My big lesson from recent years in journalism is that things are never so bad that they cannot get worse. A case in point, the appointment of Shaktikanta Das as governor of the Reserve Bank of India. An event which resulted in this disbelieving little commentary.
India’s current cash crunch is a real enigma. To begin with, there is its sheer unprecedented nature. In all the years since Independence, India has never seen something like it. “We have heard of coin shortages but never a cash shortage,” said MS Sriram, visiting faculty at the Indian Institute of Management-Bangalore’s Centre for Public […]
atms are again running dry in india. and theories claiming to explain why are doubling every day. out today, a quick report with my colleague rohan which seeks to separate plausible theories from the disingenuous (or just plain stupid) ones.
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 […]
The new financial inclusion push, Sampoorn Vittiyea Samaveshan, which Prime Minister Narendra Modi is widely expected to unveil on August 15 does not quite have the central bank on its side. Top government sources told ET that the Reserve Bank of India (RBI) was in disagreement with three critical elements of the drive. it opposed […]
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) […]
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 […]
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 […]
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 […]
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 […]
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 […]
Three decades after Independence, most poor Indians still lack institutionalised access to insurance, savings, remittances and loans. The outcomes are predictable. Migrant labour, carrying hard cash when they head back home, run the risk of being robbed. The poor rely excessively on loans to cope with a crisis — accidents, unpredictable weather, sick cattle — […]
on why complexity is bedevilling the indian government’s plans to regulate microfinance.
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 […]