Peru microlender expands into Mexico
Peru’s Grupo ACP, the non-profit majority owner of Mibanco, has continued its aggressive regional expansion with the opening of its first bank in Mexico.
Forjadores de Negocios, a Mexican microlender targeting women, opened its doors as a bank for the first time this month, with ACP as a majority shareholder. Continue reading »
India: hint of recovery in microfinance
Grameen Financial Services, the prominent Bangalore-based microfinance institution, announced this week that it has raised Rs532m ($9.7m) in its third round of equity funding.
It’s a small amount of money in comparison with India’s needs for retail credit financing. But it’s a big vote of confidence that will boost recovery hopes in the scandal-hit microfinance industry. Continue reading »
India’s bank for women: is it for real?
Photo: Bloomberg
When Palaniappan Chidambaram, India’s finance minister, presented his budget on Thursday there were elements that moved markets and elements that analysts and economists pounced on.
But there was only one element that provoked any reaction from Sonia Gandhi, the leader of the Congress party, who appeared largely bored by Chidambaram’s speech. This was a proposal to set up a public sector bank especially for women. Continue reading »
Microfinance deal aims to take Latam experience to Africa
Two years ago, the world of microfinance was plunged into crisis by a wave of suicides among poor people in rural India unable to pay their spiralling debts. In the worst hit areas, lenders including SKS Microfinance, India’s only listed company in the sector, were ordered to halt operations.
Not all the problems have been solved. But confidence is returning and several deals have been done this year, as the industry responds to its challenges through consolidation. The latest and by far the biggest deal is Thursday’s announcement of a $105m acquisition of Boston-based Accion Investments by Bamboo Finance of Luxembourg. Continue reading »
SKS Microfinance: making a comeback?
Shares in SKS Microfinance, India’s only listed microfinance company, rose 10 per cent on Tuesday to Rs143 ($2.86) as investors bet new regulations would help it build business.
But the price rise doesn’t do enough to recover steep losses over the past month, after a widely-distributed Associated Press story revived accusations of involvement of SKS employees in a wave of suicides among insolvent borrowers. And the shares are at barely more than a tenth of the Rs1,400 they hit on a wave of investor confidence that followed the company’s IPO in 2010. SKS said the AP story was “baseless”. Continue reading »
Fund file: small is beautiful
Emerging markets look set to benefit from a fast-growing interest in niche investment opportunities, not least in microfinance.
FTfm reports Oxfam GB is to launch its first-ever investment fund, teaming up with Symbiotics, the Swiss microfinance specialist, to launch the Small Enterprise Impact Investment Fund. The fund will invest in financial intermediaries with a mandate to support small and medium-sized enterprises in Africa and Asia. Continue reading »
A microfinance call for capital, but will the market listen?
SKS Microfinance, India’s only listed microfinance company, is looking raise around $183m in a share sale later this year.
But given the trouble the industry has gone through – public outcry forced the government to crack down on lenders after several struggling borrowers committed suicide – are investors ready to jump back on the microcredit bandwagon? Continue reading »
Bangladesh waking up to impact of Yunus case?
For mont
hs, the Bangladesh government has waged a bitter battle against Nobel peace prize-winning economist Mohammad Yunus – a course of action that many have warned would hurt Bangladesh’s international reputation.
As supporters of Yunus in the US congress issued fresh appeals on his behalf this week, is it possible Bangladesh authorities are finally waking up to the potential consequences of their campaign? Continue reading »
Indian microfinance: respite for now
India’s microlenders breathed a sigh of relief on Wednesday as the country’s central bank made recommendations to set new lending rules, after months of sporadic clampdowns and general uncertainty about the industry.
Shares in SKS Microfinance, one Indian lender which has taken a particularly hard hit in the markets, shot up 13 per cent on Thursday in response to the news. Continue reading »
Video: India’s microfinance industry faces crisis
In this FT video, Amy Kazmin, south Asia correspondent, talks to Vijay Mahajan, president of the Microfinance Institutions Network, about the challenges the micro lending industry faces. Thursday’s FT also has a big analysis of controversies in the microfinance sector.
India’s microlenders await better news
For nearly a month, India’s beleaguered microfinance companies have faced intense interference from local government, police and opposition politicians in the state of Andhra Pradesh. The interference has hindered the collection of outstanding loans – a potentially-disastrous situation for the companies, given that the state accounts for a third of their $6.7bn portfolio in India. Now the industry is anxiously waiting to see whether the hostile mood continues – or whether it can get back to business. Continue reading »
India’s microfinance crisis: the Rahul Gandhi factor
Rahul Gandhi, the presumed heir to India’s Congress party, may be media-shy, but he already enjoys a quiet, behind-the-scenes potency. And in India today, very little seems to escape association with him.
So it is with the microfinance crisis rocking the southern, Congress-ruled state of Andhra Pradesh. After several struggling micro-borrowers committed suicide, public outcry forced the state government to rein in lenders. Now some microfinance executives are arguing the crisis is politically motivated, designed to embarrass the young Gandhi. Continue reading »
The success of microfinance sometimes appears simply a matter of a brilliant idea (lending small amounts to unbanked entrepreneurs) and a charismatic leader (Muhammad Yunus, now a Nobel prize winner).
But microfinance’s future growth may depend on governments and big investors. So it’s significant that, according to a new report out today, Peru has the world’s best business and policy environment for microfinance. Bangladesh, home of the Grameen Bank, doesn’t even make the top 30. Continue reading »
Facing off on microfinance
Is microfinance still microfinance if it involves outside shareholders and capital markets?
That question was the subject of a lively debate at the Clinton Global Initiative this afternoon as Grameen Bank founder and Nobel laureate Muhammad Yunus squared off against Vikram Akula, the founder and chair of SKS Microfinance, the recently listed microfinance lender. Continue reading »
Microfinance faces mega default risks
Microfinance is expanding fast in emerging economies. The number of financial institutions piling in to grab a slice of the market is expanding at an even faster rate. The latest to make a move in the sector were the Indian conglomerate Aditya Birla and South Korea’s Smile Microcredit Bank.
However, the microcredit system founded by the Nobel Prize winner Muhammad Yunus, whose Grameen Bank gave millions of people access to credit, is in trouble.
In fact, it seems to be facing nothing less than a new subprime style crisis. Bloomberg’s excellent analysis on the subject points to a report by CGAP which shows that the number of defaults in the last 24 months has risen sharply in several emerging countries. Continue reading »
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