Unveiling the New Microfinance Ecosystem (Highlights)

Matthew Titus (Executive Director, Sa-Dhan)

Disbursements have reached 6,000 crores of commercial credit.

Over 200 institutions of varied legal forms and a variety of models

Rakesh Rewari (Deputy Managing Director, SIDBI)

Reaching the Unreached SIDBI’s microfinance services offer assistance packages to the under-reached areas (like the North East).

Ela Bhatt (Founder, SEWA Bank)

Self employed women’s associations typically utilise loans in 3 phases: 1) Loans used to repay existing debts 2) Further credit used to purchase tools and material 3) Third phase . . . → Read More: Unveiling the New Microfinance Ecosystem (Highlights)

Choose Investors Wisely

Veena Mankar: Pick your investors wisely

Veena Mankar (Managing Director, Swadhaar Finacess) endorses the social development aspect of microfinance, but offers a word of caution.

“Investors expect higher returns while MFIs want to spend on financial literacy or livelihood enhancement. Carefully pick investors,” she advises.

The Common Challenges

Participating MFIs at the conference took the opportunities presented in open discussion to raise several issues of concern in the sector and also seek the opinions of reknowned practioners. 

G. Pannirselvam (Vice President – Operations, Mahasemam Trust) talked about a few areas that require attention and effort; one area is the human reources. “It is important to have the rigt people in the right places,” he explained. Further, he spoke of funding, affordable interest rates, effective programs for the poorest of . . . → Read More: The Common Challenges

Now Chew on This

B. B. Mohanty (right) and Dr Jeyaseelan (left)

A conference opinion from B. B. Mohanty (CGM, NABARD)

The conference is going very well and the presence of distinguished practioners of microfinance only adds to the quality of the discussions. Core issues have been focussed on to give us food for thought.

Small MFI, big operational costs

Our organisation started with Microfinance only four years back and we have different loan products. The main challenges we face in the rural areas is the time it takes to recover from desasters like floods. In the urban sector it is our size: We have a lot of competitors and our operational costs are higher than those of the big ones. Yes, and then it is difficult to get along with the human resources. At the conference I . . . → Read More: Small MFI, big operational costs

The Structural Challenges of Scale – The Balancing Act (Highlights)

Sanjay Sinha (Managing Director, M-CRIL)

Availability of human resources is the real challenge. During the rating of an MFI, it was found that the manager of a branch was, in fact, a trainee (a “training trainee” according to him). The system of trainees training trainees is not sustainable.

Many MFIs, in an effort to minimise costs, increase the loan size. The average cost does decrease, but depth of outreach is compromised.

The portfolio quality of the large MFIs has not been affected . . . → Read More: The Structural Challenges of Scale – The Balancing Act (Highlights)

Corridor – The Place to be!

The conference for me is taking place at the corridor, to meet people, building networks.

The main challenge I face with Mimo Finance is HR: Because of a low quality education system you have to invest a lot in training. And even offering compensation packages and working on career plans is our biggest challenge.

Manab Chakraborty, CEO

mimo Finance

Growth in Microfinance and Gaps in the Practice: Highlights

Aloysius Fernandez (Chairperson, Sanghamitra Rural Financial Services)

The deeper the poverty, the lesser the micro credit effectiveness.

When an individual member stays with a group for more than 8 years, having taken 15 to 20 loans to the tune of Rs 1, 50,000 to Rs 3, 00,000,  only then can that person stand on her own feet.

B. B. Mohanty (CGM, NABARD)

Rating agency reports indicate that most MFIs have weak internal control and governance systems. There should be focus . . . → Read More: Growth in Microfinance and Gaps in the Practice: Highlights

Crisis affects Start-Ups

Helping people raising capital to spread the system is our mission. Funding is the main constrain for almost every MFI. The economic crisis definitely affects us and it is a huge challenge to raise money, especially for start-ups and young organisations. Anyway, the MF-sector is doing much better than other sectors because the poor are more isolated from the system.

At the conference I am here for meeting people. In fact Yunus’ session was the first I attended at these . . . → Read More: Crisis affects Start-Ups

Alok Prasad: Make Sound Lending Decisions

Alok Prasad (Country Director, Citi Micro

Alok Prasad: In business, there must be profit

finance) reaffirmed the neccessity of assessing a borrowers repayment capacity. “There are two things at work here – the ability of the borrower to repay the loan and the willingness of the borrower to repay the loan,” he explained. While also touching upon the changing needs of different client segments, he also expressed the need for MFIs to customise credit products.

. . . → Read More: Alok Prasad: Make Sound Lending Decisions

Ela Bhatt: Most important – coming together

Ela Bhatt (Founder, SEWA Bank) talks to Christina Weichselbaumer (Associate Editor, Microfinance Focus)

MF Focus: Founding SEWA helped practically so many women getting out of poverty and becoming more self-confident. What about the political impact?



Bhatt: This is part of the game, SEWA has grown large and has its presence. We are dealing in the mainstream economy and we are bound to shed up the power structures: With . . . → Read More: Ela Bhatt: Most important – coming together

Resources, both financial and human


J. S. Tomar, Managing Director

The biggest problems we are facing with Microfinance are the financial resources and trained staff, HR. We are already heavily influenced by the economic crisis and it practically affects our work.

Concerning the human ressources, it is difficult to train and retain people. We are operating in a very remote area and people don’t want to stay there. They are heading for better career perspectives . . . → Read More: Resources, both financial and human

Saving is the challenge

Swadhaar FinAccess Haseena Vahanvaty Director

The main challenge we face with our work is get the women in the slums to save. We have modules for financial education, working on urban Microfinance. We want to get the women start to save, to get a saving account, use it and make the women regularly safe. We try to get them at our meetings once a week and make it fun for them.

At the concerence I am here for the sessions. . . . → Read More: Saving is the challenge

Suresh Gurumani: Showcase the Sector's Competence

Suresh Gurumani: Why not harp on our success instead of problems?

The initial discussion at the Sa-Dhan National Microfinance Conference 09 focussed on the problems and issues requiring attention and remedy. In a short interview, Suresh Gurumani (Chief Executive Officer, SKS Microfinance) revealed that the competence of the microfinance sector should be showcased in such forums.

“Here is a chance for us to show regulators, investors and others that we are a responsible, credible sector and ready for new laws. . . . → Read More: Suresh Gurumani: Showcase the Sector's Competence

Technical Session 1: Highlights

Vijay Mahajan (Chairman, BASIX)

Real Sector is the Key

Crisis is not in finance, but in the real sector. The soil has lost its humus, now it is full of chemicals; the water table has dropped deep down; climate has become unpredictable. Investments are needed in the real sector; this is the need of the times.

A New Paradigm within Credit

Micro credit is small-sized, short term and for individuals. However, livelihood finance is lumpy (large), long term and for . . . → Read More: Technical Session 1: Highlights

Inaugural Session – Highlights of Speeches

H. Bedi (Managing Trustee, Development Support Team)

Professor Mohammed Yunus gave global microfinance a face and a voice.

Ela Bhat (Founder, SEWA Bank)

The effectiveness of microfinance is not in growth, but in the long term relationship of microfinance with clients and the community. Banking, after all, is a relationship of trust and not mere finance.

Banking with the poor is a resource mobilisation opportunity for bankers. Bankers need to invest more in the microfinance sector.

R. M. Malla (CMD, . . . → Read More: Inaugural Session – Highlights of Speeches

Quality HR: It's not Rocket Science

Quality human resources is an area of concern among MFIs today. This morning, minutes ahead of the conference, Sankar Datta (Dean, The Livelihood School) took time to share his views exclusively with Microfinance Focus. “It’s not rocket science. With quality training, personnel will not only be able to identify livelihood opportunities for clients but will also develop far more compassion in dealing with these clients.” Microfinance can impact lives when the benefits from the sector extend beyond credit.

Sankar . . . → Read More: Quality HR: It's not Rocket Science

Social Performance: increasing accountability and transparency in microfinance

Social Performance:  increasing accountability and transparency in microfinance

By, Frances Sinha,Managing Director |  EDA Rural Systems There has been tremendous progress in the microfinance industry over the past decade, especially in India, in working towards financial sustainability, reducing costs of delivery and attracting investment funds.  This is an important measure of success – in terms of growth. The numbers are impressive, and reported against industry standards of profitability, efficiency, portfolio quality and capital adequacy. However, relatively transparent reporting on . . . → Read More: Social Performance: increasing accountability and transparency in microfinance

Towards New Ecosystem: Full-scale Mobile Payments for Indian Microfinance: A Showcase

Towards New Ecosystem: Full-scale Mobile Payments for Microfinance: A Showcase  

By, Valerie Rozycki | Head of Strategic Initiatives | mChek India Payment Systems  

Mobile payments benefits for microfinance are generally understood:  security for MFIs and clients, lowered operational costs, access to additional services, etc.  However, there still exists scepticism around the practical applications in the field.  While still novel in India and globally, there is significant and promising anecdotal evidence that mobile payments for microfinance . . . → Read More: Towards New Ecosystem: Full-scale Mobile Payments for Indian Microfinance: A Showcase

Multiple Borrowing: Finding Solutions

Multiple Borrowings: Finding Solutions

Suresh K Krishna, Managing Director | Grameen Koota

Microfinance has accomplished what several of it’s detractors thought it never would – 100% loan utilisation and, most inportantly, recovery. The earnest and well-founded hope for a better life motivates women to enter into the contract of microfinance; business successes among borrowers only strengthens this faith in the institution of microfinance and draws more clients, who would otherwise have no access to credit, into the system.

However, it . . . → Read More: Multiple Borrowing: Finding Solutions

Savings: Meeting this Essential Need of Poor in India

Savings: Meeting this Essential Need of Poor in India                                    

By, Graham A. N. Wright | Programme Director | MicroSave 

Evidence from across the world, clearly demonstrates that savings are the most commonly  sought after financial product sought by the poor. Poor people want and do save in response to a  wide variety of risks/needs including those driven by life-cycle events, crises, macro-level  structural events, . . . → Read More: Savings: Meeting this Essential Need of Poor in India

What is the Purpose of training

Jerome Peloquin, Managing Editor-US , Microfinance Focus

Training is the topic of choice for this month’s issue: March, 2009. Microfinance Focus Magazine is dedicated to providing a knowledge as a strategic asset to our readers and to all MFI’s and NGO’s who serve the poor. We are totally dedicated to Dr. Yunus’s mission of ending poverty. If we are to succeed where others have failed then we must be better than those who have gone before us. . . . → Read More: What is the Purpose of training

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