Monthly Newsletter Issue No. 32
Any micro-credit scheme should work for alleviation of poverty permanently so that while trying to get emancipation from this curse the poor might not fall into a vicious cycle of debt.
The origin of micro-credit or micro-finance is in Bangladesh. Micro-credit, contrary to conventional banking practice, does away with the need for collateral to develop a banking system based on mutual trust, accountability, participation and creativity. The Grameen Bank (GB) translated this concept, first of its kind in the modern world, into reality in Bangladesh. As of December, 2015, the Grameen Bank had 8.81 million borrowers, 97 per cent of whom are women. With 2,568 branches, the GB provides services to 81,392 villages, covering more than 97 per cent of the total villages in Bangladesh. Currently hundreds of NGOs like BRAC, Proshika are conducting various micro-credit schemes in the country.
Under this programme, credit or investment facilities are provided to the poorest of the poor without any collateral in order to alleviate hardcore poverty. This is really a cost effective weapon to fight poverty serving as a catalyst in the overall development of socio-economic conditions of the poor who have been kept outside the banking facility on the ground that they are poor, cannot provide any collateral and therefore, not bankable. But it has now been established that if financial resources can be made available to the poor people on terms and conditions that are appropriate and reasonable, millions of such people with little or no income with their collective small efforts could contribute to create the biggest avenue to sustainable development.
India: The New Hotspots of Indian Microfinance | November 28
The Rs64,000 crore Indian microfinance industry has started seeing defaults, pipelining, and over-lending in some pockets.
P. Satish, executive director of Sa-Dhan, the oldest industry body for Indian microfinance, and Ratna Vishwanathan, chief executive of Microfinance Institutions Network (MFIN), a relatively younger body which has all large for-profit microfinance institutions (MFIs) as its members, aren’t very happy these days. Yes, the historic decision to ban Rs1,000 and Rs500 notes has contributed to their unhappiness as this has affected the entire industry—particularly those entities which operate in rural India. However, this could be a temporary phenomenon. The reason behind their grumpiness is something that the industry has been grappling with for quite some time now. An October newspaper report spoke about this—loan defaults in 10 villages of Wardha district in Maharashtra.
Impact investing is not charity and investors expect a return here too. The difference is that here they also want to make a positive impact. Besides looking at returns, they look to invest in companies whose activities can influence the environment and society.
When an investor puts money into a company, it is with the expectation of getting a good return. Impact investing is not charity and investors expect a return here too. The difference is that here they also want to make a positive impact. Besides looking at returns, they look to invest in companies whose activities can influence the environment and society.
If a private-equity fund or a venture capitalist was to invest in a chain of schools in backward regions of the country, that would be impact investing. Investors who put money in solar power plants, would similarly be called impact investors.
India: MFIs See Normalcy Soon | November 18
Microfinance institutions expect collection and disbursal to improve towards the end of the month after the upset caused by demonetisation.
After the ban on Rs 500 and Rs 1,000 notes, most MFIs and several micro lenders had to forego repayment, which typically comes in fortnightly instalments. Disbursal of credit has also shrunk because of the cash crunch.
“At present, we are passing through an extraordinary situation with the scrapping of Rs 500 and Rs 1,000 notes. Most of the borrowers take loan in cash and repayment is also in cash. But I believe this is temporary and the industry could get back on track as the situation becomes more normal,” Ajit Maity, chairperson of the Association of Microfinance Institutions (AMFI) in Bengal, said on the sidelines of a summit today.
The National Micro Entrepreneurs Federation Nepal and Deprosc Laghubitta Bikas Bank Ltd signed a memorandum of understanding (MoU) today, to promote micro entrepreneurship at the local level across the country.
The MoU was signed by NMEFN President Lakpa Lama and CEO of DLB Bank Sharada Prasad Kattel.
Speaking at the MoU signing ceremony, NMEFN President Lama said that entrepreneurs of small and cottage industries across the country have been deprived of micro finance facilities provided by different financial institutions. “Such small entrepreneurs don’t have access to bank loans and banks and financial institutions (BFIs), too, are reluctant to issue loans to small entrepreneurs,” Lama said, adding that the tie-up with DLB Bank would pave ways for new opportunities for entrepreneurs doing business in comparatively small scale.
Lama also said that loan facilities of BFIs and different subsidies of the government should reach small and cottage industries and entrepreneurs as micro enterprises are vital to alleviate poverty.
Pakistan: BOP, FINCA Sign MasterCard Affiliate Programme | November 23
FINCA Microfinance Bank and the Bank of Punjab signed an agreement on the MasterCard affiliate membership. The program enables the Bank of Punjab – a premier MasterCard partner – to extend its MasterCard license to FINCA MFB, thereby becoming the first such affiliation in the country.
This milestone enables FINCA to extend state of the art MasterCard services to its customers, while maintaining a low cost footprint. Through this affiliate license by BoP, FINCA would issue Master Card branded debit cards to its core banking as well as branchless banking customers. The deal also allows BOP and MasterCard to strengthen relationships while adding to their respective business portfolios. “We are delighted to welcome FINCA as our first affiliate member. It also means both organisations can benefit from their reach and strengths across the banking sector”, stated the BOP Retail Banking Group Head Ahmad Shah Durrani. At the signing ceremony, FINCA Microfinance Bank President and CEO Mudassar Aqil said, “FINCA was very excited and committed to SBP’s vision of National Financial Inclusion Strategy and we believe, by 2020 FINCA would be one of the largest shareholders of mobile accounts industry, through innovative product offering and value added services for end users”. The signing ceremony took place at The FINCA head office in Lahore and was attended by senior executives from FINCA Microfinance Bank, and the Bank of Punjab.
Pakistan: Kashf Foundation becomes first Pakistani institution to win European Microfinance Award | November 23
Kashf Foundation, one of Pakistan’s leading microfinance institutions, has been awarded the prestigious European Microfinance Award by the Luxembourg Ministry of Foreign and European Affairs.
The award is a first-time win for Pakistan and is in recognition of the Foundation’s credit and training facilities to low-cost private schools.
Pakistan suffers from a serious dearth of quality education, especially within the public sector. As a result, the country has seen a rise in low-cost private schools which look to fill the gap left by inadequate equipment and facilities in public sector schools. After extensively researching the needs of low-cost private schools, Kashf Foundation tailored an integrated solution that provides access to finance, school development trainings, and general pedagogy trainings for teachers. To date, the Foundation has serviced over 1,100 schools, trained 4,500 teachers, trained over 1,800 school owners, and positively impacted more than 570,000 students in low-cost private schools across Pakistan with a product unmatched anywhere in the world.
As woman entrepreneur, supporting her family on her own, Shaheen demonstrates each day that other women in Sindh can take control of their lives, work hard, educate their children, and lead their families to prosperity.
Shaheen’s cellphone rang in the middle of the night with her husband’s name flickering on the screen. She answered the phone to news that shattered her world—a strange voice asking her to come and identify her husband’s body. Shaheen’s husband had left the family home in Johar Morr, Karachi that evening to pick up medicine for their son. On his way back, he was cut down by a stray bullet intended for someone else. Shaheen hung up the phone to a new reality; she was a widow and her five children were fatherless.
Her husband’s murder left Shaheen unsure as to how to support herself and her children. Despite working as a teacher prior to her husband’s death, the family had relied on their dual incomes to survive. Shaheen was unprepared to take on the entire responsibility of supporting her family, but she had no other choice.
|Islamic Microfinance: A Solution to Expand Financial Inclusion?
Dec 14, 2016 | Luxembourg City, Luxembourg
|Risk Management Program for Microfinance Regulators and Practitioners
Jan 23 – 27, 2017 | New Delhi, India
|Certificate in Law and Regulation of Inclusive Finance
Jan 16 – 27, 2017 | Luxembourg, Luxembourg
|European Microfinance Summit
Jan 26 – 27, 2016 | Barcelona, Spain
The South Asia Micro-entrepreneurs Network (SAMN) is a regional body working to enhance financial inclusion among low-income population in the region. SAMN achieves this by improving knowledge, business environment and capital flows for the microfinance industry across six countries in the region: Afghanistan, Bangladesh, India, Nepal, Pakistan and Sri Lanka. SAMN’s members are national networks from these countries. Thus, SAMN is the representative voice of the South Asian Micro-entrepreneurs community reaching more than 60 million low-income customers in the region.