. That’s an area where even the MFIs don’t want to go because widespread poverty has made forming self-help groups difficult here. Also, most people are not into a livelihood that can be expanded. Rest of the article

High domestic funding saves Indian MFIs from meltdown: Study

Indian microfinance sector, the largest microfinance market in Asia, escaped the full impact of global meltdown due to low dependence on external funding and efficient microfinance institutions, a study said.”Globally microfinance sector experienced shocks induced by the meltdown,” said N Srinivasan, author of ‘State of the Sector Report 2009’, an annual study on microfinance brought out by Access Development Services, a not-for-profit company.

However, “South Asia had a high level of domestic funding in microfinance which seems to have significantly helped the sector to absorb shocks arising from the global meltdown,” the author said in a statement.Rest of the article

Equitas Micro Fin raises 100 cr from SIDBI

Equitas Micro Finance India, a Chennai-based new generation MFI has raised a fresh debt of Rs 100 crore from Small IndustriesDevelopment Bank of India (SIDBI). Along with SIDBI’s earlier sanctioned limit of Rs 47 crore, its total exposure will increase to Rs 147 crore. Parellelly, SIDBI has increased its equity stake to five per cent in the MFI.

Equitas’ MD, P N Vasudevan said on Tuesday, SIDBI was the earliest institution to support the MFI and its continued support would enable it to reach out with confidence to other lenders. It has relationship with 24 banks and lenders with a total outstanding of Rs 310 crore which carry an interest of 14%.Rest of the article

HDFC Bank in talks with Indian Post for extending microfinance in Maharashtra

Private sector lender HDFC Bank is looking at increasing its reach in the microfinance segment through tying-up with the postal service department and is in talks with it for the same.”Our bank is now evaluating opportunities to tie-up with the postal department to increase our microfinance base in the rural areas of Maharashtra,” a senior HDFC Bank official told PTI here on Monday.

The official also said that even if the postal department keeps for itself a three per cent spread, credit could be extended at not more than 15 per cent interest rate and the post-offices could lend to the borrower directly. Rest of the article

Western Union takes MFI route for rural spread

Money transfer company Western Union believes in tapping fortune at the bottom of the pyramid.The company is tying up with microfinance institutions (MFIs) and e-governance service providers to facilitate financial inclusion.This marks a shift in its India game plan, to offer money transfer services through MFIs besides its current portfolio of India Post network, banks, retail and finance agents.

The Nasdaq-listed company has tied up with e-governance and IT solutions provider CMS Computers, which has government’s mandate to roll out more than 17,000 e-governance locations across India.”We are looking at multiple classes of trade to catapult growth. Synergies with MFIs and e-governance providers will transform financial service offerings in rural India,” said Kiran Shetty, regional vice-president (India), Western Union. Rest of the article


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