This document proposes a Cash Collateralized Micro-Finance Obligation (Cash CMFO) investment vehicle to increase capital flows to microfinance institutions in South America. A Cash CMFO would securitize microfinance loans into tranches based on social impact and credit risk, allowing institutional investors to choose their preferred risk-return tradeoff while providing transparency and oversight of funds. The proposed Cash CMFO aims to be a sustainable and profitable investment that aligns investor interests with the social goals of microfinancing, expanding access to capital for small businesses and entrepreneurs in Latin America.
This document summarizes a prospectus for investing in Savings-Led Microfinance in Cambodia. Savings-Led Microfinance forms community savings groups that allow members to save money and take small loans. The program aims to reach 1 million Cambodians and transform the financial market. It argues that this approach empowers the poor, builds social capital, and generates economic growth through financial inclusion and capital accumulation by the poor. The document invites impact investors by highlighting both financial and social returns on investment in Savings-Led Microfinance.
Evolution of Microfinanance Investment Landscape and Reasons behind the growt...MABSIV
The document summarizes the evolution of microfinance from its origins focused on poverty reduction and social goals, to its current state with an increased focus on commercialization and profitability. This has led to greater scrutiny of the sector and questions around whether microfinance is truly achieving its original social mission. There are concerns that an overemphasis on growth and profits could lead microfinance to drift from its original social objectives and potentially harm its clients. Transparency and clear demonstration of social impact are now expected from investors and institutions in the sector.
This document summarizes a proposal for Community Development Venture Capital Funds in West Africa. It discusses how microfinance has limitations and philanthropy is not focused on economic development. The funds would provide equity, near-equity, and debt investments for private sector projects in areas like agriculture, infrastructure, and small businesses. This aims to encourage enterprise and job creation through financial support for initiatives that traditional sources fail to fund. The funds would operate according to principles of community economic development and socially responsible investing.
Community Development Financial Institutions Fund's Bond Guarantee Program Fu...Patton Boggs LLP
The Community Development Financial Institutions Fund's Bond Guarantee Program was authorized to guarantee up to $500 million in bonds for 2013 to promote investment in underserved communities. The program allows certified CDFIs to issue bonds guaranteed 100% by the fund to lend proceeds to other CDFIs. To qualify for the program, entities must be certified as CDFIs by meeting requirements including having community development as their primary mission. The fund also offers other programs including financial assistance awards, technical assistance awards, and tax credits to encourage investment in low-income communities.
Micro Finance Fair Trade and DevelopmentEton College
Microfinance aims to provide financial services to the poor and extreme poor, including microloans, savings, insurance, and remittances. It aims to reduce poverty through financial inclusion and empowerment. Professor Muhammad Yunus founded Grameen Bank in Bangladesh, which pioneered microcredit and saw rapid early growth. However, microfinance also faces criticisms like over-indebtedness, limited poverty reduction, and reliance on subsidies. Fair trade aims to promote equitable trading conditions for marginalized producers and workers through minimum prices, social premiums, and standards. However, it remains a small niche and critics argue it is not a long-term development solution on its own.
This document discusses microfinance and its role in economic development. It outlines various microfinance products like microcredit, microsavings, microinsurance, and remittance management that provide small loans, savings opportunities, insurance, and money transfer services to the poor. Microfinance aims to reduce poverty and promote financial inclusion, domestic savings, risk protection, and new business growth. The document also discusses the Grameen Bank microcredit model and social enterprises applying microfinance principles. While microfinance has helped many, some argue it has limits and risks if not implemented as part of a broader development strategy.
This document summarizes a prospectus for investing in Savings-Led Microfinance in Cambodia. Savings-Led Microfinance forms community savings groups that allow members to save money and take small loans. The program aims to reach 1 million Cambodians and transform the financial market. It argues that this approach empowers the poor, builds social capital, and generates economic growth through financial inclusion and capital accumulation by the poor. The document invites impact investors by highlighting both financial and social returns on investment in Savings-Led Microfinance.
Evolution of Microfinanance Investment Landscape and Reasons behind the growt...MABSIV
The document summarizes the evolution of microfinance from its origins focused on poverty reduction and social goals, to its current state with an increased focus on commercialization and profitability. This has led to greater scrutiny of the sector and questions around whether microfinance is truly achieving its original social mission. There are concerns that an overemphasis on growth and profits could lead microfinance to drift from its original social objectives and potentially harm its clients. Transparency and clear demonstration of social impact are now expected from investors and institutions in the sector.
This document summarizes a proposal for Community Development Venture Capital Funds in West Africa. It discusses how microfinance has limitations and philanthropy is not focused on economic development. The funds would provide equity, near-equity, and debt investments for private sector projects in areas like agriculture, infrastructure, and small businesses. This aims to encourage enterprise and job creation through financial support for initiatives that traditional sources fail to fund. The funds would operate according to principles of community economic development and socially responsible investing.
Community Development Financial Institutions Fund's Bond Guarantee Program Fu...Patton Boggs LLP
The Community Development Financial Institutions Fund's Bond Guarantee Program was authorized to guarantee up to $500 million in bonds for 2013 to promote investment in underserved communities. The program allows certified CDFIs to issue bonds guaranteed 100% by the fund to lend proceeds to other CDFIs. To qualify for the program, entities must be certified as CDFIs by meeting requirements including having community development as their primary mission. The fund also offers other programs including financial assistance awards, technical assistance awards, and tax credits to encourage investment in low-income communities.
Micro Finance Fair Trade and DevelopmentEton College
Microfinance aims to provide financial services to the poor and extreme poor, including microloans, savings, insurance, and remittances. It aims to reduce poverty through financial inclusion and empowerment. Professor Muhammad Yunus founded Grameen Bank in Bangladesh, which pioneered microcredit and saw rapid early growth. However, microfinance also faces criticisms like over-indebtedness, limited poverty reduction, and reliance on subsidies. Fair trade aims to promote equitable trading conditions for marginalized producers and workers through minimum prices, social premiums, and standards. However, it remains a small niche and critics argue it is not a long-term development solution on its own.
This document discusses microfinance and its role in economic development. It outlines various microfinance products like microcredit, microsavings, microinsurance, and remittance management that provide small loans, savings opportunities, insurance, and money transfer services to the poor. Microfinance aims to reduce poverty and promote financial inclusion, domestic savings, risk protection, and new business growth. The document also discusses the Grameen Bank microcredit model and social enterprises applying microfinance principles. While microfinance has helped many, some argue it has limits and risks if not implemented as part of a broader development strategy.
This document discusses economic development finance including the role of private and public sector financing. It outlines different types of business financing like debt, equity, and crowdfunding. Specific financing programs are also summarized like microloan funds, state and federal programs, and revolving loan funds. Case studies are provided of different businesses that received various types of financing.
Microfinance involves providing small loans and other financial services to low-income individuals who lack access to traditional banking. The history of microfinance includes early experiments in Ireland and Bangladesh in the 18th-19th centuries. Microloans are intended to spur entrepreneurship and alleviate poverty by funding micro-businesses. Applying for microloans typically requires basic documentation and collateral is often not required due to the small loan amounts. Critics argue that microfinance does not always reduce poverty and that high interest rates can burden borrowers.
Microfinance involves providing financial services like loans, savings, insurance to low-income individuals. It began in the 1970s when Muhammad Yunus started the Grameen Bank in Bangladesh. Microfinance institutions provide these services through organizations like non-profits and credit unions. They target small business owners, farmers, and traders without access to traditional banks. While microfinance helps reduce poverty, issues still exist like unregulated high interest rates and costs, and many poor people relying on informal lenders. The Indian government and organizations are working to expand access to microfinance and address weaknesses in the system.
Microfinance provides financial services like credit, savings, and insurance to low-income individuals who lack access to traditional banking services. These services allow people to build wealth and smooth consumption without relying on predatory lenders. While microfinance has helped many individuals, some debates questions whether it can provide a long-term solution to poverty at large scales. Bateman argues it may divert funds from small businesses, while Karnani believes employment and productivity are more important for reducing poverty than microfinance alone. Implementing microfinance also faces challenges like high costs, low education levels, and a lack of infrastructure in some areas. Overall, microfinance has shown some success but may be only part of the solution and not sustainable in all
Microfinance involves providing small loans, savings opportunities, and other basic financial services to low-income individuals. It began in the 1970s with programs lending small amounts to groups of poor women. In India, microfinance has existed informally for ages and various government initiatives over time helped establish a legal framework and institutions to support it, such as cooperative banks and NABARD. Today, around 60% of microfinance institutions in India are registered as societies and most use the self-help group model to deliver services to over 100 million poor households.
Slideshow of the first microfinance102 class held by the San Diego Microfinance Alliance at UCSD. Presentation by Chuck Waterfield at Microfinance Transparency
This document summarizes the results of a study on the role of microcredit in reducing women's poverty in Ethiopia through three microfinance institutions. The study found that:
1) The microfinance institutions did not adequately target poor women, as average loan balances were above 20% of per capita income.
2) Loan sizes were small and repayment schedules were too frequent, limiting their impact.
3) Women predominantly used loans for consumption and low-return businesses like food preparation, rather than higher-return investments.
4) While some positive impacts like increased consumption were found, microcredit did not significantly increase women's income, employment, or savings overall. The document recommends that microfinance institutions in Ethiop
This document discusses microfinance, including:
1) Microfinance provides financial services like loans, savings, insurance, and remittances to low-income individuals who lack access to traditional banking. The goal is to help the poor become self-sufficient.
2) Microfinance services can be provided by both formal sectors like banks and non-formal sectors like NGOs. Common services include loans, savings, insurance, remittances, and training.
3) Microfinance uses innovative methods to provide small, uncollateralized loans to borrowers, often using group lending models where groups guarantee each other's loans. Repayment of one loan enables access to future loans.
The Case For Impact Mezzanine Finance in Emerging MarketsPabloVerra
A primer developed for general partners, limited partners, large and small companies and the general public with an interest in optimizing financial structures in Emerging Markets. The presentation makes the case for general partners to deploy further mezzanine-dedicated funds in developing economies.
Introduction to Micro finance - the Lending Methodologyheba bashier
Microfinance provides financial services like loans, savings, insurance to low-income individuals working in the informal sector who lack access to traditional banks. Services are tailored to clients' needs and abilities to pay. Loans are typically offered through group lending models where members jointly guarantee repayment to reduce risk of default. Individual loans also exist but require more rigorous assessment of creditworthiness. The ultimate goal is to help the poor gain sustainable access to affordable financial services through inclusive and specialized microfinance programs.
This document provides an outline and overview of a microfinance course. It introduces key concepts like how microfinance institutions (MFIs) differ from traditional banks and relief by offering small loans to poor clients and recycling funds to help many. It defines important financial terms like interest rates, expenses, and subsidies. The document also discusses debates in the industry around approaches like savings-led vs credit-led lending and whether MFIs should remain non-profits. The outline proposes future weeks will focus on local MFIs, hearing from clients and investors, and important books and websites for learning more.
This document discusses microfinance and its role in empowering entrepreneurs and reducing poverty. It provides examples of microfinance institutions (MFIs) that have grown significantly by providing small loans to poor individuals, especially women. While MFIs have helped many, the document also notes debates around ensuring their focus remains on poverty targeting and impact. It advocates for the right balance of incentives to achieve social and financial goals through microfinance.
This document provides an overview of microfinance and how financing works. It discusses the different approaches to microfinancing such as group lending models. The primary goals of microfinance institutions are outlined as breadth, depth, length and positive impact of outreach. Key terms related to microfinance such as interest rates, repayment rates, and operational self-sufficiency are defined. Useful books and websites on microfinance are also listed.
MultiFunding Lending Snapshot - Q1 May 2011elisabethie
This report is a summary of key findings from MultiFunding’s First Quarter National Lending Snapshot. The objective of the study is to determine amongst small business owners looking for loans in today’s market – what loan types they qualify for and what interest rates they can expect to pay for their loans.
FirstBank Impact Series - Central Bank of Nigeria's Paper Presentation (abrid...FirstBank, Nigeria
The document discusses the future of microfinance in Nigeria and the role of the Central Bank of Nigeria. It summarizes the key points of the 2005 Microfinance Policy and highlights the factors that have contributed to persisting gaps in access to financial services. It then outlines the major revisions made to the policy in 2011, including changes to capital requirements for microfinance banks. Finally, it lists several next steps that will be taken to further promote microfinance and financial inclusion in Nigeria, such as capacity building programs, strengthening linkages between institutions, and collaborating with development partners.
Microfinance provides financial services to low-income individuals who lack access to traditional banking services. It includes small, short-term loans that use social collateral rather than financial collateral. Microfinance aims to help the poor raise their income and build assets through supporting microenterprises. It also seeks to integrate the financial needs of the poor into mainstream financial systems by building sustainable local institutions. Some key principles are that microfinance services should include loans, savings, insurance and money transfers to be truly useful for the poor, and that microfinance institutions must be financially self-sufficient in order to reach large numbers of people.
The document discusses the history and impact of microfinance, specifically the Grameen Bank founded by Muhammad Yunus in Bangladesh. It notes that traditional banks often exclude the poor due to lack of collateral and perceived repayment risk. The Grameen Bank pioneered an innovative group lending model where loans are provided to groups of borrowers who are jointly liable for repayment, incentivizing monitoring and reducing costs. This model has enabled over 5 million poor Bangladeshis, especially women, to access credit and engage in entrepreneurship. The success of the Grameen Bank in alleviating poverty demonstrates that traditional perceptions of lending to the poor may be outdated.
Commercial banks are beginning to recognize microfinance as a viable market and offer financial services like loans, deposits, and money transfers to low-income households and small businesses. While banks have advantages over non-bank microfinance institutions like established infrastructure and access to deposit funding, they also face challenges in adapting traditional banking practices to the needs of poor clients. The document discusses various approaches banks can take to engage in microfinance, such as direct lending, creating a microfinance subsidiary, or partnering with existing microfinance organizations.
Microfinance aims to provide financial services like credit, savings, insurance and money transfers to low-income households and micro-entrepreneurs. It is delivered by microfinance institutions (MFIs) through small loans with group lending. Shortcomings include overdependence on donors, high interest rates, lack of regulations and difficulty reaching remote areas. The State Bank of Pakistan has launched various initiatives like credit guarantee facilities, funding programs and partnerships to strengthen the microfinance sector and promote financial inclusion.
This document discusses economic development finance including the role of private and public sector financing. It outlines different types of business financing like debt, equity, and crowdfunding. Specific financing programs are also summarized like microloan funds, state and federal programs, and revolving loan funds. Case studies are provided of different businesses that received various types of financing.
Microfinance involves providing small loans and other financial services to low-income individuals who lack access to traditional banking. The history of microfinance includes early experiments in Ireland and Bangladesh in the 18th-19th centuries. Microloans are intended to spur entrepreneurship and alleviate poverty by funding micro-businesses. Applying for microloans typically requires basic documentation and collateral is often not required due to the small loan amounts. Critics argue that microfinance does not always reduce poverty and that high interest rates can burden borrowers.
Microfinance involves providing financial services like loans, savings, insurance to low-income individuals. It began in the 1970s when Muhammad Yunus started the Grameen Bank in Bangladesh. Microfinance institutions provide these services through organizations like non-profits and credit unions. They target small business owners, farmers, and traders without access to traditional banks. While microfinance helps reduce poverty, issues still exist like unregulated high interest rates and costs, and many poor people relying on informal lenders. The Indian government and organizations are working to expand access to microfinance and address weaknesses in the system.
Microfinance provides financial services like credit, savings, and insurance to low-income individuals who lack access to traditional banking services. These services allow people to build wealth and smooth consumption without relying on predatory lenders. While microfinance has helped many individuals, some debates questions whether it can provide a long-term solution to poverty at large scales. Bateman argues it may divert funds from small businesses, while Karnani believes employment and productivity are more important for reducing poverty than microfinance alone. Implementing microfinance also faces challenges like high costs, low education levels, and a lack of infrastructure in some areas. Overall, microfinance has shown some success but may be only part of the solution and not sustainable in all
Microfinance involves providing small loans, savings opportunities, and other basic financial services to low-income individuals. It began in the 1970s with programs lending small amounts to groups of poor women. In India, microfinance has existed informally for ages and various government initiatives over time helped establish a legal framework and institutions to support it, such as cooperative banks and NABARD. Today, around 60% of microfinance institutions in India are registered as societies and most use the self-help group model to deliver services to over 100 million poor households.
Slideshow of the first microfinance102 class held by the San Diego Microfinance Alliance at UCSD. Presentation by Chuck Waterfield at Microfinance Transparency
This document summarizes the results of a study on the role of microcredit in reducing women's poverty in Ethiopia through three microfinance institutions. The study found that:
1) The microfinance institutions did not adequately target poor women, as average loan balances were above 20% of per capita income.
2) Loan sizes were small and repayment schedules were too frequent, limiting their impact.
3) Women predominantly used loans for consumption and low-return businesses like food preparation, rather than higher-return investments.
4) While some positive impacts like increased consumption were found, microcredit did not significantly increase women's income, employment, or savings overall. The document recommends that microfinance institutions in Ethiop
This document discusses microfinance, including:
1) Microfinance provides financial services like loans, savings, insurance, and remittances to low-income individuals who lack access to traditional banking. The goal is to help the poor become self-sufficient.
2) Microfinance services can be provided by both formal sectors like banks and non-formal sectors like NGOs. Common services include loans, savings, insurance, remittances, and training.
3) Microfinance uses innovative methods to provide small, uncollateralized loans to borrowers, often using group lending models where groups guarantee each other's loans. Repayment of one loan enables access to future loans.
The Case For Impact Mezzanine Finance in Emerging MarketsPabloVerra
A primer developed for general partners, limited partners, large and small companies and the general public with an interest in optimizing financial structures in Emerging Markets. The presentation makes the case for general partners to deploy further mezzanine-dedicated funds in developing economies.
Introduction to Micro finance - the Lending Methodologyheba bashier
Microfinance provides financial services like loans, savings, insurance to low-income individuals working in the informal sector who lack access to traditional banks. Services are tailored to clients' needs and abilities to pay. Loans are typically offered through group lending models where members jointly guarantee repayment to reduce risk of default. Individual loans also exist but require more rigorous assessment of creditworthiness. The ultimate goal is to help the poor gain sustainable access to affordable financial services through inclusive and specialized microfinance programs.
This document provides an outline and overview of a microfinance course. It introduces key concepts like how microfinance institutions (MFIs) differ from traditional banks and relief by offering small loans to poor clients and recycling funds to help many. It defines important financial terms like interest rates, expenses, and subsidies. The document also discusses debates in the industry around approaches like savings-led vs credit-led lending and whether MFIs should remain non-profits. The outline proposes future weeks will focus on local MFIs, hearing from clients and investors, and important books and websites for learning more.
This document discusses microfinance and its role in empowering entrepreneurs and reducing poverty. It provides examples of microfinance institutions (MFIs) that have grown significantly by providing small loans to poor individuals, especially women. While MFIs have helped many, the document also notes debates around ensuring their focus remains on poverty targeting and impact. It advocates for the right balance of incentives to achieve social and financial goals through microfinance.
This document provides an overview of microfinance and how financing works. It discusses the different approaches to microfinancing such as group lending models. The primary goals of microfinance institutions are outlined as breadth, depth, length and positive impact of outreach. Key terms related to microfinance such as interest rates, repayment rates, and operational self-sufficiency are defined. Useful books and websites on microfinance are also listed.
MultiFunding Lending Snapshot - Q1 May 2011elisabethie
This report is a summary of key findings from MultiFunding’s First Quarter National Lending Snapshot. The objective of the study is to determine amongst small business owners looking for loans in today’s market – what loan types they qualify for and what interest rates they can expect to pay for their loans.
FirstBank Impact Series - Central Bank of Nigeria's Paper Presentation (abrid...FirstBank, Nigeria
The document discusses the future of microfinance in Nigeria and the role of the Central Bank of Nigeria. It summarizes the key points of the 2005 Microfinance Policy and highlights the factors that have contributed to persisting gaps in access to financial services. It then outlines the major revisions made to the policy in 2011, including changes to capital requirements for microfinance banks. Finally, it lists several next steps that will be taken to further promote microfinance and financial inclusion in Nigeria, such as capacity building programs, strengthening linkages between institutions, and collaborating with development partners.
Microfinance provides financial services to low-income individuals who lack access to traditional banking services. It includes small, short-term loans that use social collateral rather than financial collateral. Microfinance aims to help the poor raise their income and build assets through supporting microenterprises. It also seeks to integrate the financial needs of the poor into mainstream financial systems by building sustainable local institutions. Some key principles are that microfinance services should include loans, savings, insurance and money transfers to be truly useful for the poor, and that microfinance institutions must be financially self-sufficient in order to reach large numbers of people.
The document discusses the history and impact of microfinance, specifically the Grameen Bank founded by Muhammad Yunus in Bangladesh. It notes that traditional banks often exclude the poor due to lack of collateral and perceived repayment risk. The Grameen Bank pioneered an innovative group lending model where loans are provided to groups of borrowers who are jointly liable for repayment, incentivizing monitoring and reducing costs. This model has enabled over 5 million poor Bangladeshis, especially women, to access credit and engage in entrepreneurship. The success of the Grameen Bank in alleviating poverty demonstrates that traditional perceptions of lending to the poor may be outdated.
Commercial banks are beginning to recognize microfinance as a viable market and offer financial services like loans, deposits, and money transfers to low-income households and small businesses. While banks have advantages over non-bank microfinance institutions like established infrastructure and access to deposit funding, they also face challenges in adapting traditional banking practices to the needs of poor clients. The document discusses various approaches banks can take to engage in microfinance, such as direct lending, creating a microfinance subsidiary, or partnering with existing microfinance organizations.
Microfinance aims to provide financial services like credit, savings, insurance and money transfers to low-income households and micro-entrepreneurs. It is delivered by microfinance institutions (MFIs) through small loans with group lending. Shortcomings include overdependence on donors, high interest rates, lack of regulations and difficulty reaching remote areas. The State Bank of Pakistan has launched various initiatives like credit guarantee facilities, funding programs and partnerships to strengthen the microfinance sector and promote financial inclusion.
This document discusses financial inclusion in the Middle East and Saudi Arabia. It defines financial inclusion as access to affordable and usable financial services. The importance of financial inclusion is discussed, including its role in job creation, poverty alleviation, and boosting incomes. While financial inclusion can help the poor and small businesses, the literature suggests governments in the Middle East are not doing enough to increase uptake of financial services through education campaigns. The document will examine prevalence of banking, loans, and mobile banking in Saudi Arabia in 2017.
Submitted Version of Proposal - Credit - CSCC.docJinkyComon1
The document proposes a P500,000 loan from Cleopatra Savings and Credit Cooperative to provide microloans to its members for productive and provident purposes to finance microenterprise projects and help with emergencies, with loans expected to benefit around 70 borrowers over 6 months and featuring an interest rate of 24% annually.
A CONCEPTUAL FRAMEWORK FOR MICRO FINANCEMichelle Shaw
The document discusses the concept of microfinance and the "double bottom line" (DBL) framework. It proposes that DBL, which measures both financial returns and positive social impact, can help microfinance institutions attract socially responsible investors and demonstrate their achievements. Specifically, it suggests that microcredit programs that provide educational initiatives are well-suited to using DBL to communicate their dual impacts. Overall, the author argues that more widespread use of DBL can help ensure the long-term success of the microfinance industry by aligning it with impact investors.
1. The document outlines a business plan for a microcredit program operated by the Payatas Alliance Recycling Exchange Multi-Purpose Cooperative (PARE MPC) in Quezon City, Philippines.
2. The plan describes PARE MPC's loan products and services, operations procedures including loan application, approval and collection processes, as well as marketing and financial plans.
3. The microcredit program aims to provide small loans to PARE MPC members, especially those in the informal waste sector, to support their livelihoods and improve their economic conditions.
Microfinance and Entrepreneurship in Jordan Conceptual and Empirical Literatu...IJSRED
This document discusses a literature review on the relationship between microfinance and entrepreneurship in Jordan. It provides an overview of microfinance, including its goals of poverty alleviation and increasing access to financial services for low-income individuals. The review examines conceptual literature on reasons for microfinance in economies and why individuals need microfinance. It explores how microfinance can spur entrepreneurship, using Bolivia as an example. The review also discusses criticisms of microfinance and debates around its impact on poverty reduction.
This document discusses several challenges facing the microfinance field, including overindebtedness among clients, high client dropout rates, unethical collection practices, exorbitant interest rates, mission drift among microfinance institutions, and poor governance structures. It argues that the field's focus on rapid growth and commercialization has contributed to these issues and that microfinance outcomes are not guaranteed without prudent strategies, management, and governance that prioritize clients. The document calls for refocusing on achieving positive social outcomes for clients through deeper financial inclusion, creating value for clients, protecting clients from harm, and ensuring quality services.
NABFINS is an NBFC-mFI subsidiary of NABARD that aims to support rural and urban poor through loans at reasonable interest rates. It has reached over 5.5 lakh poor households across 75 districts in 5 states through 263 staff. NABFINS lends directly to self-help groups and joint liability groups through 268 business partners. It has seen steady growth over 5 years of operations with total assets growing from Rs. 413 crore to Rs. 942 crore and loan disbursement increasing from Rs. 57 crore to Rs. 795 crore. NABFINS focuses on financial inclusion through affordable loans and basic skills training while ensuring good client practices and social responsibility.
The document discusses social impact bonds (SIBs) as a potential resource raising instrument for Oxfam America. It defines SIBs as investments in social service projects that are expected to generate cost savings for public agencies. Investors receive repayments based on whether intended social impacts and cost efficiencies are achieved. The document analyzes the incentives for different parties involved in SIBs, including guarantors like development agencies who leverage private investment for social objectives, states who oversee implementation strategies aligned with their goals, and impact investors seeking social and financial returns.
Microfinance provides small loans and other financial services to poor and low-income individuals who traditionally lack access to banking and related services. The document discusses two main approaches to microfinance - the saving-led approach and the credit-led approach. The saving-led approach emphasizes group savings first before lending internally from pooled savings, while the credit-led approach prioritizes getting external capital to groups in the form of individual loans with set repayment terms. Both aim to provide poor communities with needed credit and help accumulate savings, though they differ in their starting point and governance structures.
Microfinance in India grew rapidly in the 2000s but faced a crisis in 2010 when over 200 suicides were linked to coercive loan collection practices. This prompted the Andhra Pradesh government to waive $1.5 billion in loans, crippling the industry. The document analyzes issues like multiple lending, lack of transparency, and inadequate regulations that led to this crisis. It recommends regulations like a credit bureau, caps on multiple loans to one borrower, allowing MFIs to accept deposits, and improved training to promote a sustainable microfinance industry focused on social welfare over profits.
Microfinancing aims to provide financial services to the poor by making loans accessible. However, microfinancing involves significant risks due to the unpredictable incomes of borrowers and weak property rights. Successful microfinancing requires an in-depth understanding of borrowers' social environments and financial needs. It also relies on social pressures rather than traditional collateral. Microfinancing institutions face various financial, operational, and strategic risks that must be carefully managed, such as credit, liquidity, interest rate, and fraud risks. Both the characteristics of the institutions and macroeconomic factors can impact the sustainability of microfinancing.
Microfinance alludes to little scale monetary administration for both
credits and stores that are given to individuals who homestead or fish or
crowd; work little or miniaturized scale ventures where merchandise are
delivered, reused, repaired, or exchanged; if administrations ;work for
wages or commissions ;pick up in-originate from leasing little measures of
area, vehicles, draft creatures ,or apparatus and apparatuses; and to
different people and nearby gatherings in creating nations, in both rustic
and urban ranges. Micro credits are given to business people excessively
poor, this study has accordingly, made an endeavour to analyse the part of
Microfinance and developing economy in India. It is a platform to deliver
financial products and complementary services reaching the poor in order
to get them out of poverty. By providing capital, trust, social esteem,
information, knowledge, competences, empowerment, networking, social
capital, technology and market access, microfinance institutions and other
sources of microfinance become active subject in the fight against poverty
in all its dimensions and levels. The integral development of the human
potential of the client and of her/his family, neighbourhood, and social networks is fostered by both well-established and innovative financial
products, whose high repayment ratio, remunerative interest rate (or
price) and low administrative cost guarantee the economic sustainability
of a well-managed institution.
Microfinance in India: A New Perspective Facilitating Self Employment for the...professionalpanorama
This document discusses microfinance in India and its role in facilitating self-employment for the poor. It provides an overview of how microfinance works in India, highlighting that small loans are provided to the poor to start or expand small businesses and generate additional income. It also analyzes the operational expenses of microfinance institutions (MFIs) and self-help groups (SHGs) that provide microfinance services. The key findings are that operating costs, not profits, make up the majority of interest rates charged by MFIs. It estimates that MFIs and SHGs could together reach over 18 million and 54 million poor households, respectively, by 2010 if sufficient funding is available to support their growth targets.
Other NGOs such as Dustho Shasthya Kendro (DSK), Nijera Kori, ASA etc should give an positive steps to follow BRAC, Grammen Bank and Gono Shasthya Kendro (GSK) to develop social business in order to earn fund in collaboration of overseas investors who consider the impact of their investment and profit. The local NGOs should change their mind and reform themselves to attract overseas investments.
This document provides an overview of microfinance, including its key concepts, features, role, and importance. Microfinance involves providing financial services like loans, savings, insurance, and money transfers to low-income households and microenterprises. It aims to help the poor raise their income and standards of living. Key features include dealing in small loans, catering to the poor, supporting women and self-employment opportunities. Microfinance plays an important role in providing credit to the rural poor, alleviating poverty, empowering women, stimulating economic growth, and developing skills. Understanding the country context is also important, as it influences how microfinance is delivered.
The document discusses trends in the microfinance industry globally and in India. Key points:
- Microfinance institutions (MFIs) have played a large role in addressing financial inclusion, though 2 billion people still lack access to financial services.
- Growth has been uneven globally, with some regions slowing down due to economic factors while Asia/Africa are growing. However, significant potential remains as financial exclusion is still widespread.
- In India, while inclusion has increased, banks have traditionally not focused on lower income groups. MFIs emerged to address this need, though their role in the ecosystem has changed over time.
This document summarizes the 2nd Annual Social Finance Forum. It discusses key trends in social finance like public-private partnerships and social impact bonds. It provides examples of social finance programs in the US and other countries that use performance-based contracts and measure social impact. The document emphasizes the importance of partnerships between various stakeholders like governments, financial institutions, non-profits and foundations to facilitate the growth of social finance through the development of intermediaries, common metrics, and an overall community of practice.
1. CMFO - Microfinance Investment Vehicle in South America
Opportunity
Despite Latin America and the Caribbean (LAC) growing at a projected average of 3% per annum in the medium
term, the region still has a significant portion of the population living on less than USD $2per day. And while FDI
inflows into LAC increased by
5% in 2013 there is no true sign
of the wealth disparity reverting
under traditional methods. Mi-
crofinancing sought to change
all that. Introduced to the region
in the 1970s, microfinancing
foundations grant small loans to
individuals seeking capital while
taking on risk seen as unsus-
tainable by traditional financial
institutions. When effectively
funded and implemented, mi-
crofinancing can change the
landscape of an economy while providing an average 95% repayment rate to the lenders. Projects range from
small business loans of USD $50 - $200 to loans for child education and healthcare services. By 2009 the Latin
American region boasted 10.5 million borrowers with a total loan portfolio of USD $12.3 billion and untold so-
cial impact.
However, the amount of capital inflows allocated towards microfinancing is far from what is needed for sustain-
able change. Several studies estimate that 70% of the population in Latin America is still marginalized from fi-
nancial services by commercial banks, with only 17% of those marginalized and applying for microfinancing
capital receiving funding. The continued lack of adequate capital flows to microfinancing foundations stifles the
economic and social growth of the region as 67% of microfinancing recipients are women for whom financial
capital and autonomy would provide local economic growth as well as towards family healthcare and education.
Cash Collateralized Micro-Finance Obligations (Cash-CMFO)
While investment for the sake of charity is an inspiring example, aligning charitable capital flows with investors’
self-interests can provide a win-win scenario of abundant capital and returns to global institutional investors,
regional microfinance foundations, and domestic entrepreneurs. The prevailing misconception is that microfi-
nancing only provides a charita-
ble return with little to no insight
into how the money is used. In
reality, these institutions are
quite profitable. As the risk of
default is already accounted for
by the microfinance institutions it
is diversified across our invest-
ment vehicle. However, there is a
tradeoff between the financial
return of a respective project and
the level of social impact attained
(as measured by the four credit
agencies found in Appendix 1). A
Cash CMFO operates like a stan-
dard collateralized debt obliga-
tion with a few key differences.
Firstly, since the microfinance
loans are backed by the cash pur-
2. Type: Cash Collateralized Micro-Finance Obligations (Cash CMFO)
Size: $10,000,000
Structure: 4 tranches respectively to Social Impact and Credit Risk
Region: Bolivia, Brazil, Colombia, Ecuador and Peru
Investor base: family offices, family foundations and wealthy clients
Expected Returns: 8-13% dependent on tranche
Management fees: 1% of total investment
Time horizon: 2-3 years average loan
chases of debt and equity of microfinance institutions the CMFO is backed by real assets, namely microfinance
loans, as opposed to a synthetic CDO. The second major difference is pertaining to risk. There is a positive
lation between social impact and credit rating. Therefore, we tranche the securitized loans in the Cash CMFO
based on the investor’s impact preference and their risk preferences. Hence, the level of social impact is
ly related to the return of the microfinance loans.
By creating a Cash CMFO, investors are given clarity on the use of their otherwise charitable donations, micro-
finance institutions are provided more capital through a highly liquid capital instrument, and investors are pro-
vided a competitive return that can be reinvested in future Cash CMFOs for the social and economic benefit of all
three parties. Another feature of the Cash CMFO is the cash flow waterfall. In this structure the coupon and the
principal of a social impact tranche will be paid only if all the above tranches (i.e. with higher social impact)
have been paid off. The cash flow waterfall structure gives priority to investors who seek higher social impact
despite the lower rate of returns (Appendix 2).
In short, the Cash CMFO provides the most comprehensive and competitive structuring of MF investment oppor-
tunities in South America while aligning investor interests with charitable needs.
Target investors
Central to sustainable impact investing is the ability of investors to monitor the use of their investments. The
CMFO solves this by providing investors the ability to decide their optimal level of social impact and financial
returns. As a result the CMFO satisfies the financial incentive of the investor while providing clear oversight of
the social impact achieved by their investments. This innovative approach to micro-financing is targeted at
those investors who would donate to microfinance institutions, provided equitable returns and proper over-
sight were incorporated into the investment. This structure can easily be implemented into new microfinance
investment opportunities, regardless
of location. Following successful pi-
loting of the CMFO and the subse-
quent rise in capital flows to micro-
finance institutions it is our hope
that this model could be used in de-
veloping countries, from South
America to South Asia, to provide
micro financing institutions with the
capital inflows needed to create sus-
tainable change.
Microfinance Institutions
The CMFO focuses on the level of social impact and on the rating
of the selected microfinance foundations to incorporate into the
database available to investors. In terms of social rating, only
institutions with 2.5 or more (out of 5) were included. The social
rating framework indicated the microfinance foundation’s out-
reach to the poor, appropriateness of services, and the social
responsibility to the community and to the environment. Default
rating was an important decision in the selection of the institu-
tions as we target secure rates of returns for our investors. The
CMFO will allow investors to invest only in foundations with at
least a B rating, which corresponds to moderate or well-
managed short- and medium-term risk combined with good
performance.
In summary, the Cash CMFO allows for the perfect nexus of fund-
ing for stable microfinance institutions, empowerment of social-
impact projects, and competitive returns to institutional investors. The CMFO is the investment vehicle that will
make a difference in the sustainability of microfinance, bridging the gap between charitable contributions and
innovative financial products. It is a high-impact, sustainable investment vehicle, driven by a fierce belief in
what we can achieve together.
3. Tranch Microfinance Institution Country Date MIR* ROE N° Borrowers ø Loan Portfolio Yld Date Social Rating
Fodemi Ecuador 2013 b+ 10.90% 38,109 $614 23.70% 2013 4
CRECER Bolivia 2011 A 23.40% 109,822 $536 36.30% 2013 4+
ProMujer Peru Peru 2013 a- 24.90% 61,072 $525 55.80% 2013 4
FMM Bucaramanaga Colombia 2013 a 21.70% 301,403 $902 47.70% 2013 4
ProMujer Bolivia Bolivia 2011 a- 12.90% 52,386 $477 36.90% 2013 4
Contactar Colombia 2013 b+ 18.10% 45,441 $781 32.20% 2013 4
WWB Popayan Colombia 2012 a 30.90% 417,479 $827 37.80% 2012 3.5
FINCA Peru 2013 B+ 8.5%** 16,676 $336 54.20% 2012 A-
Movimiento Manuela Ramos Peru 2012 B+ 15.00% 18,641 $361 50.80% 2010 4-
ICC Blusol Brazil 2011 b+ 4.10% 6,913 $1,574 50.50% 2011 3.5
Financiera Crear Arequipa Peru 2011 a- 29.70% 106,401 $1,679 33.40% 2012 3
Fondesurco Peru 2013*** B 5.50% 11,502 $1,724 31.00% 2011 4
Banco da Familia Brazil 2012 b 11.70% 8,928 $1,073 44.20% 2012 3.0
Coopac Norandino Peru 2012 b 14.60% 3,706 $2,091 24.60% 2012 3.5
Banco D-Miro Ecuador 2012 a- 3.70% 39,855 $1,070 29.80% 2012 3.5
Coop. Santa Maria Magdalena Peru 2011 b 14.20% 24,562 $2,344 25.80% 2011 3.0
Funbodem Bolivia 2011 b+ 5.50% 9,853 $1,529 25.20% 2011 2.5
Total/Average a-/b+ 15.43% 1,272,749 $1,085 37.64% 3.6
*Microfinance Institutions Rating **ROA (no ROE available) ***Data for Fondesurco except Rating grade taken from 2011
Social Impact
4.125
Social Impact
3.875
Social Impact
3.5
Social Impact
3.1
http://www.worldbank.org/en/region/lac/overview
http://lab.org.uk/an-overview-of-microfinance-in-latin-america
http://www.iadb.org/en/topics/microfinance/microfinance-by-the-numbers,2450.html
http://www.aboutmicrofinance.com/latin-america-caribbean/regionslatin-america-caribbean
http://www.microrate.com/
http://www.planetrating.com/EN/index.php
http://www.m-cril.com/
http://www.microfinanzarating.com/
Abrams, J. (2012). Global Microfinance Ratings Comparability. Fondo Multilateral de Inversiones (FOMIN).
Marti, A., & Finance Sàrl, E. (2012). Rating Guide: The Microfinance Institutional Rating. The Rating Initiative.
Appendix 1: Microfinance Institutions Rating and Social Rating - Comparability
Microfinance Institutions Rating
Social Rating
Appendix 2: Exemplary Structure CMFO
Microrate Planet Rating Microfinanza M-Cril
a+ A++/A+ AAA/AA a+
a A/A- A a
a- B++/B+ BBB a-
b+ B/B- BB b+
b C++/C+ B b