IT WAS a windfall five years ago that taught Panchali Satyavva the power of a lie. It happened one Monday afternoon in Someshwar village of Nizamabad district in Andhra Pradesh. It was raining in sheets and she had just placed a bucket under the steady trickle of water from the roof of her hut. Two men were at her door, holding umbrellas and offering her an unsolicited Rs. 5,000. They...
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Microfinance institutions to shut shop?
The Bill to regulate Microfinance Institutions tabled in the Andhra Pradesh assembly on Friday has upset the Microfinance institutions (MFI) network, who say their concerns have not been addressed and that may force them to shut operations in the state. "Repayment has fallen drastically and so we are not in a position to continue operations in Andhra Pradesh unless the situation is remedied," said Vijay Mahajan, President, Micro Finance Institutions Network. The...
More »Government asks banks to submit MFI loan, NPA data by Manojit Saha
Two months after the crisis in the microfinance industry broke out, resulting in the possibility of bank loans to the sector becoming non-performing, the government now wants to do a reality check. Last evening, the finance ministry dashed off a letter to public sector banks, Small Industries Development Bank of India and National Bank for Agriculture and Rural Development, asking them to furnish data on how much exposure they have to...
More »Govt plans microfinance regulatory bill
The government proposes to introduce a bill to regulate microfinance institutions (MFIs), accused of aggressive loan recovery practices, minister of state for finance Namo Narain Meena said on Tuesday. The move follows tight scrutiny of the fast-growing, largely unregulated, small loans sector after fears of large-scale defaults due to high interest rates and reports of suicides due to mounting debt. “The Department of Financial Services proposes to introduce the Micro Finance (Development...
More »Black swan in micro-finance by Ajit Ranade
The SKS IPO and the Andhra Pradesh ordinance have suddenly changed everything. Will it be the death knell or will it usher in a reformed and healthy industry? There are three basic facts about micro-finance in India. First, most of what is described as micro-finance industry is actually micro-loans. There is hardly any provision of micro-savings, micro-investments, micro-insurance or micro-pensions. This is mostly because of regulatory reasons, i.e. accepting money...
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