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  Microfinance Focus 9:58 am on November 13, 2009 Permalink | Reply
  Tags: livelihoods, livelihoods and microfinance, mfis, microfinance   

  MFIs should focus on quality microfinance: MicroSave director 

  

  Microfinance institutions should continue to focus on providing quality microfinance services rather than attempting to offer livelihoods services, said Graham A.N. Wright, Programme Director of MicroSave India, in an exclusive interview with Microfinance Focus.

  He pointed out that majority of institutions are focusing only on microfinance which he said was a sensible decision. “There are very few organisations that can credibly do both. I think strategic alliances with high-quality livelihoods support agencies is a good idea, but I think there are very few high quality livelihoods support agencies. Livelihoods segment has been struggling for many decades and it is just re-inventing itself around Value Chain Analysis which is a much more powerful paradigm,” he noted.

  “To be very honest, most MFIs are struggling with the basics of providing credit services. Each product they introduce merely complicates their front and back offices and processes. They will have plenty of products to keep themselves occupied without getting into a whole new vertical like livelihoods. I have seen this when I worked in Bangladesh and East Africa, and very rarely you come across microfinance organisations which can offer livelihoods services effectively,” he explained.

  Recalling from his experience on product development, he said the key is that products be designed and delivered to meet clearly defined client needs. Unlike the traditional approach, where in a typical “bathtub product development”, a CEO gets out of the bath one day and says ‘we need to be doing this.’ “Then the product is foisted on the client and often they don’t like it,” he explained and added, “You have to really get down to the dust and see what the clients really need, and that involves qualitative research to understand the complexity of human financial behaviour. Then you can build products and delivery systems around that.”

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  Microfinance Focus 4:43 pm on November 3, 2009 Permalink | Reply
  Tags: hsbc india, hsbc india head, microfinance, naina lal kidwai (2)   

  Creditworthiness of MFIs tops our criteria 

  

  

  Naina Lal Kidwai

  Naina Lal Kidwai, CEO of HSBC India, has more praise for the creditworthiness of microfinance institutions when she talks about lending to the sector.

  The Chief Executive Officer of The Hongkong and Shanghai Banking Corporation, (HSBC) India, who is also the first Indian woman to head the operations of a foreign bank in India, has pointed out that despite the global credit crisis, microfinance sector has withstood its record in repayments and creditworthiness.
  In an exclusive interview with Microfinance Focus in New Delhi after the inaugural session of the Microfinance India Summit last week, she said, “What makes the microfinance sector different is its capability to honour all the debts when other financial sectors like credit cards and other small loans failed miserably.”
  Though funds to the sector declined in the last one year, it was an effect of the overall impact on financial services and not merely the microfinance sector, she said and quickly added that the pie of microfinance was certainly growing. “Unless we damage the creditworthiness of the sector by irresponsible multiple lending, microfinance is bound to get a biger pie in fund inflows,” said Ms. Kidwai.
  Citing the example of Mexico where credit history of every small individual is available, she said there is a need for credit rating institutions and credit bureaux in India to mitigate the effect of irresponsible lending or multiple borrowing that is affecting the sector in many areas of the country. Community lending and self-help groups have an advantage in terms of tracking individual lending which will help the sector, she said.

  There were concerns like subprime, then real estate crisis and now microfinance bubble, she remarked. Justifying the fear among the lending agencies, she said it was caused since everybody is chasing one borrower but flagging about the crisis makes lenders aware of the problem and look for safety measures, she pointed out. At macro level, penetration of lending among the microfinance borrowers is still less and there is a huge potential in this sector, she added.
  With increased cost-effective measures, the rates of interest can be brought down, said Ms. Kidwai on the issue of higher interest rates in microfinance. It requires rotation of funds and effective management.
  On succession of top level management in the microfinance sector, she said the issue is equally important for all financial institutions, whether banks or family-run companies. The top man who has brought the company to its peak level also requires to draw a clear line of succession and in this regard big corporates have shown the way, she said.

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  Microfinance Focus 3:37 am on August 29, 2009 Permalink
  Tags: microfinance, microfinance india summit   

  Microfinance Focus Partners With ACCESS for Summit 

  

  Microfinance Focus, a news portal and monthly e-magazine on microfinance, will serve as the official media partner of the “Microfinance India Summit 2009″ to be held in New Delhi from October 26 to 28.

  The theme of the conference is “Doing Good and Doing Well: The need for balance”. The summit will focus on providing financial services to low-income groups, organisers said. The event, sixth in a series of annual summits organised by ACCESS Development Services, a microfinance solutions provider, will draw diverse perspectives of the future of microcredit in India. (More …)

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