Monthly Newsletter – Issue No. 34

Monthly Newsletter – Issue No. 34
Monthly Newsletter – Issue No. 34
samn

Monthly Newsletter Issue No. 34

JANUARY, 2017

Latest News

Bangladesh: World Bank supports Bangladesh efforts to ensure hygienic sanitation for low-income households  | January 26

Over 170,000 low-income households in rural Bangladesh will have access to hygienic sanitation under the Output-Based Aid (OBA) Sanitation Microfinance Program, said the World Bank Thursday.
The World Bank is supporting the program with a 3 million US dollars grant from the Global Partnership on Output-Based Aid (GPOBA), in line with the government’s initiative to enable households to shift from basic to hygienic quality sanitation services, said the Washington-based lender in a statement.
Bangladesh has made remarkable progress in almost ending the practice of open defecation in rural areas, which is now down to 1 percent. This has helped reduce health risk, especially for children under five and provided safety, dignity and security to women and adolescent girls, said Rajashree Paralkar, acting country director of World Bank Bangladesh.

 

Read more at: http://www.globaltimes.cn/content/1030721.shtml

Bangladesh: Fazle Kabir: The unconventional route to financial inclusion | January 03

In 2015, Bangladesh reached lower middle-income status, a milestone for a country of 160 million population. At more than 6% for 15 years, now more than 7%, economic growth has been relatively high, steady, and, more importantly, inclusive, despite persistent natural shocks. It has also defied pundits’ gloomy predictions. Over the past four decades, average life expectancy in Bangladesh increased by about 30 years to more than 70 years of age, and less than 25% of the population now lives in poverty, a figure that stood at more than 80% 40 years ago. The economy has also passed the $200bn mark, so the macro story has clearly been impressive.
Bangladesh’s micro story is even more heartening: ours has been a bottom-up, broad-based and labour-intensive growth that has both empowered and relied on women, be it in garments manufacturing, agriculture or other non-farm rural activities. Together, these transformations have enabled impressive gains in gender equality, health, education and other human development indicators. Thanks also to home-grown social innovations, these transformations have also taken place at a much lower per-capita income than witnessed in peer economies.

Read more at: http://www.thebanker.com/Comment-Profiles/Viewpoint/Fazle-Kabir-The-unconventional-route-to-financial-inclusion

India: Small finance banks may need up to Rs60,000 crore by 2020: India Ratings   | December 15

Small finance banks (SFBs) could require up to Rs60,000 crore of non-equity funding by 2019-20 assuming 25% growth in both steady state loans and off-balance sheet loans, according to an India Ratings and Research report released on Wednesday. Off-balance sheet loan portfolio includes pass-through certificates and loans acquired through the business correspondent route. Steady state loans are the ones which the lender gives on its own. Non-equity funding comprises deposits, debentures and warrants.

Small finance banks would initially ramp up their deposits through wholesale funding at rates higher than those of commercial banks and gradually replace them with granular retail deposits, the report noted.

As these banks will offer term deposit rates of 8-10%, they will save nearly 200 basis points (bps) on borrowing cost, because as microfinance companies, their borrowing cost was 10-13%, the agency said.

The savings can be used to cover higher compliance cost and cost of carry for statutory liquidity investments, India Ratings added.

Read more at: http://www.livemint.com/Industry/7dVgml1dfEFrulD0rZQpyH/Small-finance-banks-may-need-up-to-Rs60000-crore-by-2020-I.html

India: A Tale of Four IPOs: Is Public Investment in Microfinance Becoming OK Again? | January 25

Rozas and Kanze agreed that the impact of the Compartamos/SKS IPOs continues to shape the industry’s approach to public investment – indeed, as Kanze pointed out, the Andhra Pradesh crisis led to the new regulatory framework and credit bureau infrastructure in India that made the Equitas/Ujjivan IPOs possible.
Initial public offerings have long been a controversial topic in microfinance, and rightly so. The IPOs of Compartamos in Mexico and SKS Microfinance in India, in 2007 and 2010 respectively, made a lot of money for investors and turbocharged the sector’s growth. But they also sparked hyper commercialization and debt crises that rocked the industry, gravely harming its clients and tarnishing its public image.
But last year, two Indian MFIs, Equitas Holdings and Ujjivan Financial Services, had successful IPOs that have garnered a much more positive reception in the financial inclusion community – while also bringing in some major funding. We spoke with Daniel Rozas of the European Microfinance Platform and Anna Kanze of Grassroots Capital Management about how these four offerings differed, and what these differences could mean for the future of public investment in microfinance.

Read more at: http://nextbillion.net/a-tale-of-four-ipos-is-public-investment-in-microfinance-becoming-ok-again/

India: Banking the Unbanked: MFIs Join The Digital Race   | January 29

MFIs can mitigate risks involved in dealing with cash by switching to digital payments while customers can use safe and secure ways of making payments through mobile wallets, thus saving time and effort involved in collection and dropping off money
In the last two decades, India has witnessed phenomenal economic growth that has elevated its position to that of the seventh largest economy in the world. However, this growth has been sporadic across regions. While the urban population enjoyed the benefits of the economic boom, a large part of the rural population had little or no means to change their living standards.
In an attempt to reduce poverty, the Government of India has come up with several schemes to make financial products and services accessible to the less privileged. In the late 90s the National Microfinance Task Force was formed. They defined microfinance as the provision of thrift, credit, and other financial services and products of very small amounts to the poor in rural, semi-urban, or urban areas for enabling them to raise their income levels and improve living standards.

Read more at: http://www.businessworld.in/article/Banking-the-Unbanked-MFIs-Join-The-Digital-Race/19-01-2017-111698/

India: Bharti Airtel Rolls Out India’s First Payments Bank |January 12

Bharti Enterprises chairman Sunil Bharti Mittal said Airtel payments bank has the potential to transform lives and contribute to financial inclusion in a country where 233 million people still do not have access to banking facilities.
India’s largest telecom operator Bharti Airtel on Thursday launched its payments bank with an initial investment of Rs. 3,000 crore.
India
With each Airtel retail store doubling up as banking point, the payments bank will have 250,000 outlets across India. Bharti Airtel’s subsidiary, Airtel Payments Bank Ltd (Airtel Bank), had rolled out a pilot in Rajasthan on 23 November, making it the first company to do so since the grant of licences by the Reserve Bank of India (RBI). Over one million customers joined the platform during the pilot.
Finance minister Arun Jaitley launched the payments bank In New Delhi on Thursday. Bharti Enterprises chairman Sunil Bharti Mittal said Airtel payments bank has the potential to transform lives and contribute to financial inclusion in a country where 233 million people still do not have access to banking facilities.

Read more at: http://www.vccircle.com/news/banking/2017/01/12/bharti-airtel-rolls-out-indias-first-payments-bank?logintype=premium

Nepal: NRB Caps Microfinance Lending Rates at 18 Percent |January 12

Issuing a new circular on Tuesday, the Nepal Rastra Bank (NRB) has capped the interest rate for microfinance institution in line with its policy introduced in the Monetary Policy for the Fiscal Year 2016/17.

Microfinance institutions (MFIs) will not be allowed to charge borrowers more than 18 percent interest now onwards.
Issuing a new circular on Tuesday, the Nepal Rastra Bank (NRB) has capped the interest rate for microfinance institution in line with its policy introduced in the Monetary Policy for the Fiscal Year 2016/17.

The central bank took the decision following widespread complaints that MFIs were charging poor people exorbitant interest rates.

While the NRB, in its monetary policy, had said that it would require MFIs to maintain a maximum of 7 percent spread in excess to their cost of fund while charging interest on loans, it has allowed some flexibility in calculation of such spread.
The central bank has already fixed such interest spread for commercial banks. According to the requirement, commercial banks have to maintain 5 percent interest spread.
Interest spread refers to the difference between the interest rates that a financial institution charges on its loans and the interest rates that it provides on deposits.
The spread on the cost of fund of MFIs is likely to affect the profit and dividend of MFIs which have been making impressive profit and offering attractive dividends to their shareholders. According to the central bank officials, the NRB enforced such requirement to curb the practice of distributing high dividends by charging borrowers, who are often poor people in rural areas, exorbitant rates.

Read more at: http://www.myrepublica.com/news/12943

Upcoming Events

Responsible Microfinance & Career Development Workshop

APRIL 01, 2017 | Boston, Massachusetts
Advanced Practical Internal Audit Course for Microfinance Practitioners

April 03 – 07, 2017 |London, United Kingdom
Finnovation Africa: Uganda 2017

April 07, 2017 | Kampala, Uganda
2017 Annual HOPE Global Forum – Reimagining the Global Economy: Uplifting the Invisible Class

April 10 – 12, 2017| BAtlanta, Georgia – United States

About SAMN

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.