1. THE PATHWAY OF MICROFINANCE What’s it should be: Inclusive Financial System for low income households and the poor By Mohamad Nazirwan, Head of BRI - IVP Asian Banker Summit 2007: Microfinance Forum for Commercial Bankers Jakarta March 25 th 2006
2. Microfinance development 1 2 Understanding microfinance 3 Key success factors AGENDA 4 Lesson from Bank Rakyat Indonesia
3. Indonesia Russia Country Poland Brazil Philippines Mexico India Estimated Population Without Bank Account 38% 25% 57% 80% 76% 41% 80% Lower 2.5 BB People Unbanked 40% of World Population Postal Banks 51% State Banks 19% Rural Banks 17% Cooperatives 6% NGOs 5% Informal Underbanked population: Huge business potential? Iceberg Phenomena Bankable Banking Horizon Viable MSE Prospective MSE Start-up MSE UNDERSTANDING MICROFINANCE The challenges ………….. Upper Middle Middle Mass Affluent High Net Worth
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8. Commercial banks State dev banks Postal banks Insurance companies Leasing companies Money transfer firms Apex organizations Rural banks Co - operative banks Microfinance banks Credit unions Regulated MFIs Finance companies Unregulated MFIs NGOs Savings and credit associations Village banks Self - help groups Farmers’ organization Women’s associations Community savings clubs Formal Semiformal informal Money Lender UNDERSTANDING MICROFINANCE Microfinance institutions and providers
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14. COMMERCIALIZATION ROAD MAP Progress Toward Commercialization Applying commercial principles Full commercialization Increased cost recovery Operational self-sufficiency Financial self-sufficiency Market-based sources of funds Fully profit oriented Social Public Commercial Bi - & Multilateral donors Foundations I F I Private Funds Commercial Investors Capital market
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16. INVESTMENT IN MICROFINANCE 0 1985 1990 1995 2000 2005 2007 2010 Funding Source Concessionary Public Commercial $32B
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19. BANK RAKYAT INDONESIA’s Microfinance 1968 BRI State-owned Bank BIMAS Rice 2003 1983 Financial Deregulation Interest Rates Free 1984 Transformation Commercial Approach 1986 Profitable 1997 East Asia Crisis IPO 3,600 BRI-Unit Public Listed Company 1895 Established 1970 Sustainable
