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Is SKS Any Different from Wal-Mart, and Does it Matter if It Isn’t?

Malcolm Harper's picture

This post is the second in a special blog series on the Microfinance Institution, SKS and it's IPO launch in partnership with CGAP. Over the coming weeks we’ll be featuring a variety of voices on the issues raised by the IPO. We welcome your participation in this discussion through comments.

This is the first time that I have knowingly contributed to a ‘blog’; hence I am not familiar with medium’s etiquette.  Am I to oppose, to concur, or to add? I’ll try to do all three.

Steve Rasmussen poses a number of important questions; they are mostly about the future, and about clients, which is surely where our focus should be.

I shall not comment on the rights or wrongs, legal or ethical, of the ways in which the shareholdings of the SKS clients’ Mutual Benefit Trusts were handled; Professor Sriram has already covered that issue, very well. 

Six Questions for Indian Microfinance Institution SKS

Stephen Rasmussen's picture

This post kicks off a special blog series on the Microfinance Institution, SKS and it's IPO launch in coordination with CGAP. Over the coming weeks we’ll be featuring a variety of voices on the issues raised by the IPO. We welcome your participation in this discussion through comments.

A rare microfinance occurrence took place in late July this year. The Indian microfinance institution, SKS, became the second pure microfinance institution (MFI) globally to go public by listing its shares on the stock market. SKS is one of the largest microfinance institutions in the world with almost 6 million clients, mostly poor women living in rural areas. It has also been one of the fastest growing MFIs over the past few years, with a compound annual growth rate of 165% since 2004.

From one perspective, the IPO was a great success. It was 13 times oversubscribed, the company valuation reached the top of the offer band price (valuing the company at $1.5 billion), and the share price rose 42% in the first five weeks of trading. In the process SKS raised $155 million in fresh capital that will allow it to grow and serve far more people than it reaches now.

Open Forum: Have Your Say on Development!

Joe Qian's picture

World Bank Open Forum worldbank.org/openforum

World Bank Open Forum: On October 7-8, the world's financial leaders will be in Washington, D.C., working together to find solutions to the most pressing issues in the wake of the financial crisis. You're invited to join this online event featuring live-webcasts of expert discussions, special announcements, and a 24-hour global chat forum on three key issues: open data and development solutions, global job creation, and major development challenges.

China's Accountability and India's Voice

Yongmei Zhou's picture

As a Chinese working on public sector governance and living in India, I'm often asked to compare the two governing systems, the largest democracy in the world and the largest non-democracy in the world. The gap in political and civil participation between the two countries is well known.

India's civil society and media are much more dynamic and vocal. I particularly admire the impact of the Center for Science and Environment on environmental policy, Pratham on education, the Naz Foundation on gay and lesbian rights, and MKSS on Rights to Information. I’m not aware of equally impactful counterparts in China but would be happy to hear about those you have come across. Certainly China can benefit from moving towards a more open society, where minority voices are heard and rights protected, and where abuse of official power and natural resource is restrained.

But when it comes to building infrastructure and reducing poverty, China is doing much better. Why? We often hear "Yes, but China is an authoritarian regime." -- as if authoritarian regimes automatically are more capable of development. Yes an authoritarian regime can be more efficient in making policies -- good or bad -- because the process of consultation and public deliberation can be truncated. But which theory predicts that democracies are less capable of building good infrastructure quickly or taking care of the poor?

Revisiting the Rules of the Game: Modular Approach to Project Design

Rajeev Ahuja's picture

Writing anything on “project design’ can be hazardous. For, development contexts are diverse, actors and sectors are varied, and design can take innumerable forms. Nevertheless, this non-prescriptive note may help Bank teams engaged in designing new lending operations as they rethink the rules of the game.

Designing a development project is, in many ways, akin to constructing an edifice. Just as a building requires a solid foundation together with flexible structures to withstand shocks, a project also needs firm foundations -- based on government policy, the institutional context, and the cultural milieu – as well as a flexible superstructure that can adjust when things change. Cast any project design in stone and the changing context will soon render it obsolete!

The development path is strewn with uncertainties, not all of which can be fully anticipated. Just as natural disasters, insurgencies, early elections and so forth can derail things, so too can the cobwebs of bureaucracy, technical revisions, policy changes, implementation impediments, and change in leadership, alter the context.

The Inexorable March of Branchless Banking

Ignacio Mas's picture

There are two ‘coming of age’ tests for bold new ideas. The first, still in the realm of the market for ideas, occurs when the concepts become entrenched as conventional wisdoms, when you no longer need to justify them as ideas. The second is when they gain traction in the marketplace, when you no longer need to justify them as a business proposition.

The ground has shifted massively on both counts since I wrote about the opportunities from branchless banking in this blog more than two years ago. Few now would dispute that a key step to achieve much broader financial inclusion is to take banking transactions outside of banking halls and into everyday retail establishments that exist in every village and every neighborhood, and that financial service providers need to put technology in the hands of customers (in the form of cards or, better still, mobile phones) to increase the convenience and security of those transactions.

Making Money Off the Poor? Microfinance Institutions Going Public Creates Controversy

Shweta Banerjee's picture

Microfinance originated in South Asia in the 1970s when pioneers such as Mohammed Yunus of Grameen, introduced the idea that providing small loans to the poor, especially women, can help generate income. In the last thirty years, after many experiments from around the world, the term microfinance now not only includes credit but also savings, insurance and cash transfer services for low income families.

An explosive growth of microfinance institutions (MFIs) has been seen within the last decade, both in India and globally. In fact, following the recent financial crisis, both Grameen Bank and Kiva have started lending in the United States.

The largest MFI in India, SKS made its first public offering on July 28, 2010. Backed by powerful funders like George Soros and Narayan Murthy, this is only the second “pure” MFI in the world to go public. The first one was the Mexican MFI, Compartamos, in 2007.

The Microfinance Gateway is the most comprehensive online resource for the global microfinance community and recently features an article based on eleven interviews with diverse experts on what they think the IPO could mean for the poor. Here’s a sneak-peek:

Have Librarians Missed the Bus?

Dilinika Peiris's picture
Photo Courtesy of Sri Lanka Library Association (SLLA)

As the Sri Lanka Library Association celebrates its Golden Jubilee this year, it’s time for us to reflect on the contributions of the Library and Information professionals to the development of Sri Lanka. At the same time, given the explosion in the sheer amount and sources of information now available especially through the internet, I found myself asking; do librarians have a role in the digital world? How are they adapting to this change? And are organizations and policymakers still making effective use of their knowledge and expertise while making decisions?

A recent Sunday Island piece captures the challenges and exciting opportunities that Librarians face in Sri Lanka today; I agree with them that with the expansion of information and sources, professional assistance is vital to identify trusted and accurate information. As a result, we should more actively recognize and involve Library and Information professionals as partners in policy consultations and working groups.

The Little State that Could

Muthukumara Mani's picture

It is not often that you find forest officers sitting face to face with mining officials to discuss environmental sustainability—especially in a state which is rich in both minerals and forest resources. Nor do you often see fishermen walking toe to toe with farmers in sweltering 48° C heat to be heard alongside tribal chiefs and industrialists. And it is not often that a state, dubbed as the disaster capital of India, and which lags behind on every conceivable development indicator, comes out on top by being the first to consult with its people on how to tackle the onslaught of climate change.

Well, this happened last week in India’s coastal state of Orissa, one of the poorest states in the country. While the richer states - Maharashtra and Gujarat - were busy building fancy climate models to predict temperature and rainfall changes fifty years from now, Orissa focused on what it can do today.

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