Microfinance News Digest

MFI industry shrunk by Rs 10,000 cr in 11 months – News Digest

Q&A: Alok Prasad, CEO, MFIN
The size of the Indian microfinance sector is shrinking fast, following the crisis the sector saw in Andhra Pradesh, the largest market for micro-lenders in the country. Micro Finance Institutions Network chief executive, Alok Prasad, in an interview with Somasroy Chakraborty, talks about the current state of affairs in the sector. Edited excerpts: BS


Microfinance Institutions Network India

Micro-lenders to roll out special package to recover Rs 7,000 cr dues in AP
Microfinance institutions (MFIs) have begun negotiations with their clients in Andhra Pradesh to recover outstanding loans of Rs 7,000 crore.HBL

Bhartiya Samruddhi Finance wants to convert loans into preference shares
Bhartiya Samruddhi Finance, the microfinance arm of livelihood promotion institution Basix, has sought permission from its lenders to convert loans worth Rs 200 crore into non-convertible preference shares in an effort to secure an immediate line of credit. ET

Micro-lender Spandana inks Rs 2,300-cr debt recast deal with banks
Spandana Spoorty Financial Ltd, the second largest microfinance institution in the country, has inked a corporate debt restructuring (CDR) deal with 34 banks.HBL

Financial Inclusion | A road India needs to travel
It is estimated that about 40% of Indians lack access even to the simplest kind of formal financial services. LM

India awaits boom in mobile banking
A bank need not always be a brick-and-mortar complex with a handful of tellers sitting in tiny cubicles and doling out cash, with armed security guards pacing up and down, and a place where someone always wants to borrow your pen to fill a form. For a bank in Japan, called Jibun Bank, a bank only means a mobile phone in the hands of all the customers. The bank, started in mid-2008, has absolutely no branches, operates only through mobile phones where its customers can perform all possible transactions. FC

Microfinance at a Crossroads: Balancing Good Intentions with Critical Industry Structuring
In the quest to reduce and eventually eliminate poverty, there exists no silver bullet. Poverty is a complex problem that requires the cooperative assistance of people from the top to the bottom of the economic pyramid. NB

Revisiting microfinance
We are working with a group of experts to improve our performance cycles for the microfinance space. The aim is to understand credit risk. Microfinance lenders were criticised for profiteering from unfairly high rates of interest. This made it imperative to review practices, understand the universe of microfinance variables and see if an objective system could be arrived at to assist the sector players. BS

RBI warns banks on poor customers
In the name of financial inclusion, banks should not blindly follow a policy of customer acquisition, providing new access to new customers. Instead, they must address the issues faced by poor customers properly, for it might otherwise lead to a long term mistrust and loss of confidence in the banking system. BS

The urban banking model cannot work in rural areas
The rural banking model should be block-focused—a large number of branches should be covering a block and the products should be as per the specific needs of the customers: Narayanan Vaghul. LM

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