Book by SKS Microfinance Founder says he once Considered Bankruptcy
While, Vikram Akula, founder and chairman of SKS Microfinance, may be worth millions today, not too long ago he almost declared personal bankruptcy. The man that built India’s largest micro-loan empire was struggling with a $45,000 mountain in credit-card debt in 2004, more than his annual salary at the time.
The unexpected expenses of launching the company as well as the cost of a drawn out divorce in the U.S. had left him with more debt than 100 of his borrowers put together. Instead of declaring bankruptcy though he got a job. He left SKS to his managers in Andhra Pradesh and went to work for a stint at McKinsey in the U.S. to generate some cash. Read the rest on the Wall Street Journal
Interview with Elevar Equity co-founder and managing director Sandeep Farias.
How do you assess the recent move of Unitus backing out of microfinance activities? What does it mean for its fund that you are managing?
Elevar is a socially responsible investment company founded by Chris Brookfield, Maya Chorengel, Johanna Posada and myself. Unitus, that had set up the Unitus Equity Fund (UEF), sub-contracted with Elevar to manage the Unitus Equity Fund (UEF), a decision that assured management continuity as Chris and Johanna had managed UEF from its launch in 2006. We are pleased that UEF is not impacted (by the decision of Unitus to exit microfinance) and that the sub-contracting relationship with Elevar will continue to be in place.
Soon after Elevar was founded in 2008, we launched our own fund, Elevar Equity II, to invest in social businesses in India, Latin America and SE Asia. This fund, which closed in 2009, is not impacted by their decision to exit microfinance as it was raised by Elevar and is independent of Unitus. We are currently investing from this fund. Read the rest on VCCircle
PNB joint venture to enter microfinance in Nepal
Indian public sector Punjab National Bank’s joint venture in Nepal, Everest Bank Ltd (EBL), is now seeking to enter the microfinance segment in the Himalayan republic following the success of the industry inspired by Nobel peace prize laureate Prof Muhammad Yunus’ Grameen Bank in Bangladesh.
EBL is among 24 finance organisations that have applied to Nepal Rastra Bank, the republic’s banking regulator, to start microfinance companies in a bid to take banking to the rural areas of Nepal where, due to the harsh topography, climate and security conditions, banks are yet to reach thousands of villages. Read the rest on the Economic Times
L&T Finance planning Rs 1500 Crore IPO
India’s largest heavy engineering firm, Larsen & Toubro is finally taking their diversified financial services division public, through a Rs. 1500 crore IPO. Better hedging of risks due to generalised portfolio, strong parentage, proven capital market stewardship for wealth creation, an investment business apart from financing, a strong investment portfolio, and a possible banking licence are all pluses for this NBFC, provided the IPO is on investor-friendly valuations.
But the million dollar question before investors is whether a broad based NBFC like L&T Finance Holdings can succeed as much as niche NBFCs that thrive solely around their super-specialised core competencies. Read the rest on Seasonal Magazine
Turning Chit Funds into a Tool of Financial Inclusion
If a group photo were to be taken of Indian financial institutions, one graying credit source that is likely to be elbowed out is the chit fund. Unlike its spunkier cousin microfinance, which is mollycoddled by private equity, venture capitalists and policy makers alike, chit funds seem unloved.
While microfinance loans have grown 10-fold over the last four years, registered chit funds have, amid rising costs, fallen behind on the back of regulations that cap margins at 5%. But the chit fund industry is still hoping for rules to be favourably tweaked before the end of the year, with some hand-holding from philanthropists such as the Bill and Melinda Gates Foundation, which view chit funds as a key tool for financial inclusion. Read the rest on Livemint
BFCs seek to work with banks to achieve financial inclusion
Non-banking finance companies (NBFCs) are seeking to work alongside the banking sector to help the government achieve its financial inclusion goals.
“NBFCs operate in specific areas and if the government wants to achieve its goal of financial inclusion faster, it must involve the finance companies. Rural and SME segments are very important for achieving financial inclusion goals and NBFCs can play a larger role in both cases because of their reach,” Hemant Kanoria, chairman and managing director, Srei Infrastructure Finance, told FC. Read the rest on theFinancial Chronicle
Re-Examining The Microfinance Mission: Should Interest Rates Be Capped?
On September 14th, at the Mayer Brown building in midtown Manhattan, the microfinance community of New York gathered to debate over the need to cap interest rates in the industry.
NGO interests were represented by Camilla Nestor, Vice President of Microfinance Programs at the Grameen Foundation and Chuck Waterfield, CEO and President of MFTransparecy. Representing the commercial interests in the microfinance debate were Brian Cox, CEO of MFX Solutions and Michael Edberg, Director of Investments at MicroVest Capital Management. Read the rest on Forbes