August11

BSFI on verge of closure

27th July, 2011 Vijay Mahajan-promoted Bhartiya Samruddhi Finance Ltd (BSFL), Indias oldest microfinance institution (MFI), is collapsing under the burden of bad loans. With borrowers in Andhra Pradesh refusing to repay, bad loans are growing and threatening to wipe out its entire net worth and reserves. As of 30 June, BSFLs net worth was Rs128 crore, down from Rs230 crore in September last year, and this will get completely eroded because of accumulated bad loans of Rs450 crore. Link:http://www.livemint.com/2011 /07/27003826/India8217s-oldestmicrofina.html

1996eight years before SKS Microfinance Ltd, Indias largest and only listed micro lender, set up shop as a non-banking financial company. MFIs extend small loans to poor borrowers at 24-36% and source money from banks to do business. The industry, worth Rs. 20,000 crore in India, has been struggling since it started facing regulatory hurdles last year. Link:http://www.livemint.com/2011 /08/07231543/BSFL-to-get-Rs-800cr-funding.html?h=B

Assocham for capital norms

22nd August, 2011

raising

MFIs'

BSFL The oldest MFI gets relief

7th August, 2011 This is indeed a lifeline for us, said Mahajan, who founded BSFL in

The Associated Chambers of Commerce and Industry of India (Assocham) today called for raising the minimum capital requirement for microfinance institutions (MFIs) to at least Rs 25 lakh, as against Rs 5 lakh proposed in the Micro Finance Institutions (Development and Regulation) Bill, 2011.

It proposed the minimum capital requirement be backed with strong technology intervention for adequate reporting, supervision and regulation. Clarity in definitions of expressions like microfinance and profit were also sought. Link: http://www.businessstandard.com/india/news/assocham -for-raising-mfis-capitalnorms/446592/

Link: http://www.businessstandard.com/india/news/beggarscan-be-choosers-/446464/

Banking access to rural poor

9th August, 2011. One of the more impressive aspects of India's growth story relates to the expansion of the banking infrastructure. Between 1969 and now, the banking network has grown ten-fold from 8,000 branches to 80,000. The number of rural branches has increased phenomenally, from 1,443 to 32,000. Link:http://www.thehindu.com/toda ys-paper/tp-features/tpbookreview/article2338046.ece

Beggars can be choosers

21st August, 2011 A successful micro finance business model for the poorest of the poor is creating waves in rural Bengal. At 7.30 AM, Bikash Dey Sarkar, an employee of Bandhan Microfinance, is out at work, surrounded by close to 150-odd villagers, watching him scribble a map on the mud floor of a makeshift community centre. Sarkar is not a cartographer but is on an assignment to create a data bank of ultra low net worth individuals in far flung villages.

Government gets cracking on key reforms hanging fire

15th August, 2011 Nine advisory committees to suggest sector-wise solutions. As the wait for the passage of key financial sector Bills on insurance,

pension and microfinance gets longer in Parliament, the finance ministry has decided to initiate some reforms at the grass-roots level. The ministry plans to set up multiple advisory groups to ponder over issues that blight the financial sector and find long-term solutions. Link: http://www.businessstandard.com/india/news/govt-getscrackingkey-reforms-hangingfire/445867/

Link:http://economictimes.indiatime s.com/news/news-byindustry/banking/finance/bandhanfinancial-services-will-raise-43more-funds-thisyear/articleshow/9713171.cms

SKS Microfinance bucks the trend

23rd August, 2011 SKS Microfinance fell 2% in an otherwise firm market on Monday amid speculation that some of the shareholders were selling the stock after the one-year lock-in period, as the initial public offer ended last week. SKS shares ended at 266.30 after falling 4% to 261 earlier in the day. The counter attracted volumes double the two-week average on the BSE. SKS shares were listed at 1,040 on August 16, 2010 against the issue price of 985 a share after a successful public offering. Link:http://economictimes.indiatime s.com/markets/stocks/stocks-innews/sks-microfinance-bucks-thetrend/articleshow/9701034.cms

Bandhan Financial Services will raise 43% more funds this year
24th August, 2011 Bandhan Financial Services plans to raise 43% more funds in loans this year as banks begin to open their purse strings for microfinance companies after more than a year of freeze due to a collapse in loan recovery. It will borrow 2,400 crore this financial year. Bandhan will use the resources for on-lending to its existing borrowers while it still wants to go slow on new customer acquisition as the sector is still not out of the woods.

Wipro sets up first rural BPO centre in Tamil Nadu

26th August, 2011 Wipro BPO on Monday inaugurated its first rural centre at Manjakkudi village in Tamil Nadu to capitalize on literate talent pool available in the region. The Manjakkudi centre in Tamil Nadu has a capacity of 120 seats, and will open with a 50-seat pilot project for an international client in the retail sector. Wipro plans to expand its rural BPO operations to 500 seats by March 2013 in Tamil Nadu and to replicate this BPO model in other states in the near future, Wipro said in a statement. Link:http://articles.economictimes.i ndiatimes.com/2011-0826/news/29931867_1_rural-bposwipro-bpo-senior-vice-presidentwipro-sets

Rural youth prefer the book to the plough

26th August, 2011 People in the age group of 15-24 seem to prefer pursuing studies rather than working on farms. This is evident from the number of youth working on farms declining by 14 million in the last decade (200111). Speaking at a national meet on Attracting farm youth sustainable agriculture' organised by University of Agricultural Sciences-Bangalore and Indian Society of Extension Education, Prof Abhijit Sen, Member of Planning Commission, said, There were 47 million youth engaged in farming according to the 2001 census. But this has declined to 33 million according to the latest census of 2011. Link:http://www.thehindubusinessli ne.com/industry-and-economy/agribiz/article2400616.ece

Tapping electronic banking value at the bottom of the pyramid

26th August, 2011. Addressing the FICCI-IBA Conference on Global Banking, HR Khan, and Deputy Governor of Reserve Bank of India said that financial inclusion should be seen not only as a social responsibility but also as a potential business model because of the huge untapped market that it seeks to bring into the fold of banking services. Highlighting that India has the highest number of households (approximately 145 million) who are excluded from banking, he asked banks to devise appropriate strategies for tapping the banking value that is represented by these large number of households at the bottom of the pyramid. Mr. Khan discussed financial inclusion enablers such as mobile banking, Aadhaar enabled payment systems, and liberalization of BC guidelines etc, which when deployed with a sound business plan can generate value not only to the customers but also to the banks.

Link:http://www.microfinancefocus. com/tapping-electronic-bankingvalue-bottom-pyramid

SKS Microfinance fell 58% in one month

25th August, 2011. Indias largest and only listed microfinance institution SKS microfinance fell by over 58 percent on Bombay Stock Exchange in the last one month period. The companys stocks have reached their lower circuit limit of 5 percent and were last trading at Rs. 229.30. SKS has been losing on the bourses for the last nine consecutive days of trading. From a monthly high of Rs. 544 it has dropped to Rs. 229.30. SKS Microfinance launched a successful IPO in July last year with its shares oversubscribed by nearly 11 percent. Link:http://www.microfinancefocus. com/sks-microfinance-fell-58-onemonth

Grameen bank will not be left to collapse BB Governor

25th August, 2011. Speaking at the report launching ceremony for State of the Microfinance Sector: Bangladesh 2011, on Thursday, Governor of Central Bank of Bangladesh Mr. Atiur Rahman said Performance of the Grameen Bank has not been and will not be left to founder following retirement of its pioneer Nobel Laureate Dr. Yunus. Highlighting some of the gaps in the financial services currently available, Mr. Rehman said that there is neither enough provision of credit for meso type activities which are between micro and small enterprises nor savings options for poor households who are not members of MFIs. He invited regulators, program managers, development partners and the private sector to develop insurance products for the poor, particularly health insurance and crop insurance. Link:http://www.microfinancefocus. com/grameen-bank-will-not-be-leftcollapse-%E2%80%93-bb-governor