Though neither the RBI nor the government has fixed any ceiling on MFI interest rates, the consensus among bankers and the regulator is that rates should not be more than 24 percent. Read the rest on Indian Express
SEWA celebrates the financial success of 5 lakh women across India
The Indian School for Microfinance for Women (ISMW), which is promoted by SEWA Bank, celebrated its second Financial Literacy Day on Thursday, along with Citi Centre of Financial Literacy. It also celebrated the financial success of almost 5 lakh women across India. According to Jayshree Vyas, managing trustee of ISMW, the target for next year is to reach another 5 lakh women and impart knowledge of savings, budgeting, and banking. Read the rest on DNA
Microfinance loans are now big business for the rich
A Rs 5,000- microfinance loan to a carpenter for livelihood is becoming an asset class for men who move around in Mercedes. The highest yield among fixed-income instruments is drawing many millionaires that can enrich them and also keep the lending to poor going. Securitization of loans to small self-help groups that started a few months ago, is beginning to open a window of riches for those who get 8% or 9% on investments in bonds and other fixed-income yielding instruments. Read the rest on Economic Times
Run MFIs with more than just a little bit of altruism
The fracas surrounding the sacking of SKS Microfinance’s CEO has turned the spotlight on the microfinance industry, and the kind of things that are showing up are not pretty. From Andhra, the epicenter of microfinance in the country has come news stories about microfinance recovery agents kidnapping a borrower’s daughter to force recovery and of another borrower being driven to suicide. To investigate these incidents, there have been raids on the offices of the two lenders (one of them being SKS) and the state’s chief minister has talked about a law to rein in microfinance outfits. Read the rest on Economic Times
The ugly underbelly of Microfinance
SKS Microfinance, India’s largest microfinance player, arrived with a bang with its hugely successful IPO in August. However, the recent sacking of its MD and CEO Suresh Gurumani has opened up a pandora’s box that is now threatening to expose the ugly underbelly of the sector which, many allege, is teeming with players who are no better than moneylenders but have so far been able to operate under the pious garb of poverty eradicators. TOI spoke to a cross-section of people associated with the sector and found that most are of the opinion that far from pursuing their so-called vision of eradicating poverty and being poor-friendly, private MFIs are actually in it just for profiteering as they are lending to the poor at interest rates as steep as those charged by moneylenders, or ‘Pathaani Vyaaj’ , a sobriquet derived from the ruthless moneylenders of Afghan origin who operated during the early 20th century. Read more: The ugly underbelly of Microfinance
