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Archive for Microfinance

Cashpor Micro Credit – India’s Finest Microfinance Institution

Cashpor Micro Credit – India’s finest Microfinance Institution, Amongst the world’s best.

Cutting the clutter:

  • Cashpor Micro Credit is a profitable Microfinance Institution, headquartered in India.
  • Cashpor Micro Credit was India’s first MFI to receive an Equity Investment, from a pedigree investor i.e. Vinod Khosla (co founder  of Sun Microsystems and venture capitalist, ex KPCB). Read here
  • Cashpor works in India’s poorest ‘n most neglected areas (Read: Bihar and Uttar Pradesh) in a truly very focused manner.
  • Cashpor genuinely and only targets the poorest of the poor clients through its unique Cashpor Housing Index.
  • Cashpor voluntarily charges amongst the lowest rates of interest from its clients in India. No hidden charges, whatsoever.
  • Cashpor has a brilliantly talented management team comprising of senior bankers led the almost legendary Prof David Gibbons
  • Cashpor has never defaulted on any financial institution credit facility till date
  • Cashpor employees are extremely motivated and believe in the vision of the company, which has resulted in low attrition.
  • Above all, Cashpor is sincere, fair, transparent and ethical with all its stakeholders – Employees, Clients, Investor, Bank, Regulator and the Indian Microfinance Sector

Other Interesting Facts:

  • Cashpor is headquartered in Varanasi, One of the oldest and holiest cities of India. Varanasi was voted as amongst the top ten places to visit before something by Lonely Planet.
  • Varanasi or Banaras is the oldest living city in the world. Established in 7th century B.C., Varanasi is the holiest of the holy cities to Hindus. The sacred river Ganga (Ganges) flows towards the north here which is considered very auspicious by the Hindus. The most famous of all temples of Lord Shiva is situated here(Temple of Lord Viswanath). Varanasi is full of temples, probably thousands of temples are here. There are about 365 GHATs or places of bathing on the river Ganga.

  • These GHATs are always crowded with devotees & pilgrims, & there are hundreds of priests to help them in their sacred rights. At evening, priests perform AARTI (worship with lighted lamps) at some of the more famous GHATs, & the scene is just beyond descriptions. Thousands of people attend this AARTI ceremony, including hundreds of foreigners. With its narrow streets teeming with people as well as (sacred) bulls, Varanasi is a must for all the foreign visitors to India who want to have a glimpse of the eternal India & Indian culture.
  • Every fifth shop in Varanasi either sells Paan (Betel Leaf with a dozen filings of Indian herbs) or Milk/Milk Products
  • Certain days of the year, Thandai (Thick shake made from milk, pistachios, almonds and cashew nuts) laced with marijuana cream is consumed by devotees of Shiva (Who George Clooney refers to The God of Death, in the superb Michael Clayton)
  • Varanasi is home to the Banaras Hindu University, housed in some 1250 acres.

Microfinance – No.1 CSR Activity – TNS/The Times of India Survey

As per a recent TNS/Times of India Survey, The priority areas that the respondents felt ought to be covered under CSR initiatives included microfinance (99%), environment (81%), health (81%), education (82%), women empowerment (63%), livelihood promotion (62%), sanitation (61%), HIV/AIDS (54%), child care (55%), slum improvement (50%), disaster management (36%) and agricultural development (29%) .



Source: The Times of India

The 12 Point Guide: Camouflaging an NBFC to an MFI

 The Rules of the Game:


1.     Rename the NBFC to some ethnic-Hindi name meaning and/or Progress,Happiness,Development,Light,Opportunity…

2.     VOW never to refer your operations as business BUT always as “Program/Program Outreach..”

3.     Re-Write on the website/print brochures your firm’s vision, focusing only on “alleviating poverty/improving livelihoods”

4.     Re-Brand existing loan products by affixing/prefixing/suffixing “micro” to them

5.     Edit your reporting style. Refer to Assets as “Borrowers/Micro Loans/Program Outreach”

6.     Rating – get the NBFC rated by a rating co. specializing in MFI ratings, just for the heck of it !

7.     Partner with some renowned technical advisory firm, just for the heck of it !

8.     Obtain a Membership of some industry association of Microfinance, just for the heck of it !

9.     Attend ALL industry events – seminars, conferences etc

10.   Appoint a sector specialist debt advisor to help you raise debt from commercial banks, he will try to position you well. 

11.   Approach VC firms for possible equity dilution (they’ll prefer you over “not for profit” firms, anyway !)

12.   Send periodic emails to the entire sector regarding the above, periodically, refer to them as milestones !




Higher CAR – RBI Draft Guidelines for NBFC’s ; WILL Impact MFI’s

Higher capital adequacy ratio (CAR) mooted by RBI in it draft guidelines for non-banking financial companies (NBFC), including microfinance institutions (MFI), will put the organisations under pressure to boost their capital requirements by half to 15% by April 2009. MFIs in the country are highly leveraged since they are dependent on borrowings. They could find it difficult to bring in additional capital to meet the norms.

The draft guidelines have increased CAR of systemically-important non-deposit-taking NBFCs from 10% to 12% immediately, and to 15% by April 1, 2009. This would limit the way the NBFCs leverage their capital. Some experts say that with a 15% CAR, MFIs can leverage only up to five times. 

The regulator’s concern was triggered because NBFCs raised short-term resources to fund their asset books.

So far, only deposit-taking NBFCs were subject to prudential regulations on income recognition, asset classification and provisioning capital adequacy, among others, while non-deposit-taking NBFCs were subject to minimal regulation. Most of the systemically-important NBFCs are those promoted by banks. There are 173 systemically-important non-deposit-taking NBFCs.

According to RBI, “In view of recent international developments, the risk associated with highly-leveraged borrowings and the reliance on short-term funds by some NBFCs, there have been concerns regarding the enhanced systemic risk associated with the activities of the entities.”

Non-deposit-taking NBFCs with an asset size of over Rs 100 crore would be considered NBFC-ND-SI, and a new regulatory framework involving prescription of capital adequacy and exposure norms for such NBFC-ND-SI was put in place from April 1, 2007. The companies were advised to maintain a minimum capital-to-risk weighted assets (CRAR) ratio of 10%.

Fitch – Risks in Microfinance ; the New Rating Criteria

Click the following link to download the Report:-  fitch-microfinance-12-jun1   

 Fitch says in a published today that the fast growing microfinance industry, which provides financial services to low-income populations in emerging markets, could be exposed to greater risks. Separately, the agency has published its rating criteria that formalise the agency’s existing approach to microfinance institutions (MFIs).

Fitch notes that high growth and transformation within the microfinance sector puts pressure on internal control systems, and places new demands on the quality of management and corporate governance. Increased access to commercial funding brings new demands in risk management, disclosure, and moves MFIs away from their traditional base of public or donor funding. Transformation to for-profit and regulated structures heightens the risk of “mission drift”, leading the MFI away from its traditional social mission.

The Big Trouble In Small Loans – Time

 Interesting Article – Must Read,  Click here to read the article in TIME 

Starship Enterprise – M2i

M2i – A 2 year old, truly promising, management consulting firm for MFI’s was recently covered by The Economic Times ! 

Click here to read the Economic Times writeup – Starship Enterprise.

Started by a team of highly motivated IRMA + Ex-Mcril Alumni, M2i has advised, mentored, trained “several” MFI’s since inception. Website: www.m2iconsulting.com/.

Client List Sampler (source: ET): Rashtriya Grameen Vikas Nidhi (RGVN), Sa-Dhan, Development Alternatives, ESAF, Cashpor, BISWA, Nirmaan Bharati,Appropriate Technology India (ATI).

 Kudos to the founding team Deepak, Atul, Rahul, Rajeev !