G Venkatasubramanian trots out some astonishing numbers. Over the last 15 years, he and his fellow researchers at Pondicherry’s French Institute have been studying debt bondage among families in 20 villages in Tamil Nadu. Half of these settlements are in the coastal district of Cuddalore, and the others are in the adjoining district of Villupuram. […]
from the et special issue on modi sarkar completing 100 resplendent days in power, this story on financial inclusion… Every two years, India’s financial inclusion drive reformats itself into a brand new, entirely unrecognisable avatar. Till about three years ago, it starred banks, the Reserve Bank of India and banking correspondent companies. Then came DBTs […]
early in april, the rbi surprised most financial sector watchers by granting a banking license to bandhan, a microlender with most of its operations in eastern india. in a story out today, my colleague atmadip and i take a closer look at this decision. and say that this is a high stakes experiment — for […]
and, after a long time, i write again on india’s search for regulatory mechanism for microfinance. With the Standing Committee on Finance rejecting the latest avatar of the microfinance bill, old questions about the microfinance sector have resurfaced. Since 2010, when the controversial Andhra Pradesh ordinance made it all but impossible for Microfinance Institutions (MFIs) […]
on vikram akula’s attempt to get back into sks microfinance, by my colleague john samuel raja and me.
A last-minute change in the bill to govern microfinance institutions has sent banks and MFIs into a tizzy. The bill has raised the loan credit limit tenfold, a move that could alter the character of these lenders from tiny loan providers to the poor to financers of the relatively affluent. yep. after all the reports […]
india’s beleaguered mfis are making a set of fundamental changes to their business models. in a bid to survive, one bunch is diversifying beyond microfinance into lending for cycles, vehicles, homes, tractors and whatnot. another lot is sticking to microfinance but making some significant changes within that — like who they lend to and how […]
all right. so, here is something puzzling. Microfinance practitioners insist their embattled industry should not be regulated by state governments. State governments, they say, do not know how to regulate financial organisations. Keeping microfinance institutions (MFI) under the purview of the state government, they add, will leave microlenders vulnerable to political pressures. It is a […]
an interview with vijay mahajan shortly after he announced basix would shut down in a couple of months. here.
reported for this story by my colleague atmadip on how the credit taps might be opening up again for the mfis. which is good for them. coz the last few months have seen mfi loan portfolios shrink as bank lending dried up. At Chennai-headquartered Equitas, the asset base is down from 950 crore to about […]
With the Finance Ministry completing its draft Microfinance Institutions (Development and Regulation) Bill, another large piece of the puzzle on how to regulate Microfinance Institutions has fallen into place. It has been a tough puzzle to crack. In the beginning of last year, when complaints about women being pushed into debt traps were gathering pace, […]
the draft microfinance bill is up on the finmin website for comments. a look at what it says.
With SKS Microfinance challenging Andhra Pradesh’s controversial microfinance law in the Supreme Court, India might soon have an answer to the question: who should regulate microfinance institutions (MFIs), the Centre or the states? This is a question that needs an immediate answer. As non-banking finance companies (NBFCs), MFIs are regulated by the RBI. Being financial […]
and a look at what debt restructuring means for mfi promoters. “I have a 45% stake,” says a promoter of a leading MFI. “If we restructure Rs 1,000 crore of debt, my stake will drop to about 1%.” This will be a setback for promoters of MFIs such as Spandana Spoorthy and Share Microfin, which […]
the mfi story continues to unfold. in this story, my colleague john samuel and i look at why mfis’ attempts to restructure their debt are off to a poor start.
In the middle of this week, the RBI broadly accepted the reccos of the malegam committee report. With that, India’s beleaguered MFIs finally have a regulatory framework under which to operate. In this quick and dirty story, I try to understand what the new framework means for the MFIs.
You could say he has found a whole new way to walk the talk. And Vijay Mahajan, considered by many to be the high priest of Indian microfinance, is taking it quite literally—some 5,000 km across rural hinterlands. The chairman of Basix, a microfinance institution (MFI), began a quiet 75-day journey on January 30 from […]
and would you like to guess what the head of one of india’s largest mfis earns?
I worked on these two stories on the mutual benefit trusts with my colleague john samuel raja d. (see this and this).
a day after after the initial optimism, the mfis figure that the old adage of ‘what one hand giveth, the other taketh away’ fits the malegam committee report perfectly. A day after a central bank appointed committee submitted its report, small microfinance institutions (MFIs) say the recommendations if accepted would wipe away their presence in […]
after three months of low repayments, mfis in andhra are staring down the barrel of a gun, says this story by my colleague john samuel raja d and me.
The Microfinance Institutions Network (MFIN), a self-regulatory body of a clutch of 44 NBFC MFIs, has asked for Rs 1,000 crore in the form of business continuity facility, an euphemism for emergency money, to ensure survival. In an email to fellow MFIN members, Vijay Mahajan, the president of the NBFC-MFI association, said the loan has […]
a few months ago, papers and tv channels in andhra pradesh began reporting that women who had taken loans from microfinance companies were killing themselves. after 2005-06, when there had been similar reports of suicides amongst MFI borrowers back in 2005-06 (see this), this was the second such outbreak. the whole thing was surprising. while media […]
In the past two months, RBI has informally directed Sidbi to not invest in any non-banking finance companies without its approval… Sidbi has also been told by the finance ministry to ensure that Indias MFIs do not levy onerous interest rates. Further,it has been told to commission a study on interest rates and to start […]
this is the draft of a story on microfinance agents that never got published. i could not conclusively prove the existence of these microfinance agents. but it is an interesting read nonetheless, on how the informal economy subverts the formal sector’s best laid plans. take a look. In xx, while auditing the books of an […]
An investigative ET report on why Suresh Gurumani had to go. (see this article for context)
on the fourth of october, sks microfinance surprised all and sundry by announcing it had fired CEO Suresh Gurumani.
A Reserve Bank of India committee headed by executive director VK Sharma, in its draft report, has recommended that the priority sector status, which is accorded now to banks’ exposure to Non-Banking Finance Companies, or NBFCs, should be withdrawn. More, here.
Roughly a month before the SKS Microfinance IPO , the Seattle-based charity Unitus, a large investor in the firm, unexpectedly announced it was shuttering its non-profit operations in micro-credit and laying off more than 40 employees. The decision sparked a controversy because Unitus stood to make $70-80 million from the sale of its shares in […]
more brainstorming on how to regulate chez mfis.
for two years now, a quiet experiment on how to deliver financial services to india’s rural masses has been underway in and around the ancient temple town of thanjavur, tamil nadu. travel through the villages of pattukottai, thanjavur and kumbakonam and you will see branches — 57 of them — of a local “bank” called […]
on why complexity is bedevilling the indian government’s plans to regulate microfinance.
sks microfinance bosses sell shares in the company before its IPO.
On the ground… the MFIs’ growth is creating an unnerving situation. Even among those in the industry, there are fears of a mass-delinquency. In fact, Andhra is the most penetrated market in the world, on par with Bangladesh, says Daniel Rozas, a contributor at industry blog Microfinacefocus.com. “The state was already at 6% overcapacity a […]
India’s booming microfinance segment is under the scanner, with the Reserve Bank of India (RBI) issuing a veiled warning that it could be taken off the priority sector lending list of banks if the industry fails to improve its governance standards… The RBI officials reportedly told MFI executives that the central bank was aware of the […]
right. continuing with my highly successful strategy of driving readers away by never posting anything less than 5,000 words long, here is the term paper i just submitted on the microfinance suicides that india saw in march last year. as ever, comments welcome. “One Rennu Chandramma of Chenchu colony on the Chandraiah drain bund in […]
Between November and December 2005, I worked as a consultant on a World Bank project to create market linkages for self help groups in Andhra Pradesh through the private sector. What follows is a story I wrote about that experience. **** eleven in the morning. the tired, dessicated landscape of telengana, its aged, withered hills, […]