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Grameen Koota Reaches Milestone with 1 Million Microfinance Customers

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Monday, July 27, 2015 3:00PM IST (9:30AM GMT)
Bangalore, Karnataka, India

Bangalore-based NBFC –MFI, Grameen Koota Financial Services Pvt Ltd (Grameen Koota) has reached a new milestone of 1 million microfinance customers, in a testimony to its strong client-centric approach aimed at providing holistic financial and social services.


Grameen Koota, with 3,000 employees working in 270 branches spread across Karnataka, Maharashtra, Tamil Nadu, Madhya Pradesh and Chhattisgarh, reached one million customers with a portfolio of Rs.1, 602 as of 30th June 2015. As part of its future mission, Grameen Koota has been striving to reach over 2 million poor and low income households through financial products and development services by 2020.

Founded as an NGO project in 1999 by Vinatha M. Reddy to cater the need of micro-credit to the rural low-income households, the MFI was modeled after taking inspiration from the success story of Nobel Laureate Prof.Muhammad Yunus and his Grameen Bank. Suresh K Krishna as Co-Promoter and Director supported her in this initiative, which has grown largely after its transition into a non-banking financial corporation (NBFC) in 2007-08.

On reaching one-million customer base, Vinatha M Reddy, who is also Chairperson of Grameen Koota, said, “As a responsible MFI, Grameen Koota will continue its meaningful work with renewed commitment and reach out to thousands of other unbanked households in the coming years.”

Suresh K Krishna, Co-Promoter & Director of Grameen Koota, echoed similar views when he said, “The success of Grameen Koota is also a demonstration of the need and relevance of microfinance services to the poor and low income households. Grameen Koota will continue to be client centric organization and provide need based microfinance services in a transparent manner. I also thank and recognize the efforts of over 3,000 employees who have been working tirelessly, with the passion to see change in the community.”

Udaya Kumar, Managing Director and CEO of Grameen Koota, said: “We serve with our responsible lending principles along with social focus by providing financial literacy, micro-credit for all their needs, awareness on social, economic, education, health hygiene, water, sanitation etc. Customer Retention of over 90% validates our pro-poor business and social focus.”

Grameen Koota is backed by CreditAccess Asia & Creation Investments Capital Management, MFI focus investors, who have been aligned with vision and mission of the promoters.  Major Private and public sector Banks including Axis, ICICI, IDBI, SIDBI, State Bank of India, among others are the lending partners. Further, Grameen Koota has been supported by international lenders such as Standard Chartered Bank, Blue Orchard, responsAbility, Triodos Investments and others.

Congratulating Grameen Koota on reaching its milestone of one-million customers, Paolo Brichetti, Founder & CEO, CreditAccess Asia, said, “Grameen Koota is a key part of our integrated Group of credit institutions and we are very proud of this excellent result. We have supported the company since 2009 and it has been exciting to support the Management Team of Grameen Koota in this path to impressive growth. Continuing to keep focus on clients’ interests, will ensure that Grameen Koota will reach new milestones.”

Ken Vander Weele, Co-Founder and Partner of Creation Investments, said, “We are very pleased to be a shareholder in Grameen Koota. The Company has been uniquely able to manage rapid growth without ever compromising on the quality of service to its clients or the principles of client protection and care.”

About Grameen Koota Financial Services Pvt Ltd

Grameen Koota is one of the 5 financial institutions in the world and one of the 3 microfinance institutions (MFI) in India to have been honored by Smart Campaign for having met all the client protection principles. It is also one of the few MFIs be awarded with Truelift Certification of ‘Achiever’s level’ by M-CRIL and Social Rating of  Σα-(alpha- minus) for its commitment on social performance and pro-poor business.

Grameen Koota has been working with Joint Liability Groups formed exclusively of women belonging to poor and low income households by providing them with its diverse credit products catering all life-cycle needs such as income generation and access to water, sanitation, education, health care, home repairs, emergency, energy efficient cook stove etc. It gives its clients the option to repay weekly, fortnightly or monthly, depending on their cash flow and convenience.

More information: www.gfspl.in

Photo Caption: Grameen Koota reaches milestone with 1 million microfinance customers, a testimony of its strong client-centric approach. Photo Credit: Vikash Kumar

For News Release background on Grameen Koota click here
Media Contact Details
Udaya Kumar, MD & CEO, Grameen Koota Financial Services Pvt Ltd, +91-9901100889, udayakumar@gfspl.in

http://www.financialexpress.com/article/companies/grameen-koota-reaches-milestone-with-1-million-microfinance-customers/108616/

Creation Strives for Good Returns—and a Better World – MiddleMarketGrowth.org

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Global

Creation Strives for Good Returns—and a Better World

Small things do add up.

Or so it seems for Patrick Fisher and his growing team at Chicago-based Creation Investments Capital ManagementThe private equity firm aims to marry healthy investor returns with a social impact mission to provide microloans to the working poor.

In countries such as Sri Lanka, Albania and Mexico, Creation is scooping up small private financial services organizations to fill in the gaps where traditional lenders don’t have the inclination to tread— providing needed financing to struggling entrepreneurs.

“Big banks have thought, there’s not a lot of money in making a $100 dollar loan because it costs $20 to $50 to make that loan,” says Fisher, the firm’s 36-year-old founder. “If you do it in a certain model, it’s actually very efficient.”

“Big banks have thought, there’s not a lot of money in making a $100 dollar loan because it costs $20 to $50 to make that loan,” says Fisher, the firm’s 36-year-old founder. “If you do it in a certain model, it’s actually very efficient.”

Creation acquires nongovernmental organizations and charity-owned lenders with solid foundations that lack expertise in back-office systems, human resources and business development.

“There’s a need for investors like us that have the real focus and the next skill set,” he says.

Fisher is a former banker whose passion for emerging markets was fueled by a stint in China for JPMorgan. His co-founder, Ken Vander Weele, had nearly two decades of experience in microfinance when they started the firm in 2007. The Chicago staff has grown to eight; in addition, the firm employs representatives in Eastern Europe, Mexico and India.

Creation’s portfolio companies typically help individuals and small businesses obtain working capital—money for purchases that can make a big difference: a tractor to speed harvest, a motorcycle to deliver goods, sewing machines to mechanize production and the like.

“One of the key things here is that these aren’t consumer loans,” Fisher says. “These are loans to individuals and small businesses that are going right into their business.”

 Besides loans, Creation’s portfolio companies offer services such as remittances, microsavings and microinsurance. They operate on nine platforms, serving some 4.5 million entrepreneurs with roughly $1.1 billion in loans outstanding.

Fisher, whose firm has raised $140 million in equity plus debt funding, says his returns are comparable to those of traditional private equity funds. Despite higher levels of risk, the funds are backed by some heavy-hitting institutional investors that decline to be named, as well as families and family offices. Return on equity at Creation’s companies averages about 20 percent.

And Creation is far from finished. Globally, says Fisher, there are thousands of additional financial services organizations ripe for consolidation and capital injections to get to the next level. The firm is looking primarily at growth in “core emerging markets,” such as Brazil, that have stability and a regulatory regime, he says.

“Charities still need to do the early work,” Fisher says. “After a certain point in time, these things do become very compelling investments.”


Patrick_Fisher

A former banker with JPMorgan, Patrick Fisher founded Creation Investments in 2007. He is responsible for overall management of the firm, including deal generation, due diligence, deal structuring and negotiation, along with fundraising, investor relations and portfolio oversight. His background includes work in international banking and global treasury and trade services.

 

 

http://www.middlemarketgrowth.org/creation-strives-good-returns-better-world/

Janalakshmi to lead investor rush into Indian microfinance sector

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After Janalakshmi’s record-breaking deal, Indian MFI sector likely to raise Rs 2,000 crore ($335 million USD) in 2014

Janalakshmi Financial Services, a non-banking financial company (NBFC) focused on the urban under-served, is expected to lead the rush of (PE) funds into India’s sector, signalling a strong recovery. According to sources, global PE major is among the two global that are in advanced discussions with the Bangalore-based firm to invest about $100 million with an existing investor.

As and when Janalakshmi, started by social entrepreneur Ramesh Ramanathan, sews up the transaction, it will mark India’s largest PE funding in the microfinance sector, which was recently hit by a major crisis in Andhra Pradesh (AP). Last year, Janalakshmi had raised a record Rs 325 crore; the funding round was led by Morgan Stanley.

After this transaction, which is to close by October 2014, eight other microfinance institutions are expected to the funding rounds by raising Rs 2,000 crore by the end of FY15. According to sources, Ujjivan Financial Services, started by Samit Ghosh, will initiate a fund raise for Rs 350 crore. Various other fast-emerging microfinance institutions such as Grameen Koota, Utkarsh Microfinance, Satin Creditcare Network, Sonata Finance, and Suryoday Micro Finance are among those that have initiated talks to raise PE funds.

CARE Ratings said in a recent report the microfinance sector was entering a phase of relative stability after going through three broad risk phases in the past – high growth (till 2010), high volatility (2010-11), consolidation (2011-13).

Explaining the rationale, CARE Ratings said: “The overall credit profile of the MFIs (microfinance institutions) has shown improvement with improving profitability, as stable margins are expected during FY14 onwards on account of removal of interest rate cap and control in operating expenses. The players in the sector are also adequately capitalised with overall gearing increasing moderately in spite of good growth in the loan portfolio in FY13. Overall gearing has been at comfortable levels mainly on account of equity infusion from the private equity investors post AP crisis.”

JP Morgan and Global Impact Investing Network in their research said that investments into social impact space was likely to increase globally during 2014, with South Asia and Southeast Asia among the top regions likely to attract a major share. Intellecap, an advisory firm focused on social enterprises, said $1.6 billion of capital has been invested in 220 impact enterprises across India, with half of the investments in microfinance. Unitus Capital, an impact investment-focused investment bank, expects impact equity investments in India to grow 30 per cent this year.

In its recent report, Intellecap added that the microfinance sector alone has been able to attract $225 million in follow-on capital involving only mainstream PE and venture capital investors in later rounds, indicating the sector’s ability to attract mainstream capital without the support of impact funds. Cumulatively, the microfinance sector saw total investments of $458 million from mainstream venture capital and PE investors in the first round and follow-on deals.

 

World Bank Reports That Microcredit Works After All

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The World Bank has released a report that examines microfinance in Bangladesh over the longest period yet studied. The results were quite positive:

The results of the basic model unequivocally show that group-based credit programs have significant positive effects in raising household welfare including per capita consumption, household non-land assets and net worth. Microfinance increases income and expenditure, the labor supply of males and females, non-land asset and net worth as well as boys’ and girls’ schooling. Microfinance, especially female credit, also reduces poverty. The results using long-panel data thus confirm most of the earlier findings that microfinance matters a lot, and more for female than for male borrowers.

….Membership in multiple programs has grown steadily from none to 33 percent in 2010/11….Trading is perhaps now saturated with microcredit loans and households have already started to experience diminishing returns. In such circumstances, households must be assisted through skill training and the development of improved marketing networks to expand activities in more rewarding sectors and beyond the local economy; otherwise, microfinance expansion cannot be sustained. In short, the current microfinance policy of credit expansion alone may not be enough to boost income and productivity, and, hence, sustained poverty reduction.

“Examining the dynamics of microcredit programs in Bangladesh” uses long panel survey data spanning over 20 years to study the effects of microcredit programs in Bangladesh. It uses a dynamic panel model to address a number of issues, such as whether credit effects are declining over time, whether market saturation and village diseconomies are taking place, and whether multiple program membership, which is rising as a consequence of microcredit expansion, is harming or benefiting the borrowers. The paper makes the following observations:

•          Group-based credit programs have significant positive effects in raising household welfare including per capita consumption, household non-land assets and net worth;

•          Microfinance increases income and expenditure, the labor supply of males and females, non-land asset and net worth as well as boys’ and girls’ schooling;

•          Microfinance, especially female credit, reduces poverty;

•          Past credit has a higher impact on income and expenditure than current credit;

•          With higher village-level aggregate current male borrowing, the marginal effect of male borrowing on per capita income gets lower.

The paper concludes that the current microfinance policy of credit expansion alone may not be enough to boost income and productivity, and, hence, sustained poverty reduction.

Notre Dame, MIT Economists Demonstrate Wage Impacts of Large Microfinance Program

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JULY 20, 2012 BY  LEAVE A COMMENT

Fonkoze Credit Center – Participants in Chemen Lavi Miyó, a program offered by Fonkoze (a microfinance organization). The participants meet twice a week in Mirebalais, Haiti, to learn basic life skills. Photographer: Laura Elizabeth Poh

A major argument in favor of microfinance is that the poor who live in areas without banking services will gain higher returns on investments and increase their assets when provided with credit.

But a notable new study from the Consortium on Financial Systems and Poverty presents some of the first real evidence of microfinance impacts and indicates that the true returns of expanding access to credit are much more complex. Some of the greatest benefits to alleviating poverty, the study suggests, may be in the impact the programs have on driving up wages.

The research, by economists Joseph P. Kaboski of the University of Notre Dame and Robert M. Townsend of the Massachusetts Institute of Technology, examined changes in behavior resulting from the Thai Million Baht Fund. This initiative by the government in Thailand transferred one million Thai baht (about $24,000 at the time) to each of 77,000 villages throughout the country. The goal was to increase available credit and stimulate the economy. The findings were published earlier this year in the journal Applied Economics.

The CFSP study found that the village fund had the desired effect of increasing overall credit in the economy, and, in fact, in the long run, the program led to an overall expansion of credit. More significant, the authors argue, is that that wages increased by approximately 7% in a typically-sized village during the first two years that were tracked.

“This paper is the first real evidence we have on wage impacts of microfinance,” notes Kaboski. “The impact on wages is important in terms of the potential of microfinance as a poverty reduction program. Only a relatively small fraction of the poor want to borrow from microfinance, but a much greater share of the poor work, and might therefore benefit indirectly from an increase in wages. We are far from understanding the mechanisms, but there is great potential here.”

The authors suggest that the wage impacts may be because the fund led to a more efficient distribution of capital to entrepreneurs, which then increased the demand for labor. The study recorded that the wages increased for general non-agricultural labor, such as construction in the villages, but not for professional occupations or occupations outside of the village.

Additionally, the study showed, other effects of the injection of credit were more short-lived, including a notable jump in consumption, and increases in borrowing, business and labor income, and investment in agriculture.

The authors report that further examination of the data is underway. Their findings are based on an economic model they developed, using data captured as part of the Townsend Thai Data project, a monthly household panel survey that Townsend has led since 1997.

The paper, “The Impacts of Credit on Village Economies,” was published in the journal Applied Economics earlier this year.

Source: AAAS EurekAlert

Photo:  Bread for the World 

http://greenbuildingelements.com (http://s.tt/1iuIn)

LEAP Zones: A Legal, Economic, Administrative and Political Framework for Free Cities

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Mark Klugmann

April 20, 2012 | Universidad Francisco Marroquín | 10 min
Click here to watch the video. An excellent session on the importance of legal, administrative and political structures to stimulate economic development.
http://newmedia.ufm.edu/klugmannleapzones
Mark Klugmann is the creator of the LEAP Zones model (a legal, economic, administrative and political framework for a free city/charter city. He served in the White House as speechwriter to Presidents Ronald Reagan and George H.W. Bush; then, he moved to Chile where he helped Jose Piñera to create the International Center for Pension Reform.
In El Salvador, he assisted two governments in reforming pensions, telecom, ports, dollarization, labor rationalization, security policy and family legislation, collaborating with Juan Jose Daboub and Manuel Hinds. <b>In Honduras, he began working with President Porfirio Lobo, then leader of the Congress. He also collaborated with Octavio Sánchez who launched and leads the creation of Special Development Regions for Honduras, based on the LEAP Zones model that Klugmann created and brought to Honduras. Klugmann has lectured on his methodology at the World Bank and Harvard’s Kennedy School, testified on reforms before legislative committees in the US, UK and Chile, and worked closely with 6 governments in Latin America. He is on the board of Americans for Tax Reform Foundation.

Global poverty: A fall to cheer – The Economist

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For the first time ever, the number of poor people is declining everywhere

Mar 3rd 2012 | from the print edition

 

 

THE past four years have seen the worst economic crisis since the 1930s and the biggest food-price increases since the 1970s. That must surely have swollen the ranks of the poor.

Wrong. The best estimates for global poverty come from the World Bank’s Development Research Group, which has just updated from 2005 its figures for those living in absolute poverty (not be confused with the relative measure commonly used in rich countries). The new estimates show that in 2008, the first year of the finance-and-food crisis, both the number and share of the population living on less than $1.25 a day (at 2005 prices, the most commonly accepted poverty line) was falling in every part of the world. This was the first instance of declines across the board since the bank started collecting the figures in 1981 (see chart).

 

The estimates for 2010 are partial but, says the bank, they show global poverty that year was half its 1990 level. The world reached the UN’s “millennium development goal” of halving world poverty between 1990 and 2015 five years early. This implies that the long-term rate of poverty reduction—slightly over one percentage point a year—continued unabated in 2008-10, despite the dual crisis.

A lot of the credit goes to China. Half the long-term rate of decline is attributable to that country alone, which has taken 660m people out of poverty since 1981. China also accounts for most of the extraordinary progress in East Asia, which in the early 1980s had the highest incidence of poverty in the world, with 77% of the population below $1.25 a day. In 2008 the share was just 14%. If you exclude China, the numbers are less impressive. Of the roughly 1.3 billion people living on less than $1.25 a day in 2008, 1.1 billion of them were outside China. That number barely budged between 1981 and 2008, an outcome that Martin Ravallion, the director of the bank’s Development Research Group, calls “sobering”.

If China accounts for the largest share of the long-term improvement, Africa has seen the largest recent turnaround. Its poverty headcount rose at every three-year interval between 1981 and 2005, the only continent where this happened. The number almost doubled from 205m in 1981 to 395m in 2005. But in 2008 it fell by 12m, or five percentage points, to 47%—the first time less than half of Africans have been below the poverty line. The number of poor people had also been rising (from much lower levels) in Latin America and in eastern Europe and Central Asia. These regions have reversed the trend since 2000.

All this is good news. It reflects the long-run success of China, the impact of social programmes in Latin America and recent economic growth in Africa. It is also a result of the counter-cyclical fiscal expansions that many developing countries, notably China, embarked on in response to the 2007-08 crisis. Many economists (including some at the World Bank itself) were sceptical about these programmes, fearing they would prove inflationary, inefficient and ill-timed. In fact, the programmes helped make poor and middle-income countries more resilient.

The poverty data chime with other evidence. Estimates by the Food and Agriculture Organisation that the number of hungry people soared from 875m in 2005 to 1 billion in 2009 turned out to be wrong, and were quietly dropped. Derek Headey of the International Food Policy Research Institute has shown that despite the world food-price spike, people’s assessment of their own food situation in most poor and middle-income countries was better in 2008 than it had been in 2006.

Most of the progress has been concentrated among the poorest of the poor—those who make less than $1.25 a day. The bank’s figures show only a small drop in the number of those who make less than $2 a day, from 2.59 billion in 1981 to 2.44 billion in 2008 (though the fall from a peak of 2.92 billion in 1999 has been more impressive). According to Mr Ravallion, poverty-reduction policies seem to help most at the very bottom. In 1981, 645m people lived on between $1.25 and $2 a day. By 2008 that number had almost doubled to 1.16 billion. Even if many of these middling poor move up, their places are often taken by those who have just escaped from absolute poverty; population growth does the rest. The poorest of the poor seem to have escaped the worst of the post-2007 downturn. But the growth in the middling poor shows there is much to be done.

from the print edition | Finance and economics

Impact Investing Creates Template for Responsible Capitalism

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Posted: 02/14/2012 10:13 am

 A microfinance lender in Tamil Nadu, a rice farm in Tanzania, a housing project in Chiapas and a rural development bank in Pakistan: all these projects are recipients of impact investment capital, committed to “doing good while doing well,” in one of the fastest growing investment trends of the past two decades.

Impact investing has developed out of traditional philanthropy in an effort to find solutions that allow investors to make profitable investments that can also address social and environmental challenges. Impact investors seek to combine the seemingly conflicting aims of investing for maximum risk-adjusted returns and contributing to social good. The level of return expectation varies according to the type of investor. Individuals or foundations tend to prioritize social impact over financial return and are willing to forgo the latter if the social goal is clearly advanced.

By contrast, institutional investors, especially those like pension funds which owe a fiduciary duty to their beneficiaries, usually look for a return that is at least competitive with traditional asset classes. As a result, investment risk appetite will also differ. Most impact investing takes place via private transactions with small businesses, often operating in emerging markets where poor governance and inadequate information flow may add greatly to the risk of the projects.

Investors in these companies will look for a commensurate financial return, as well as measurable social impact on the ground. While some prefer the terms venture philanthropy or social investment, impact investing represents a distinct style of responsible capitalism which has become particularly popular among foundations, endowments and high net worth individual investors.

Industry pioneers, such as the $3 billion Rockefeller Foundation in New York, see impact investing as a way to find solutions to poverty reduction and other social problems; but more importantly to access the private sector capital markets that ultimately hold the wealth required to scale up these solutions globally. While charitable donations by high net worth individuals were down 35 per cent in 2010, according to Bank of America Merrill Lynch and Indiana University, the impact investing sector is expecting steady growth.

In 2010, JP Morgan forecast potential impact investment capital of $400 billion to $1 trillion globally over the next ten years. Much recent activity in impact investing has been effectively direct investing, with the typical venture capital approach sometimes supplemented by grants and capacity building. The Omidyar Network, for example, launched in 2004 by eBay founder Pierre Omidyar, “has invested $450 million in equity and grants to promote microfinance, entrepreneurship, technology and government transparency, mostly in developing countries.”

Investment managers such as the Acumen Fund and the Capricorn Investment Group, which manages the Skoll Foundation’s multi-billion dollar portfolio, are active in emerging markets across Asia, Africa and Latin America.

Impact investing does present significant challenges to investors. It can be difficult to obtain basic investment information in emerging markets, and equally hard to monitor and track the performance of small companies and projects. This is compounded by the complexity of trying to quantify the non-financial “impact” of investments: it is not that simple to compare the social benefits of investing in, for example, vaccinations in Ghana versus cleaner burning cooking stoves in India.To help donors and investors tackle this issue, the Global Impact Investing Network (GIIN), a non-profit company supported by the Rockefeller Foundation, has worked with B Lab to develop industry infrastructure aimed at improving information flow and creating a more efficient marketplace.

GIIN’s Impact Reporting and Investment Standards provides a standardized language and framework for measuring the social and environmental performance of impact investments, including a list of nearly 400 metrics, such as customer poverty level and access to education. B Lab has created a similar tool for institutional investors, with support from ratings agency Moody’s and several financial companies.

Improved transparency, the creation of analytical tools for investors and the beginnings of a clear market structure are encouraging mainstream institutional investors, such as pension funds, to look at impact investing as a credible asset class. For example, TIAA-CREF, a huge US pension fund, has committed approximately $650 million to impact investing, mostly to low income housing; and American insurance company Prudential is another significant player, with about $400 million in impact investments.

As more funds are allocated to this sector, the impact investing industry is evolving rapidly to meet the demands of a wide variety of investors. Traditional debt and equity are being supplemented by more innovative structures, such as the Social Impact Bond issued in the UK, where return is linked to measures of social performance such as reduction in prisoner reoffending rates.

Alexandra Tracy is chairman of ASrIA, the Association for Responsible Investment in Asia

This article was originally featured in a special report on Sustainable Investments, produced by Raconteur Media and distributed in The Times (UK)