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We have Faith in Microfinance

Romesh Sobti, MD & CEO of IndusInd Bank has expressed great faith in the microfinance business in India. He expressed his optimism after the private sector bank confidentiality, exclusivity, and standstill’ agreement with Bharat Financial Inclusion. The deal which was signed last month put up due diligence and discussions that evaluated a potential strategic combination between the two financial organizations. According to Sobti, in post demonetization India, the microfinance industry is restoring its normal disbursement levels. It has embraced different changes and adopted a new mechanism to get over the impact of the demonetization period. The improvements were much more than the expected.
Towards the end of September 2017, microfinance accounted for 2.18 percent of the overall loan book which is expected to rise to about 5 percent by 2020. Sections of the weak in the society are granted loans through the ‘business correspondent model that comprise of microfinance institutions that are spread geographically across the country. Small micro-enterprise inclusive of trading, snack stores, bicycle repair shops have been empowered through the loans.
A dedicated inclusive banking group by IndusInd Bank partners with suitable intermediaries or financial institutions in a collaborative approach. The mechanism allows the Bank to provide financial services efficiently to their clients and ensure positive development in the financial sector.

Azerbaijan Micro-finance Association Issues Loans Worth 20B Manats

The Agricultural sector is an essential aspect of a nation. Many financial institutions have taken the responsibility of providing the farmers in their country with commercial service to enable the growth of different crops for consumption of the people in the nation. Similarly, The Azerbaijan Micro-finance Association (AMFA) has disbursed loans worth 20 billion manats ($11.84 billion to around five million people. The loans were provided to clients from rural locations to aid in the development of agriculture. AMFA Executive Director Zhalya Hajiyeva addressed the future of Micro-finance in Azerbaijan while considering the difficulties and opportunities. She said that massive amounts of unreturned loans are contributed by the devaluation of the national currency.
Zhalya emphasized the importance of creating the Credit Guarantee Fund to assist entrepreneurs to access financial services and also a solution to the increased competition in the finical sector. Establishing a Credit guarantee will also enable entrepreneurs’ access manat loans from authorized banks. Vusal Gasimli, Executive director of the country’s Center for Analysis of Economic Reforms and Communication, urged microfinance organizations to incorporate new and innovative financial technologies in their operations.
Suleyman Kalyashev, who chairs the Association of Microfinance of Azerbaijan also urged the microfinance organizations to expand their yield f manta loans. The institutions remain committed towards the provision of financial services to the people to stimulate production and the distribution of goods and services.

CWBLA Partners with Nofia

Microfinance institutions have significantly empowered women from the knowledge that they are among the marginalized groups in the society. There have been numerous opportunities for growth among the women particularly the opportunities to run their businesses and improve the lives of the people in the community they dwell. The Cameroon Women Business Leaders Association (CWBLA) signed a partnership in agreement to partner with Nofia which is a microfinance institution. The association between the two organizations is directed towards the benefit of the women in the group. They will receive better financial services inclusive of easier access to loans for their commercial projects.
CWBLA March 10th 2017 in Douala Cameroon with the founding president, Mary Concilia Anchang of The African Chamber of Trade and Commerce. The reason behind the formation of this association was to find and generate solutions to the challenges facing businesswomen. Its mission was to promote the activities of these women venturing in business to make them heard and visible. A conducted study established that accessing funds is challenging to the development of SMEs. The study further revealed that when the women lead the SMEs, challenges to overcome are more. Nofia is now the financial partner of the Cameroon Women Business Leaders Association and continued to offer them quality financial services.

Microfinance Industry Thrives in Zimbabwe

In the past years, the microfinance sector in Zimbabwe faced numerous challenges including usurious interest rates that dragged down its operations. Assets belonging to the borrowers were also repossessed before the formal regulation of Reserve Bank of Zimbabwe (RBZ). After several adjustments in the sector, the industry is currently gaining back the confidence of the public and advancing into Zimbabwe`s financial inclusion strategy. Reports are indicating a rise in the number of the microfinance institutions in the country as well as more and new savings account leading to more borrowing from the microfinance institutions. The savings account grew from 522 in June 2016 to 1993 by March 2017. 251,553 clients were active in these establishments by June last year compared to the current 322,728 active customers that indicate a 28 percent growth. The improved operations have enabled the growth of assets.
The achievements were not without several reforms from the reserve bank to promote a vibrant microfinance sector. The improvements and the initiatives were geared towards improving the credibility of the microfinance sector after its initial collapse. Additional a $ 10 million microfinance revolving facility is set to be constructed to strengthen the microfinance institutions in Zimbabwe to offer finance solutions to low-income and marginalized groups. The institutions are required to charge their clients an interest rate not exceeding 2 % per month for the sector to maintain positive growth.

Using Microfinance Institutions (MFI) as Banking Correspondents

The dominant Reserve Bank of India (RBI) concluded a financial decision that gave the Microfinance Institutions (MFIs) the authority to act as business correspondents for banks. The decision has so far been a success from the guarantee of a steady flow of funds to the unbanked sectors although several micro lenders face the challenge of raising enough capital. Data from Bharat Microfinance Report of 2017 indicated a 27 per cent growth in business correspondents in the last fiscal year. Similarly, the off-balance sheet portfolio for MFIs increased from 13 per cent to 20 per cent in the preceding fiscal year. In January 2006, the RBI granted permission to MFIs, NGOs and other civil society organizations to function as banking intermediaries in the provision of financial and banking services. Loans delivered by MFIs as partners of the bank are not included in the balance sheet thus contributes to the growth of their businesses devoid of additional capital.
Manoj Nambiar, MD at Arohan Financial Service expressed significant optimism of the approach that functioned to optimize capital and worked best for small micro finance institutions that could not raise money easily. He described such partnerships as value creators. Microfinance institutions can now develop a customer base and through bank loans and earn an extra fee for their services.

VisionFund Granted $4 Million Loan

VisionFund Myanmar received the receipt of a US$4 million loan for two years from Japan ASEAN Women Empowerment Fund (JAWEF. JAWEF is the first fund to show interests and invest with female micro-entrepreneurs in the Southeast Asia frontiers and other emerging markets. The funding received recognition as the first microfinance initiative in Asia to target Asian Microfinance Institutions. The investment manager at BlueOrchard Finance Ltd was trusted to manage the fund granted to VisionFund Myanmar. The organization has expanded its micro financial operations to reach the rural and the urban communities in Asia.
Chief Executive Officer of VisionFund Myanmar, Rommel Caringal expressed the communities’ optimism for an improved future from the expected creation of new jobs and the improved incomes enough to empower different families as well as unlocking the financial potential in the region. The enterprise is committed to improving the lives of children through the provision of loans and other financial services to families living in poverty. It has assisted different clients to establish various businesses that were later a success thus improving their families’ lives and their community.
Currently, the organization’s portfolio is above US$25 million with more than 152,000 customers who have taken loans with the company. The company has further empowered women to stand up for their families and themselves financially through granting them loans and education on how to build a life from the loans and other financial services.

Microfinance in Post Monetization India

Demonetization in India left many Microfinance institutions in financial chaos. Fortunately, the industry is swiftly making an impressive comeback in post demonetization. The Microfinance Intuitions Network (MFIN) conducted a study and established that there had been significant improvements in the April-June quarter of 2017-18 in the asset quality of microfinance industry. The portfolio at risk has reduced to 7.46 per cent April-June quarter of 2017-18 from 10.8 per cent during the January-March period of 2016-17. The move towards demonetization was initiated last year to terminate rampant financial corruption cases and counterfeit currency which affected micro finance negatively from the severe cash crunch.
The improved portfolio at risk numbers is an indication that NBFC-MFI business is slowly making its comeback and returning to normalcy. The industry will, however, require some more time to achieve a pre-monetization level of under 1 per cent. Ratna Vishwanathan, CEO of MFIN expressed his optimism that the industry will continue to grow in the coming months. Additionally, the numbers of clients at NBFC-MFIs increased to 19 per cent and reaching 2.08 crore towards the ending of the first quarter of 2017-18 whereas there was a 21 per cent increase in the loans disbursements. The developments continue to be experienced in the Indian Microfinance Sector which also improves the economy of the country.