Microfinance News Digest

What’s Wrong and Right with Microfinance – EPW : News Digest

What’s Wrong and Right with Microfinance
By: David Hulme, Thankom Arun
Recent events in south Asia have led to an unexpected reversal in the narrative of microfinance, long presented as a development success. Despite charges of poor treatment of clients, exaggeration of the impact on the poorest as well as the risks of credit bubbles, the sector can play a non-negligible role in reaching financial services to low-income households. In regulating the sector, there is need for caution in setting interest rate ceilings on micro-loans and for greater openness to micro-savings products. Read the rest on EPW

 

microfinance loans

MFI crisis helping loan sharks in AP
The collapse of the microfinance industry in Andhra Pradesh has made traditional money lenders in India’s fifth largest state active even as borrowers are either selling personal assets to improve cash flow or halting business expansion, an industry report released on Wednesday said.LM

Look beyond profit, high growth, warns Sa-Dhan
MFI association says 50% annual growth is optimal, asks lenders to choose investors with long-term focus. LM

MFI’s delivery channels in AP fall short of expectations: Mathew Titus, Executive Director, Sa–Dhan
In an interview with ET Now, Mathew Titus, Executive Director, Sa–Dhan, talks about MFI funding. Excerpts: ET

SKS Microfinance hits low, dips below Rs 100
SKS Microfinance is trading lower by 4% at Rs 99.65, extending its 10% decline in past three days, after the exit of the company’s founder and executive chairman Vikram Akula. The company did not give any reason for the resignation. Bs

Private equity players staying away from MFIs
The sector is not at all attractive unlike a year ago. The return on equity is now in the range of 16-18 per cent compared to up to 45-48 per cent earlier,” Mr Vishal Mehta, Co-founder and Partner of Lok Capital, a venture capital firm which has investments in some MFIs including Basix and Ujjivan Financial Services. HBL

1 Comment

1 Comment

  1. s santhanam

    December 4, 2011 at 2:05 pm

    David Hulme’s paper on what is wrong and what is right with microfinance is yet great effort to provide one stop information of what is good and what is not good with mF sector. But, what is the way forward? Proposal offered in the paper is to reduce the size of MFI portfolio to avoid credit bubble. But, look at the way things are happening – new modules being added ‘Sub-K’ by BASIX, planning to convert SKS MF (under the new CEO) as a vennila type NBFC ignoring the Mission of the organisation with which it came to the Public and other similar examples around. Hope some MFIs in India will listen to David Hulme’s advice.

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