By Asma Azmi, Assistant Editor -Microfinance Focus
Microfinance Focus, Dec. 30, 2009: The year 2009 may go down as the watershed year for the Indian microfinance industry. Marked by strong growth and pioneering deals the industry is riding high, growing at a rapid pace of 100%-200% year-on-year. Attracting attention from mainstream investors, the sector accounted for 40 percent of all Private Equity deals in the past 18 months. There were 11 PE deals worth $178 million during the financial year 2009, compared to three deals worth $52 million in 2008, according to Venture Intelligence.

A plethora of reasons like huge untapped rural market, lower delinquency rates, high resilience, Union Budget emphasis on rural development and a volatile world economy have made investors flock to this segment. MFIs have reported growth in outstanding portfolio at a CAGR (Cumulative Annual Growth Rate) of 80 per cent and ROE (Return on Equity) of 30 per cent between 2003 and 2008. According to the 2008 microfinance industry report by Intellecap, the current Indian MFI market is around $1.5 billion with a penetration of around 10 per cent while the overall market size is estimated to be as high as $50 billion. Even the MFIs seem to be well prepared to exploit the new opportunities and take their business through uncharted ways like experimenting with various financial instruments like non-convertible debentures (NCDs), commercial papers, IPOs mutual funds etc.

International Investments

From the global funders, there was a steady flow of funds though the investment cycles turned a little longer due to credit crisis. India Financial Inclusion Fund (IFIF), an off-shore India-focused equity fund for microfinance companies and enablers, has achieved a final close of $90 million. Incorporated in Mauritius last year and advised by Hyderabad-based Caspian Advisors, IFIF has raised commitments from the likes of UK’s CDC Group ($30 million), Global Microfinance Equity Fund and Switzerland’s Social Investment Services. Since its inception it has made a gross total investment of $30 million in MFIs like Equitas Microfinance, Trident Microfin, to name few.

Grassroots Capital’s global microfinance equity fund, mainly meant for Indian microfinance sector, received investments worth $60 million (approx) from Dutch Pension Fund PGGM. In the last quarter, India’s EXIM Bank was able to raise $100 million loan from the Asian Development Bank.  The investment arm of World Bank, International Financial Corporation also committed INR 350 million in Rajasthan-based NBFC, AU Financiers Pvt. Ltd. Entering India for the first time, Incofin, a Belgium based microfinance company, has picked up a 34 per cent stake (Rs 8 crore) recently in Asomi Finance Private Ltd. Other institutions like IFC and Blue Orchards (Switzerland) too are showing a keen interest to invest in Asomi Finance Pvt Ltd.

Domestic Market

Back in the domestic market, the Indian microfinance sector witnessed the first ever listed non-convertible debentures issued by Hyderabad-based SKS Microfinance which has raised Rs 75 crore by issuing one-year NCD at a coupon rate of 10%. Listed on Bombay Stock Exchange, the NCDs have been placed with the Standard Chartered Bank’s Foreign Institutional Investments (FII)7. The company chose to raise funds through debt so that it could match its debt with the recently raised equity and its total equity capital is placed at about $135 million. Following its footsteps, Tamil Nadu-based Grama Vidiyal Micro Finance Limited (GVMFL) plans to raise Rs 100 crore by way of NCDs. Prior to this it had raised $4.25 million (Rs 21.7 crore) from private equity investors including Micro Vest, Amar Foundation and Unitus Equity Fund. Spandana Sphoorty Financial Ltd of Hyderabad also raised Rs 80 crore ($16.74 million) in the same manner.

Credit Securitization

Microfinance Institutions are also venturing into Credit Rated Securitization deals, to access funds at a lower cost. Securitisation is the process of converting existing assets or future cash-flows into marketable securities. In the case of microfinance, the loans are written in the books of the MFI and sold as future receivables to the bank. “A credit rated securitisation deal will give a pricing advantage of 100-150 basis points as against a term loan. This will further reduce the cost of funds. Also rating by an independent agency assures the investors of the portfolio quality,” claimed Dilli Raj, Chief Finance Officer, SKS10. The company’s securitized portfolio worth Rs. 137 crore (Rs. 1,370 million) with YES Bank has been rated by Credit Analysis & Research Ltd. (CARE) as PR1+ SO (Highest Safety) rating in October this year. The Securitization enables YES Bank to purchase from SKS 1, 58,878 micro loans offered to SC, ST and other minority sections of the society across 17 different states. Other MFIs including Spandana have used the securitization route to save on interest costs and make more efficient use of capital.

A recent micro-loan securitization, completed by IFMR Capital and Equitas Micro Finance, has enabled the first-ever mutual fund investment into the Indian microfinance sector. The Rs. 480 million ($10.4 million) transaction is backed by over 55,000 micro loans originated by Equitas Micro Finance, a Chennai-based microfinance institution with approximately 700,000 low-income clients. ICICI Prudential Asset Management, India’s third largest mutual fund, subscribed to a majority of the securities. Axis Bank, Dhanalakshmi Bank, and IFMR Capital also subscribed. Micro-loan securitization provides banks a profitable way to increase their investment in the microfinance sector through rated and tradable securities. They also benefit from the MFIs collection efficiency and NPAs of less than 0.5 per cent. SHARE Microfin Limited executed a unique rated loan assignment transaction of Rs 49.34 crore with YES Bank. The transaction involved rating identified loan receivables from micro clients, numbering around 104,000 borrowers, with an average loan size of Rs 4,700. The transaction has been rated A2+ (SO) by ICRA Limited.

Private Equity Bubble

Although the pouring investments are helping MFIs in actualizing their expansion and diversification plans, but the unconstrained flow of funds may soon be cascading as investors fear an approaching bubble. Since a large number of credit-rich companies are chasing a very few profit making MFIs, the market valuation of MFIs has inflated artificially. For instance, valuation of SKS rose to at least Rs2,000 crore in its recent round, and Spandana is expecting a valuation of at least Rs1,800 crore for its latest round. Most MFIs are raising funds now at approximately 10 times their earnings while many are doubling earnings annually, said Eric Savage of Unitus capital. Many investors have thus put on hold their investing plans due to such skyrocketing prices.

MFIs plan IPOs

This year Indian microfinance industry had its first brush with controversy when its largest MFI unravelled its plans for stock market floatation. There are fears among some of the industry’s leading figures that the SKS listing could further raise the pressure on the group to make profits, possibly at the expense of poor borrowers as was the case with Mexico’s Banco Compartamos, which went public in the year 2007. Its return on equity is more than three times the 15 per cent delivered by Mexico’s conventional lenders and was able to raise $450 million for a group of backers that had originally invested only $6 million. It ended up charging an annual percentage rate of interest of more than 100 per cent — about treble the global microfinance average from its poor borrowers.

Vikram Akula, the SKS founder and chairman has recently told the media that his group hoped to steer a middle path between the microfinance model proposed by Mr Yunus, where funds come from sources that do not expect to make significant returns, and the Compartamos model, where investors buy in because of the possibility of earning huge profits.

Financial Regulation

With its unprecedented growth, Microfinance sector have also recognized the need for a regulated financial environment. Till now, the lenders have been appraising credit risks on their own but now they are looking for institutional assessment of borrowers’ creditworthiness. Microfinance India Network (MFIN)—an association of microfinance lenders has come with a code of conduct, and took some concrete measures like not to offer above Rs50,000 to any single borrower and not more than three lenders should lend money to one individual. In another similar development, around 30 microfinance lenders jointly took a 5% equity interest in High Mark Credit Information Services Pvt. Ltd, a company that has obtained in-principle approval from the Reserve Bank of India to offer credit information services. Investors are also in talks to set up a Credit Information Bureau for keeping accurate records of its rising customer base.

Saving Schemes for Poor

SBI Mutual Fund has launched an equity-based micro-systematic investment plan, called SBI Chota-SIP. The plan, which aimed at low-income households, allows a person to invest in mutual funds with a minimum sum of Rs 100 a month. In line with the government’s increased emphasis on financial inclusion, Sahara Mutual Fund is planning to launch a daily systematic investment plan or SIP — Sahara Daily Fund — under which one can invest a minimum sum of Rs 10 ($0.2) a day. “This scheme is a trend-setter in the mutual fund industry, which provides opportunity to small investors to participate in the economic development and reap the fruits of financial inclusion as intended by the government,” Garg, CEO of Sahara Mutual Funds stated.

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Microfinance Focus, Dec. 29, 2009 : CRISIL, India’s leading Ratings, Research, Risk and Policy Advisory company, has upgraded its rating on Asmitha Microfin Ltd’s (AML) long-term bank loan facility to ‘BBB/Stable’ from ‘BBB-/Stable’, as per a release. It has assigned its ‘BBB/Stable’ rating to the company’s proposed long-term non-convertible debenture programme. The rating upgrade reflects improvement in AML’s capitalisation, with the company’s absolute net worth increasing to Rs.1.6 billion as on October 31, 2009, from Rs.860 million as on March 31, 2009.

Set up in 2002 as a non-banking financial company, AML is one of the top five microfinance institutions in India, in terms of loans outstanding. The company follows the micro-credit model of Grameen Bank, Bangladesh. In 2008-09, the company’s loan disbursement more than doubled to Rs.12.5 billion. As on September 30, 2009, AML had loans outstanding of Rs.8.3 billion (including managed loans) and presence in 14 states. In August 2009, Blue Orchard infused Rs.500 million in AML, thereby increasing its stake in AML to 18.1 per cent. For the half year ended September 30, 2009, AML reported a PAT of Rs.226 million on total income of Rs.1.2 billion, against a PAT of Rs.95 million on a total income of Rs.547 million for the corresponding period of the previous year.

AML’s capitalisation improved because of infusion of fresh equity capital of Rs.0.5 billion in August 2009 and healthy accretions to net worth between April and October 2009. The recent capital infusion resulted in an increase in AML’s capital adequacy ratio to 19.5 per cent as on September 30, 2009 (18.6 per cent after adjustment for direct assignments), from 15.5 per cent as on March 31, 2009 (11.7 per cent after adjustment for direct assignments). CRISIL believes that AML will maintain its capitalisation at the improved level on the back of healthy cash accruals and flexibility to infuse additional capital; the company is likely to maintain a comfortable capital adequacy ratio (16 to 18 per cent after factoring in direct assignments) while pursuing its high growth plans.

AML’s net profit margin (NPM) was high at 4.1 per cent for 2008-09 (refers to financial year, April 1 to March 31), on the back of upward revisions in its lending rate during 2007-08 and 2008-09. CRISIL believes that AML’s NPM will be around 3.5 per cent over the medium term, largely driven by the company’s healthy interest spreads, expectation of improving operating efficiency through economies of scale, and manageable credit costs.

CRISIL has given a ‘Stable’ outlook to the organization believing that AML will maintain its adequate asset quality and sufficient capitalisation over the medium term, on the back of healthy internal accruals and timely equity infusions. However, AML’s operations are expected to remain geographically concentrated over the medium term. The outlook may be revised to ‘Positive’ if AML significantly improves its market position without compromising its asset quality, and maintains its capitalisation. Conversely, the outlook may be revised to ‘Negative’ if AML’s asset quality deteriorates, affecting its capitalisation and earnings profile, or if its market position weakens significantly.

AML’s asset quality is adequate, because of its group-based lending approach, sound credit-monitoring and collection systems, and the practice of regular internal audits. AML’s portfolio at risk (PAR) overdue by more than 90 days, increased to 0.96 per cent as on September 30, 2009, from 0.1 per cent as on March 31, 2009. This decline in asset quality was mainly because of borrowers defaulting on loan repayments in a few districts of Karnataka, and is in line with the trend in the microfinance industry. Nonetheless, CRISIL does not expect AML’s asset quality to deteriorate from current levels; AML’s asset quality is expected to remain adequate over the medium term, backed by the company’s effective credit monitoring and collection mechanism.

Despite AML expanding its operations to 10 new states between April 2008 and October 2009, its portfolio remains concentrated in specific districts of Andhra Pradesh (AP; 50 per cent as on October 31, 2009) and Orissa (19 per cent). Furthermore, AML has depended only on borrowings from banks and financial institutions. While AML has diversified its wholesale funding profile, its top four lenders accounted for over 40 per cent of its overall borrowings as on September 30, 2009. Given AML’s heavy reliance on wholesale funding, CRISIL believes that AML’s cost of borrowing will remain susceptible to volatility in interest rate movements over the medium term.

Microfinance Focus , Dec. 29, 2009 : Citi Foundation, Citi’s philanthropic arm, recently extended five new grants to the King Abullah II Fund for Development, Injaz ) a member of Junior Achievement Worldwide(, FINCA, Jordan Hashemite Fund for Human Development and Al-Aman Fund for the Future of Orphans in the form of financial aid and micro-finance support benefiting more than 150 Jordanian youths.

This latest series of grants marks a decade of support for social and economic development programs in Jordan by Citi with a total social investment grants exceeding $1,200,000. Throughout this period, the bank’s efforts have mainly focused on providing partial scholarships reaching over 1,700 university level students in addition to extending grants to NGOs investing in youth education programs & microfinance for low-income families.

A key partnership with the Jordan River Foundation (JRF) was forged during this period resulting in the successful execution of several sustainability programs aimed at raising business skill level of women entrepreneurs in Amman, Aqaba and Ajloun. Since 2006, JRF has been Citi’s partner in launching the ‘Citi Microentrepreneurship Awards’ program which aims at rewarding successful micro-entrepreneurs in Jordan and raising awareness about the vital economic role of small business establishments in the Kingdom.

Ziyad Akrouk, Citi’s General Manager for Jordan, said: “We at Citi adopt a clear policy in the service of the 100+ communities that host us worldwide, including Jordan, and we do play a positive role in promoting financial education and micro- entrepreneurship for the purpose of improving the talent pool and improving living conditions among the less advantaged parts of society.”

“We support the microfinance sector through annual financial grants to micro-entrepreneurs and reward outstanding students at Jordanian universities, whose only impediment is financial, through scholarships. This has been our approach for more than seven years and we intend to continue on this route which falls within our mission as a global corporate citizen,” continued Mr. Akrouk.

Microfinance Focus, Dec. 29, 2009: Root Capital, an Agricultural Development Program-Related Investment Organization working in African region, plan to expand economic opportunities for 500,000 rural households in Africa with Bill and Melinda Gates Foundation support.  Root Capital has received $10 million investment and $4 million grant from Bill & Melinda Gates Foundation’s first program-related investment (PRI) from its Agricultural Development initiative this month. Root Capital aims to fill the “missing middle” of finance in developing countries – the underserved gap between microfinance and commercial banking.

Root Capital will use the six-year, $10 million PRI as loan capital to scale its operations in Sub-Saharan Africa. The investment will expand economic opportunities for more than 500,000 rural households by enabling Root Capital to extend access to credit, financial management training, and global market opportunities for small and growing rural businesses. The $4 million operating grant will support Root Capital’s five-year growth plan to achieve a financially self-sustainable lending program by 2013.

“Providing access to capital, financial training, and global markets empowers businesses to grow, communities to thrive, and economies to flourish,” said William Foote, Founder and CEO of Root Capital. “Root Capital is honored to receive funding from the Bill & Melinda Gates Foundation to connect smallholder farmers and other rural producers in Sub-Saharan Africa to global markets. We aspire to catalyze broader change in the capital markets that will truly impact global poverty and improve livelihoods for the rural poor.”

“Access to the types of financial services provided by Root Capital is a critical enabling factor in the development of efficient agricultural markets and the entire value chain,” said Lutz Goedde, deputy director of the Agricultural Development initiative at the Bill & Melinda Gates Foundation. “By funding these services, we hope to provide small farmers and their families’ opportunities to increase their incomes and lift themselves out of hunger and poverty.”

This grant and PRI are part of the Bill & Melinda Gates Foundation’s Agricultural Development initiative, which is working with a wide range of partners in sub-Saharan Africa and South Asia to provide millions of small farmers in the developing world with tools and opportunities to boost their yields, increase their incomes, and build better lives for themselves and their families. The foundation is working to strengthen the entire agricultural value chain—from seeds and soil to farm management and market access—so that progress against hunger and poverty is sustainable over the long term.

Root Capital, a nonprofit social investment fund that is pioneering finance for rural communities in developing countries, provides capital and financial training to small and growing businesses such as farmer and artisan cooperatives that are trapped in the “missing middle” – the gap between microfinance and traditional banking.

Since its founding in 1999, Root Capital has provided more than $175 million in loans to 255 small and growing businesses, representing more than 370,000 farmers in 30 countries throughout Sub-Saharan Africa and Latin America.

Microfinance Focus , Dec. 28, 2009 :Yet another significant year for the Microfinance Industry, The Sector has witnessed several important events and initiatives this year. Microfinance Focus looks back at the year 2009 and presents you with the most read stories covered by us in 2009.

Best of the best: Featured Stories

Is There a Microfinance Bubble in South India?

By most standards, microfinance is a young sector, and in many countries it can be said to still be in its infancy.   Yet its continuing spectacular growth, especially in India, should give one pause – every time promoters celebrate another multi-million-client threshold, I wonder – how many more such thresholds are left?  How do we know when we’ve arrived?..

More …

• Copenhagen outcome funds can change microfinance climate
• Opinion Poll brings forth key trends in Indian Microfinance
• Why is Europe funding microfinance?
• Microfinance in Afghanistan facing stiff challenges: MISFA member
• Hunger haunts more than 20% in India, much of Asia: ADB report

Best of the Best: Microfinance Focus Top Stories

Lessons learned from Microfinance crises: Viewpoints from investors

Microfinance Focus, Nov. 4, 2009: The ongoing Nicaraguan “No Pay” movement, which began Spring 2008 in the north of the country, is an example of an organized protest movement against microfinance institutions. ..

More…

• SKS microfinance reaches 50 lakh women, targets 500 lakh now
• Indian Microfinance on the verge of consolidation: Aavishkaar CEO
• How to assess the real strength of a microfinance institution?
• US to honour Microfinance pioneer Dr Muhammad Yunus with Freedom medal
• Bandhan microfinance targets unemployed youth
• Vijay Mahajan unveils wish list for Microfinance’s future

Best of the Best: Microfinance New Initiatives

Venturing beyond microfinance: Nirantara eyes kids’ education now

Microfinance Focus, July 9, 2009: It’s no more the traditional practice of extending small short-term loans to support income-generating activities among under-privileged and isolated populations for Bidar-based Nirantara Foundation. They have decided to trek that extra mile to provide pre-school education to the children of their clients and even lend micro credit for the purpose…

More…

• Grameen Koota venturing into Water Credit, gets Rs. 1.34 cr
• Free Clinics in Pakistan Promote Microinsurance for Healthcare
• HSBC ties up with Spandana Microfinance and MEC to offer clean energy solutions
• Oikocredit partner first to offer microfinance pricing transparency data in Africa

Best of the Best: Microfinance Top Interviews

Interview with Dr. Muhammad Yunus

Professor Muhammad Yunus, founder and managing director of Grameen Bank, has been a great inspiration to the entire microfinance community. Microfinance Focus congratulates Dr Yunus and takes the opportunity to republish an exclusive interview that Dr. Yunus had given to it on March 30 on the sidelines of the Sa-Dhan’s National Microfinance Conference 2009 in New Delhi…

More…

• An Exclusive Interview with Sam Daley-Harris Director, Microcredit Summit
• An Exclusive Interview with Padma Bhushan Ela Bhatt , (Magsaysay laureate)
• Interview with Padamshree Aloysius P. Fernandez
• Interview with Alex Counts
• Interview with Dr. Vikram Akula

Best of the Best: Microfinance Thoughts

Myth of single-digit interest rate in microfinance: Vijay Mahajan

Microfinance Focus, Dec. 08, 2009/Mumbai: We need to break the middle class myth that it is possible to deliver small doses of credit to remote locations at single-digit interest rates in microfinance, said Vijay Mahajan, Chairman BASIX and Thought Leader, at Srijan 2009 Microfinance Forum while delivering key note address…

• MFIs should focus on quality microfinance: MicroSave director
• Microfinance Bill required to streamline smaller MFIs: NABARD chief
• Naina Lal Kidwai: Creditworthiness of MFIs tops our criteria
• Alex Counts: Flexibility is the mantra for microfinance institutions
• Yunus questions traditional banking model, cites its recent failure
• Lack of education not behind multiple borrowing: Malcolm Harper

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Microfinance Focus, Dec. 27, 2009: Zynga, a social game provider, announced that several of its top games will run holiday campaigns to raise money for FONKOZE, Haiti’s one of the largest micro-finance institution. Zynga will donate 50 percent of the proceeds from social virtual goods within its online games that run on Facebook and other platforms.

FONKOZE, based in Port-au-Prince, is an alternative bank for the poor. It is Haiti’s largest micro-finance institution and is committed to the economic and social improvement of the people and communities of Haiti and to the reduction of poverty in the country.

“The concept of social virtual goods is in its infancy, and we are very excited to present our gamers with opportunities to make a difference in people’s lives”

The program expands on the company’s successful “Sweet Seeds” program within FarmVille that recently raised more than $800,000 for the benefit of children in Haiti. This holiday season, Mafia Wars fans can purchase a special Haitian drum that will help feed families and build school kitchens in Haiti through FATEM. Zynga Poker players who load up on a premium chip package will support women and children living in poverty in Haiti through Fonkoze, the largest micro-finance institution in the country. Gamers who play YoVille, Roller Coaster Kingdom and FishVille will also discover exclusive and festive ways to bring holiday cheer to their games, including the purchase of glitter globes and special food platters, while also contributing to improve the quality of life of those living in poverty.

“The concept of social virtual goods is in its infancy, and we are very excited to present our gamers with opportunities to make a difference in people’s lives,” said Mark Pincus, Zynga’s founder and CEO. “Being able to connect and empower players to affect change in Haiti and elsewhere is just the beginning of how social gaming can do good in the world and provide meaningful connections.”

Microfinance Focus, Dec. 26, 2009: Caritas, a Switzerland based international NGO, has helped to setup 22 microfinance groups this year  in South Darfur under its six-year programme launched in 2004 . The six-year programme has launched with Act International partnerships. Together, Caritas and ACT have raised US $81 million for the people of Darfur since 2004.

Caritas has also launched a US $12 million appeal to directly help 350,000 people in Sudan’s Darfur region, including 240,000 who have lost their homes. Caritas will continue to provide clean water, healthcare, peace building and livelihoods in a continuation of its six-year programme, the report said.

Over 2.5 million people who have fled from their homes because of conflict remain in Darfur and many live outside Sudan. Many of these people are totally reliant on the remaining aid agencies or the UN still present in Darfur after 16 aid agencies were closed down or expelled in March.

Caritas Internationalis Secretary-General Lesley-Anne Knight said, “Caritas and its partners continue to help 350,000 people through this appeal. Over the next 12 months, there will be a continued focus on providing desperately needed aid as one of the biggest humanitarian organizations left operating in Darfur.

Microfinance Focus, Dec. 26, 2009: Bank Negara Malaysia in collaboration with the CGAP, a microfinance group based at the World Bank and the Alliance for Financial Inclusion (AFI) organized the Microfinance Policymakers Forum 2009 on 2 and 3 December 2009.  Discussions of the workshop focused on key considerations and recent developments in institutional structures, as well as regulatory and supervisory requirements necessary for effective adoption and application of branchless banking.

The two-day workshop held at Lanai Kijang, Bank Negara Malaysia involved key policymakers and regulators from 17 Asian countries including Afghanistan, Bhutan, Timor Leste, India, Indonesia, Korea, Lao PDR, Malaysia, Thailand, Vietnam and Philippines.

“All of the participants are focused on the needs of the poor as they consider new regulations for this innovative way to expand access to financial services; and this is vital for the success of any branchless banking regulation” Michael Tarazi, Senior Regulatory Specialist at CGAP said.

“Representatives are being thoughtful and cautious as they think about merging the domains of finance, payments, and telecommunications to create a framework that balances customer needs with concerns around security, risk and regulation”, says Tarazi.

“Countries in emerging markets have been some of the first to innovate ways to go beyond traditional bank branches to bring financial services to the poorest. Many came to this workshop to share their experiences with one another on how to implement sound policy in a range of new fields. Peer to peer advice and mutual learning can be one of the most effective ways to unlock the potential of financial inclusion”, says Alfred Hannig, Executive Director, Alliance for Financial Inclusion.

“In terms of addressing the policy concerns, Bank Negara Malaysia has taken measures to put in place the payment infrastructure, promote a broad product range to cater for the different payment needs of consumers and business as we have also developed a transparent and cost-effective pricing framework to provide the incentive structure that would spur the adoption of electronic means of payments”, says Dato’ Zamani Abdul Ghani, Deputy Governor Bank Negara Malaysia.

Branchless banking presents a special challenge for policymakers as they balance greater access with consumer protection. Among the challenges are:
•    Allowing non-bank third parties, such as local merchants, to conduct “cash-in/cash-out” functions and to interact directly with customers and to perform ‘Know Your Customer’ procedures for remote account opening.
•    Adopting the right measures to address money laundering and combating the financing of terrorism (AMLATFA)
•    Ensuring effective consumer protection to avert potential issues that may arise with the use of mobile phones and the use of agents, including issues such as privacy and fraud.
•    Identifying the right regulatory space for the issuance of e-money and other stored-value instruments (particularly when issued by parties other than licensed and supervised banks).
•    Allowing an appropriate balance of competition and cooperation in retail payment systems in order to promote a certain degree of interoperability.
•    Getting the balance right in competition policies – providing the right incentives for pioneers to invest in the branchless banking business without allowing for the formation of customer-unfriendly monopolies.

Microfinance Focus, Dec. 26, 2009: The Microfinance Sector has witnessed several important new initiatives this year. Water, education and mobile banking were the favorite new segments. Our team has brought together the top 10 most read new initiatives. We will follow all the new initiatives, its successes, challenges and lessons learnt in the next year…

10 most read new initiatives in the year 2009^

1. Venturing beyond microfinance: Nirantara eyes kids’ education now
2. Grameen Koota venturing into Water Credit, gets Rs. 1.34 cr
3. Free Clinics in Pakistan Promote Microinsurance for Healthcare
4. HSBC ties up with Spandana Microfinance and MEC to offer clean energy solutions
5. Oikocredit partner first to offer microfinance pricing transparency data in Africa
6. Shell Foundation drive to rope in MFIs to sell biomass stoves
7. Ujjivan, first microfinance institution to pilot Unitus`s SPM Project
8. Skoll Foundation commits $14 million in new funding
9. Grameen Foundation, Google, MTN launch mobile services for Uganda’s poor
10. Gates Foundation helps form new global alliance for financial inclusion

^ click on respective links to read more

Microfinance Focus, Dec. 24, 2009: Done Card Utility Limited, a subsidiary of OSS group has been certified by Reserve Bank of India (RBI) to operate prepaid cash card under the brand Done Card.

Done card Utility Limited became the first company in India to get the licence. The RBI has granted certificate of authorization to operate payment system for issuance and operations of prepaid cash card in India which implies all transactions through Donecard are subject to RBI guidelines. RBI has created a new segment for prepaid cash card operations and amended its rules and regulations.

Explaining the concept of pre-paid card, Subhash Jewria, chairman and Managing Director said it features will be little different than the credit/debit card. A donecard users will have to fill up (KYC) form and his one time upper limit will be restricted to Rs 10,000.

With RBI approval, we will be concentrating heavily in rural market where people don’t have access to credit/debit card services. The customer can easily buy Donecard pre-paid cash card and can do various transactions which includes buying bus, rail, air tickets. It also facilitates paying utility bills and mobile recharge services online.

Highlighting about future growth plan, OSS Retails Ceo Subhash Jewria quote “We would like to reach out to remote villages and will provide services to the common man including farmers at best affordable rates. It will also generate employment opportunities in rural India and will foster customer lifestyle.”
OSS group is an emerging market leader in ecommerce space since seven years. It is India’s first single window operation, where the consumers can avail all services and products under one roof. The OSS group has 40 Offices across india and our stronghold distributors are located at Mumbai, Delhi, Chennai, Kolkata, Gujarat, MP and Rajasthan.