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Microfinance

How can regional integration improve access to finance in South Asia?

Sarmad Shaikh's picture

South Asia is the least integrated region in the world. Intra-regional trade in South Asia is less than 2% of GDP compared to over 20% in East Asia. Labor mobility and regional travel is minimal, with few exceptions. Even remote communication is low – only 7% of international telephone calls in South Asia are to countries within the region, compared to 71% for East Asia. The case for closer integration has remained strong for a while now, and it is refreshing to see that some movement, albeit watchful, in addressing some of the region's deep rooted political economy issues, particularly between India and Pakistan.

The discussions around closer integration have centered on energy, trade, connectivity and stability. All of these offer strong potential to enhance growth in the region. However, financial sector integration overall, and access to finance in particular, hardly ever make it to the agenda of regional integration forums and deliberations. This is unfortunate, because the region has a long way to go in providing adequate access to financial services and insurance products, especially to the vulnerable segments of the population. Given that South Asia is home to more than half a billion of the world’s poor, this becomes a poverty reduction goal as much as a financial inclusion goal.

Wanted: Photos Highlighting the Diversity and Dynamism of Microfinance!

Michael Rizzo's picture

On June 6th, CGAP launched its annual and ever-growing photo contest that highlights the diversity and dynamism of microfinance around the world. Each year, the CGAP Photo Contest receives stunning photographs from around the world that help tell the story that CGAP’s work addresses.

Now in its 7th year, CGAP has asked entrants to focus on the broader issues that surround financial inclusion to help show the variety of formal and informal ways in which finance is woven into the fabric of poor people’s day-to-day activities. CGAP is continually trying to build upon the Contest’s success by challenging photographers to use their imaginations to capture microfinance in distinctive ways and diversify the representations of microfinance. In particular, photographers from South Asia that have consistently dominated the top prizes will need to continue wowing the judges for place as a finalist as more and more photographers from Sub-Saharan Africa, Latin America, and the Middle East deliver compelling work.

The Value of Connected Savings

Daniel Radcliffe's picture

The business case for low-balance savings is tough, as the margin on float may not amount to much. In much of South Asia, the economics of savings for the poor has been buttressed by microcredit – the notion that the account anchors the customer relationship and the loan gives it profitability. But financial inclusion premised on credit is always going to leave some people behind: those who do not feel like credit is the right financial tool for them or who simply do not have the ability to commit to future payment streams.

A new vision is emerging around integrating the savings proposition into a broader payments network. Offering “connected savings” accounts rather than stand-alone accounts helps the economics of low-balance savings in three ways:

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.

India’s Vision for Technology and Financial Inclusion: Interview with Bindu Ananth of IFMR Trust

Jim Rosenberg's picture

Bindu Ananth is the President of IFMR Trust, which has a mission of ensuring that every individual and every enterprise in India has access to complete financial services. In pursuit of this, IFMR has made four key investments – IFMR Rural Finance (full service financial institutions for remote rural India), IFMR Capital (guarantee company for high-quality MFIs), IFMR Mezzanine (subordinated debt provider for emerging MFIs) and IFMR Ventures (debt access for rural enterprises).  Through these investments as well as other initiatives , IFMR Trust is advocating for an inclusive financial system in India. Recently I interviewed Bindu about how the financial system in India might be configured to deliver complete financial service access.

Geography, Infrastructure and Poverty Reduction

Eliana Cardoso's picture

The proportion of people living below the poverty line in Bangladesh has fallen sharply from close to 60% in 1990 to 40% in 2005. Using the Household Income and Expenditure Survey conducted by the Bangladesh Bureau of Statistics; economists Aphichoke Kotikula, Ambar Narayan and Hassan Zaman find that the number of poor people in Bangladesh fell by nearly 6 million between 1990 and 2005. The study, “To what Extent are Bangladesh’s Recent Gains in Poverty Reduction Different from the Past? also shows substantial improvements in living conditions. For instance, the percentage of households with connections to electricity increased from 31% to 44% between 2000 and 2005.

Key factors contributing to poverty reduction include changes in certain household characteristics – most prominently, a smaller number of dependents and improvements in their education.