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    Mf research project Mf research project Presentation Transcript

      • Microfinance in Crisis in South Asia: An Analysis of Government Intervention in Andhra Pradesh, India & Bangladesh
      Source: http://wikitravel.org/upload/shared/4/4b/Map_of_South_Asia.png By Jeremy Bamberg
    • Agenda
      • Introduction & Thesis
      • MF In India
      • MF In Bangladesh
      • MF Crisis in A.P
      • October Ordinance
      • RBI & Malegam Committee
      • Grameen & Bangladesh Government
      Abbreviations: MF: Microfinance A.P: Andhra Pradesh RBI: Reserve Bank of India
    • Thesis
      • As a result of the MF Crisis in both A.P, India and with the Grameen Bank in Bangladesh several myths have become a part of a discourse demonizing MFIs (particularly NBFCs)
      • These myths need to be analyzed
      • Both the Governments of India and Bangladesh have begun to gradually encroach on MF- Sector. Certainly the Government needs to develop a role in the sector, but they need to be careful not to favor Government MF models to those of NGOs or NBFC- MFIs (Although this is debatable)
      NBFC: Non- Bank Finance Company MFI: Microfinance Institution
    • MF In India Source: Sinha, Frances: State of Microfinance in India
      • Existing SHG models since 1970’s funded by government
      • One of largest MF markets in the world due to high population of poor
      • MFIs are effectively barred by regulation from taking any deposits
    • MF Crisis in A.P Source: Respective Websites Source: Ashta, Arvind: Interest Rate ethics: an aspect of social performance in Microfinance Source: Sinha, Frances: State of Microfinance in India
    • Weeding Out The Myths
      • 1) “Usurious” interest rates
            • Interest rates of MFIs in India ranged from 28% to 32% annually, which are among lowest rates of microfinance globally (Intellecap, Oct. 15th)
            • Many interest rates neglect transaction costs and opportunity costs
      • 2) MF causing farmer suicide rates to rise
            • Link is questionable: “Over 22,000 people have committed suicide in A.P over the past 10 years..” (Intellecap, Oct. 25th)
      Source: Mapsof.net: Andhra Pradesh
    • October Ordinance: AP Act
      • Ordinance’s 4 Premises
      • MFIs charge ‘usurious’ interest rates;
      • If clients fail to pay on time, MFIs use coercive methods to collect the interest;
      • These practices are frcing the poor to commit suicide;
      • MFIs make huge profits and have no social mission to help poor
      Source: The Hindu: Microfinance credit: AP govt may start NBFC with PSU
    • RBI & Malegam Committee
      • Purpose: “To review the definition and practice of microfinance in India, delineate a regulatory framework, and make related recommendations”
      • Set minimum capital for NBFC- MFIs at 15 Crore ($3.4 mil.) from previous 2 Crore
      • With proposed interest caps it becomes extremely difficult to start and run a commercially viable business as an NBFC- MFI
      Source: Intelelcap White Paper: Malegam Committee Recommendations on MF Sector Source: Ibid
    • Grameen & Bangladesh Government
      • Former Grameen ties with Government
      • Norwegian Funding
      • Attempt to form Political party
      • Leveraging the poor as voters
      • Age
      Source: http://humanosphere.kplu.org/files/2010/12/4308450701_f042bd9c49_z.jpg
    • Works Cited
      • http://www.cgap.org/gm/document-1.9.48945/FN67.pdf
      • Killing microfinance will help moneylenders - Economic Times
      • http://www.microfinancegateway.org/gm/document-1.9.41474/19.pdf
      • http://intellecap.com/assets/83/First_Update_to_White_Paper_on_Indian_Microfinance_Crisis_2010.pdf
      • http://intellecap.com/assets/89/Response_to_Malegam_Committee_Reco_Intellecap_White_Paper-February_2011.pdf
      • http://intellecap.com/assets/87/Malegam_Committee_Report.pdf
      • http://www.responsability.com/domains/responsability_ch/data/free_docs/Malegam%20Committee%20Report.pdf
      • Elisabeth Rhyne: On Microfinance: Who's to Blame for the Crisis in Andhra Pradesh?
      • The Lessons of Andhra Pradesh «
      • http://beyondprofit.com/Intellecap%20Microfinance%20White%20Paper%20(Oct%202010).pdf
      • http://apmas.org/pdf%5Cn.pdf
      • Andhra Pradesh: Crisis or Opportunity?
      • Bangladesh's largest NGO admits role in microfinance crisis
      • Stellungnahme responsAbility zum aktuellen Malegam Bericht
      • Media focus on microfinance in Andhra Pradesh, India
      • http://www.inm.org.bd/saarc/document/India.pdf
      • The Ouster of Muhammad Yunus: Can Politics Destroy Grameen Bank? - Knowledge@Wharton