Friday, November 30, 2007
International Regulators - Securities - 1
Bank regulators in various countries - list updated up to December 2010
Thursday, November 29, 2007
About the Blog
This blog is being developed by me as a supplement to Professor Bhole's book -
L M Bhole
Financial Institutions and Markets: Structure, Growth and Innovations.
This blog will contain the latest information and some explanation of the issues, which I feel participants in my class are not able to appreciate appropriately.
L M Bhole
Financial Institutions and Markets: Structure, Growth and Innovations.
This blog will contain the latest information and some explanation of the issues, which I feel participants in my class are not able to appreciate appropriately.
Introduction
This blog is being developed by me as a supplement to Professor Bhole's book -
L M Bhole
Financial Institutions and Markets: Structure, Growth and Innovations.
This blog will contain the latest information and some explanation of the issues, which I feel participants in my class are not able to appreciate appropriately.
L M Bhole
Financial Institutions and Markets: Structure, Growth and Innovations.
This blog will contain the latest information and some explanation of the issues, which I feel participants in my class are not able to appreciate appropriately.
Ch. 1 The Nature and Role of Financial System - Part 2
Financial System and Economic Development
In an examination conducted by me on 27/10/2007, I asked the question - Briefly explain the theories that explain the impact of financial development on savings and investment.
Many could not answer the question appropriately. They could not figure out the role of financial development.
Prior Savings Theory:
Bhole has written - "Financial system has both the scale and structure effect on savings and investment. It increases the rate of growth (volume) of saving and investment, and makes their composition, allocation, and utilisation more optimal and efficient. It activises saving or reduces idle saving;it also reduces unfructified investment and the cost of transferring saving to investment."
Credit Creation Theory:
In this it is emphasized by Bhole that, the contribution of a financial system to growth goes beyond increasing prior-saving-based investment. According to the thought emphasized by Kalechi and Schumpeter, the financial system plays a positive and catalytic role by providing finance or credit through creation of credit in anticipation of savings. This, to a certain extent, ensures the independence of investment from saving in a given period of time. The investment financed through created credit generates the appropriate level of income which, in turn leads to an amount of savings which are equal to the investment already undertaken.
Theory of Forced Savings:
In this approach the argument is that investment can be increased autonomously through monetary expansion. Monetary expansion is made possible by bank money. A well developed banking system facilitates monetary expansion.
Financial Regulation Theory:
The important point to note is that regulation is a part of the financial system. This theory especially emphasizes the positive benefits of specific regulatory actions. For example, government has to ensure that payments system does not have any problem. It points areas where regulation improves savings and investment.
Financial Liberalisation Theory:
This theory may not be an opposing theory to regulation theory. But it points out that if a financial system is repressed then it cannot serve the society in optimal manner. This theory calls for an evaluation of financial systems to examine whether they are repressed.
In an examination conducted by me on 27/10/2007, I asked the question - Briefly explain the theories that explain the impact of financial development on savings and investment.
Many could not answer the question appropriately. They could not figure out the role of financial development.
Prior Savings Theory:
Bhole has written - "Financial system has both the scale and structure effect on savings and investment. It increases the rate of growth (volume) of saving and investment, and makes their composition, allocation, and utilisation more optimal and efficient. It activises saving or reduces idle saving;it also reduces unfructified investment and the cost of transferring saving to investment."
Credit Creation Theory:
In this it is emphasized by Bhole that, the contribution of a financial system to growth goes beyond increasing prior-saving-based investment. According to the thought emphasized by Kalechi and Schumpeter, the financial system plays a positive and catalytic role by providing finance or credit through creation of credit in anticipation of savings. This, to a certain extent, ensures the independence of investment from saving in a given period of time. The investment financed through created credit generates the appropriate level of income which, in turn leads to an amount of savings which are equal to the investment already undertaken.
Theory of Forced Savings:
In this approach the argument is that investment can be increased autonomously through monetary expansion. Monetary expansion is made possible by bank money. A well developed banking system facilitates monetary expansion.
Financial Regulation Theory:
The important point to note is that regulation is a part of the financial system. This theory especially emphasizes the positive benefits of specific regulatory actions. For example, government has to ensure that payments system does not have any problem. It points areas where regulation improves savings and investment.
Financial Liberalisation Theory:
This theory may not be an opposing theory to regulation theory. But it points out that if a financial system is repressed then it cannot serve the society in optimal manner. This theory calls for an evaluation of financial systems to examine whether they are repressed.
Ch. SEBI - Policy Annoncements
ET, 5 Dec 2007 page 1
SEBI clarified to investor Mr. Gokhale that AMFI decided that MFs will not charge entry loads and exit loads on bonus units or reinvested dividends.
----------------------
SEBI clarified to investor Mr. Gokhale that AMFI decided that MFs will not charge entry loads and exit loads on bonus units or reinvested dividends.
----------------------
Ch. IRDA - Part 5 - Proposals for Future
November 30 2007 Mint Page 5
IRDA said it has plans to come out with separate guidelines for health insurers. A separate health unit has been set up in the authority.
IRDA also made a recommendation to the government to bring down capital requirements for a stand alone health insurance companies to Rs.50 crore from Rs. 100 crore which is the limit for general insurance companies.
IRDA said it has plans to come out with separate guidelines for health insurers. A separate health unit has been set up in the authority.
IRDA also made a recommendation to the government to bring down capital requirements for a stand alone health insurance companies to Rs.50 crore from Rs. 100 crore which is the limit for general insurance companies.
Wednesday, November 28, 2007
Certificates of Deposit Market - India
2007
19th January 2007
The Certificates of Deposit (CD) market is buzzing with banks going all out to raise funds from the wholesale market. According to the Reserve Bank of India’s (RBI) March bulletin, the outstanding CDs for the fortnight ending 19 January stood at Rs 70,149 crore. This is much higher than the Rs 34,521 crore for the fortnight ending 20 January 2006 and Rs 4,236 crore for the fortnight ending 21 January 2005.
T
he interest rates on CDs, too, have moved up sharply to nearly 8 per cent to 9.55 per cent in January 2007 from the 4.01-6.25 per cent thereabouts in early 2005, in line with the general rise in interest rates in the economy.
So, what explains the surge in CD issuances by banks? Well, while the year-on-year (YoY) growth in money supply, which stood at 20.4 per cent on 5 January 2007 was higher than 16 per cent a year ago and above the projected trajectory of 15 per cent indicated in the Annual Policy Statement for 2006-07, credit offtake is way ahead of the growth in deposits.
http://www.businessworld.in/content/view/1067/1123/
19th January 2007
The Certificates of Deposit (CD) market is buzzing with banks going all out to raise funds from the wholesale market. According to the Reserve Bank of India’s (RBI) March bulletin, the outstanding CDs for the fortnight ending 19 January stood at Rs 70,149 crore. This is much higher than the Rs 34,521 crore for the fortnight ending 20 January 2006 and Rs 4,236 crore for the fortnight ending 21 January 2005.
T
he interest rates on CDs, too, have moved up sharply to nearly 8 per cent to 9.55 per cent in January 2007 from the 4.01-6.25 per cent thereabouts in early 2005, in line with the general rise in interest rates in the economy.
So, what explains the surge in CD issuances by banks? Well, while the year-on-year (YoY) growth in money supply, which stood at 20.4 per cent on 5 January 2007 was higher than 16 per cent a year ago and above the projected trajectory of 15 per cent indicated in the Annual Policy Statement for 2006-07, credit offtake is way ahead of the growth in deposits.
http://www.businessworld.in/content/view/1067/1123/
Tuesday, November 27, 2007
Guidelines for Issues of Commercial papers in India
Guidelines for Issue of Commercial
Paper (CP) as amended up to June 30, 2007
Introduction
Commercial Paper (CP) is an unsecured money market instrument issued in
the form of a promissory note. CP, as a privately placed instrument, was introduced
in India in 1990 with a view to enabling highly rated corporate borrowers to diversify their sources of short-term borrowings and to provide an additional instrument to investors. Subsequently, primary dealers and all-India financial institutions were also permitted to issue CP to enable them to meet their short-term funding requirements for their operations.
Who can Issue Commercial Paper (CP)
2. Corporates, primary dealers (PDs) and the all-India financial institutions (FIs) that have been permitted to raise short-term resources under the umbrella limit fixed by the Reserve Bank of India are eligible to issue CP.
3. A corporate would be eligible to issue CP provided: (a) the tangible net worth of the company, as per the latest audited balance sheet, is not less than Rs.4 crore; (b)company has been sanctioned working capital limit by bank/s or all-India financial
institution/s; and (c) the borrowal account of the company is classified as a Standard Asset by the financing bank/s/ institution/s.
Rating Requirement
4. All eligible participants shall obtain the credit rating for issuance of Commercial Paper from either the Credit Rating Information Services of India Ltd. (CRISIL) or the Investment Information and Credit Rating Agency of India Ltd. (ICRA) or the Credit Analysis and Research Ltd. (CARE) or the FITCH Ratings India Pvt. Ltd. or such other credit rating agencies as may be specified by the Reserve Bank of India from time to time, for the purpose. The minimum credit rating shall be P-2 of CRISIL or such equivalent rating by other agencies. The issuers shall ensure at the time of issuance of CP that the rating so obtained is current and has not fallen due for review.
Maturity
5. CP can be issued for maturities between a minimum of 7 days and a maximum up
to one year from the date of issue. The maturity date of the CP should not go beyond
the date up to which the credit rating of the issuer is valid.
Denominations
6. CP can be issued in denominations of Rs.5 lakh or multiples thereof. Amount
invested by a single investor should not be less than Rs.5 lakh (face value).
Limits and the Amount of Issue of CP
7. CP can be issued as a "stand alone" product. The aggregate amount of CP from
an issuer shall be within the limit as approved by its Board of Directors or the
quantum indicated by the Credit Rating Agency for the specified rating, whichever is
lower. Banks and FIs will, however, have the flexibility to fix working capital limits duly
taking into account the resource pattern of companies’ financing including CPs.
8. An FI can issue CP within the overall umbrella limit fixed by the RBI, i.e., issue of
CP together with other instruments, viz., term money borrowings, term deposits,
certificates of deposit and inter-corporate deposits should not exceed 100 per cent of
its net owned funds, as per the latest audited balance sheet.
9. The total amount of CP proposed to be issued should be raised within a period of
two weeks from the date on which the issuer opens the issue for subscription. CP
may be issued on a single date or in parts on different dates provided that in the latter
case, each CP shall have the same maturity date.
10. Every issue of CP, including renewal, should be treated as a fresh issue.
Who can Act as Issuing and Paying Agent (IPA)
11. Only a scheduled bank can act as an IPA for issuance of CP.
Investment in CP
12. CP may be issued to and held by individuals, banking companies, other corporate
bodies registered or incorporated in India and unincorporated bodies, Non-Resident
Indians (NRIs) and Foreign Institutional Investors (FIIs). However, investment by FIIs would be within the limits set for their investments by Securities and Exchange Board of India (SEBI).
Mode of Issuance
13. CP can be issued either in the form of a promissory note (Schedule I) or in a
dematerialised form through any of the depositories approved by and registered with
SEBI.
14. CP will be issued at a discount to face value as may be determined by the issuer.
15. No issuer shall have the issue of CP underwritten or co-accepted.
Preference for Dematerialisation
16. While option is available to both issuers and subscribers to issue/hold CP in
dematerialised or physical form, issuers and subscribers are encouraged to prefer
exclusive reliance on dematerialised form of issue/holding. However, with effect from
June 30, 2001, banks, FIs and PDs are required to make fresh investments and hold
CP only in dematerialised form.
Payment of CP
17. The initial investor in CP shall pay the discounted value of the CP by means of a
crossed account payee cheque to the account of the issuer through IPA. On maturity
of CP, when CP is held in physical form, the holder of CP shall present the instrument for payment to the issuer through the IPA. However, when CP is held in demat form, the holder of CP will have to get it redeemed through the depository and receive payment from the IPA.
Stand-by Facility
18. In view of CP being a 'stand alone' product, it would not be obligatory in any
manner on the part of the banks and FIs to provide stand-by facility to the issuers of CP. Banks and FIs have, however, the flexibility to provide for a CP issue, credit
enhancement by way of stand-by assistance/credit, back-stop facility etc. based on
their commercial judgement, subject to prudential norms as applicable and with
specific approval of their Boards.
19. Non-bank entities including corporates may also provide unconditional and
irrevocable guarantee for credit enhancement for CP issue provided:
(i) the issuer fulfils the eligibility criteria prescribed for issuance of CP;
(ii) the guarantor has a credit rating at least one notch higher than the issuer given by an approved credit rating agency; and
(iii) the offer document for CP properly discloses the net worth of the guarantor
company, the names of the companies to which the guarantor has issued similar
guarantees, the extent of the guarantees offered by the guarantor company, and the
conditions under which the guarantee will be invoked.
Procedure for Issuance
20. Every issuer must appoint an IPA for issuance of CP. The issuer should
disclose to the potential investors its financial position as per the standard market
practice. After the exchange of deal confirmation between the investor and the issuer,issuing company shall issue physical certificates to the investor or arrange for crediting the CP to the investor's account with a depository. Investors shall be given a copy of IPA certificate to the effect that the issuer has a valid agreement with the IPA and documents are in order (Schedule III).
Role and Responsibilities
21. The role and responsibilities of issuer, issuing and paying agent (IPA) and
credit rating agency (CRA) are set out below:
(a) Issuer
With the simplification in the procedures for CP issuance, issuers would now
have more flexibility. Issuers would, however, have to ensure that the guidelines and
procedures laid down for CP issuance are strictly adhered to.
(b) Issuing and Paying Agent (IPA)
(i) IPA would ensure that issuer has the minimum credit rating as stipulated by
RBI and amount mobilised through issuance of CP is within the quantum
indicated by CRA for the specified rating or as approved by its Board of
Directors, whichever is lower.
(ii) IPA has to verify all the documents submitted by the issuer, viz., copy of board
resolution, signatures of authorised executants (when CP in physical form) and
issue a certificate that documents are in order. It should also certify that it has
a valid agreement with the issuer (Schedule III).
(iii) Certified copies of original documents verified by the IPA should be held in the
custody of IPA.
(iv) Every CP issue should be reported to the Chief General Manager, Financial
Markets Department (FMD), Reserve Bank of India, Central Office, Fort,
Mumbai-400001.
(v) IPAs, which are NDS member, should report the details of CP issue on NDS
platform within two days from the date of completion of the issue.
(vi) Further, all scheduled banks, acting as an IPA, will continue to report CP
issuance details as hitherto within three days from the date of completion of
the issue, incorporating details as per Schedule II till NDS reporting stabilises
to the satisfaction of RBI.
(c) Credit Rating Agency (CRA)
(i) Code of Conduct prescribed by the SEBI for CRAs for undertaking rating of
capital market instruments shall be applicable to them (CRAs) for rating CP.
(ii) Further, the credit rating agency would henceforth have the discretion to
determine the validity period of the rating depending upon its perception about
the strength of the issuer. Accordingly, CRA shall at the time of rating, clearly
indicate the date when the rating is due for review.
(iii) While the CRAs can decide the validity period of credit rating, they would have
to closely monitor the rating assigned to issuers vis-a-vis their track record at
regular intervals and would be required to make their revision in the ratings
public through their publications and website.
Documentation Procedure
22. Fixed Income Money Market and Derivatives Association of India (FIMMDA)
may prescribe, in consultation with the RBI, for operational flexibility and smooth
functioning of CP market, any standardised procedure and documentation that are to
be followed by the participants, in consonance with the international best practices.
Issuer/IPAs may refer to the detailed guidelines issued by FIMMDA in this regard on
July 5, 2001.
23. Violation of these guidelines will attract penalties and may also include
debarring of the entity from the CP market.
Defaults in CP market
24. In order to monitor defaults in redemption of CP, scheduled banks which act as
IPAs, are advised to immediately report, on occurrence, full particulars of defaults in repayment of CPs to the Financial Markets Department, Reserve Bank of India,
Central Office, Fort, Mumbai-400001, in the format as given in Annex I.
Source: Master circular of RBI dated 2nd July 2007
Paper (CP) as amended up to June 30, 2007
Introduction
Commercial Paper (CP) is an unsecured money market instrument issued in
the form of a promissory note. CP, as a privately placed instrument, was introduced
in India in 1990 with a view to enabling highly rated corporate borrowers to diversify their sources of short-term borrowings and to provide an additional instrument to investors. Subsequently, primary dealers and all-India financial institutions were also permitted to issue CP to enable them to meet their short-term funding requirements for their operations.
Who can Issue Commercial Paper (CP)
2. Corporates, primary dealers (PDs) and the all-India financial institutions (FIs) that have been permitted to raise short-term resources under the umbrella limit fixed by the Reserve Bank of India are eligible to issue CP.
3. A corporate would be eligible to issue CP provided: (a) the tangible net worth of the company, as per the latest audited balance sheet, is not less than Rs.4 crore; (b)company has been sanctioned working capital limit by bank/s or all-India financial
institution/s; and (c) the borrowal account of the company is classified as a Standard Asset by the financing bank/s/ institution/s.
Rating Requirement
4. All eligible participants shall obtain the credit rating for issuance of Commercial Paper from either the Credit Rating Information Services of India Ltd. (CRISIL) or the Investment Information and Credit Rating Agency of India Ltd. (ICRA) or the Credit Analysis and Research Ltd. (CARE) or the FITCH Ratings India Pvt. Ltd. or such other credit rating agencies as may be specified by the Reserve Bank of India from time to time, for the purpose. The minimum credit rating shall be P-2 of CRISIL or such equivalent rating by other agencies. The issuers shall ensure at the time of issuance of CP that the rating so obtained is current and has not fallen due for review.
Maturity
5. CP can be issued for maturities between a minimum of 7 days and a maximum up
to one year from the date of issue. The maturity date of the CP should not go beyond
the date up to which the credit rating of the issuer is valid.
Denominations
6. CP can be issued in denominations of Rs.5 lakh or multiples thereof. Amount
invested by a single investor should not be less than Rs.5 lakh (face value).
Limits and the Amount of Issue of CP
7. CP can be issued as a "stand alone" product. The aggregate amount of CP from
an issuer shall be within the limit as approved by its Board of Directors or the
quantum indicated by the Credit Rating Agency for the specified rating, whichever is
lower. Banks and FIs will, however, have the flexibility to fix working capital limits duly
taking into account the resource pattern of companies’ financing including CPs.
8. An FI can issue CP within the overall umbrella limit fixed by the RBI, i.e., issue of
CP together with other instruments, viz., term money borrowings, term deposits,
certificates of deposit and inter-corporate deposits should not exceed 100 per cent of
its net owned funds, as per the latest audited balance sheet.
9. The total amount of CP proposed to be issued should be raised within a period of
two weeks from the date on which the issuer opens the issue for subscription. CP
may be issued on a single date or in parts on different dates provided that in the latter
case, each CP shall have the same maturity date.
10. Every issue of CP, including renewal, should be treated as a fresh issue.
Who can Act as Issuing and Paying Agent (IPA)
11. Only a scheduled bank can act as an IPA for issuance of CP.
Investment in CP
12. CP may be issued to and held by individuals, banking companies, other corporate
bodies registered or incorporated in India and unincorporated bodies, Non-Resident
Indians (NRIs) and Foreign Institutional Investors (FIIs). However, investment by FIIs would be within the limits set for their investments by Securities and Exchange Board of India (SEBI).
Mode of Issuance
13. CP can be issued either in the form of a promissory note (Schedule I) or in a
dematerialised form through any of the depositories approved by and registered with
SEBI.
14. CP will be issued at a discount to face value as may be determined by the issuer.
15. No issuer shall have the issue of CP underwritten or co-accepted.
Preference for Dematerialisation
16. While option is available to both issuers and subscribers to issue/hold CP in
dematerialised or physical form, issuers and subscribers are encouraged to prefer
exclusive reliance on dematerialised form of issue/holding. However, with effect from
June 30, 2001, banks, FIs and PDs are required to make fresh investments and hold
CP only in dematerialised form.
Payment of CP
17. The initial investor in CP shall pay the discounted value of the CP by means of a
crossed account payee cheque to the account of the issuer through IPA. On maturity
of CP, when CP is held in physical form, the holder of CP shall present the instrument for payment to the issuer through the IPA. However, when CP is held in demat form, the holder of CP will have to get it redeemed through the depository and receive payment from the IPA.
Stand-by Facility
18. In view of CP being a 'stand alone' product, it would not be obligatory in any
manner on the part of the banks and FIs to provide stand-by facility to the issuers of CP. Banks and FIs have, however, the flexibility to provide for a CP issue, credit
enhancement by way of stand-by assistance/credit, back-stop facility etc. based on
their commercial judgement, subject to prudential norms as applicable and with
specific approval of their Boards.
19. Non-bank entities including corporates may also provide unconditional and
irrevocable guarantee for credit enhancement for CP issue provided:
(i) the issuer fulfils the eligibility criteria prescribed for issuance of CP;
(ii) the guarantor has a credit rating at least one notch higher than the issuer given by an approved credit rating agency; and
(iii) the offer document for CP properly discloses the net worth of the guarantor
company, the names of the companies to which the guarantor has issued similar
guarantees, the extent of the guarantees offered by the guarantor company, and the
conditions under which the guarantee will be invoked.
Procedure for Issuance
20. Every issuer must appoint an IPA for issuance of CP. The issuer should
disclose to the potential investors its financial position as per the standard market
practice. After the exchange of deal confirmation between the investor and the issuer,issuing company shall issue physical certificates to the investor or arrange for crediting the CP to the investor's account with a depository. Investors shall be given a copy of IPA certificate to the effect that the issuer has a valid agreement with the IPA and documents are in order (Schedule III).
Role and Responsibilities
21. The role and responsibilities of issuer, issuing and paying agent (IPA) and
credit rating agency (CRA) are set out below:
(a) Issuer
With the simplification in the procedures for CP issuance, issuers would now
have more flexibility. Issuers would, however, have to ensure that the guidelines and
procedures laid down for CP issuance are strictly adhered to.
(b) Issuing and Paying Agent (IPA)
(i) IPA would ensure that issuer has the minimum credit rating as stipulated by
RBI and amount mobilised through issuance of CP is within the quantum
indicated by CRA for the specified rating or as approved by its Board of
Directors, whichever is lower.
(ii) IPA has to verify all the documents submitted by the issuer, viz., copy of board
resolution, signatures of authorised executants (when CP in physical form) and
issue a certificate that documents are in order. It should also certify that it has
a valid agreement with the issuer (Schedule III).
(iii) Certified copies of original documents verified by the IPA should be held in the
custody of IPA.
(iv) Every CP issue should be reported to the Chief General Manager, Financial
Markets Department (FMD), Reserve Bank of India, Central Office, Fort,
Mumbai-400001.
(v) IPAs, which are NDS member, should report the details of CP issue on NDS
platform within two days from the date of completion of the issue.
(vi) Further, all scheduled banks, acting as an IPA, will continue to report CP
issuance details as hitherto within three days from the date of completion of
the issue, incorporating details as per Schedule II till NDS reporting stabilises
to the satisfaction of RBI.
(c) Credit Rating Agency (CRA)
(i) Code of Conduct prescribed by the SEBI for CRAs for undertaking rating of
capital market instruments shall be applicable to them (CRAs) for rating CP.
(ii) Further, the credit rating agency would henceforth have the discretion to
determine the validity period of the rating depending upon its perception about
the strength of the issuer. Accordingly, CRA shall at the time of rating, clearly
indicate the date when the rating is due for review.
(iii) While the CRAs can decide the validity period of credit rating, they would have
to closely monitor the rating assigned to issuers vis-a-vis their track record at
regular intervals and would be required to make their revision in the ratings
public through their publications and website.
Documentation Procedure
22. Fixed Income Money Market and Derivatives Association of India (FIMMDA)
may prescribe, in consultation with the RBI, for operational flexibility and smooth
functioning of CP market, any standardised procedure and documentation that are to
be followed by the participants, in consonance with the international best practices.
Issuer/IPAs may refer to the detailed guidelines issued by FIMMDA in this regard on
July 5, 2001.
23. Violation of these guidelines will attract penalties and may also include
debarring of the entity from the CP market.
Defaults in CP market
24. In order to monitor defaults in redemption of CP, scheduled banks which act as
IPAs, are advised to immediately report, on occurrence, full particulars of defaults in repayment of CPs to the Financial Markets Department, Reserve Bank of India,
Central Office, Fort, Mumbai-400001, in the format as given in Annex I.
Source: Master circular of RBI dated 2nd July 2007
Articles - CPs - CDs
Mastrer circular of RBI of CPs dated 2 July 2007
http://rbidocs.rbi.org.in/rdocs/notification/PDFs/78345.pdf
Mastrer circular of RBI of CDs dated 2 July 2007
http://rbidocs.rbi.org.in/rdocs/notification/PDFs/78347.pdf
http://rbidocs.rbi.org.in/rdocs/notification/PDFs/78345.pdf
Mastrer circular of RBI of CDs dated 2 July 2007
http://rbidocs.rbi.org.in/rdocs/notification/PDFs/78347.pdf
Monday, November 26, 2007
Microfinance
Time to Take the Credit,
Article in Economic Times Corporate Dossier dated 30 March 2007, page 2
There are now 10,000 microfinance institutions lending an average of less than $300 to 40 million poor borrowers worldwide.
Procredit, made up of 19 microfinance banks in countries from Moldova to Ecuador was established in 1998 by International Financial Institutions. It is now wildly successful, boasts over 2.2 million customer accounts and arrears by volume of a miniscule 1.2%.
Still only a fraction of the world's 500 million impoverished micro entrepreneurs hve access to the financial system.
-------------------------
SKS Micro announces Rs 50 cr equity infusion,
New items in Economic Times, dated 30 March 2007, Page 13
Hyderbad based SKS Microfinance, announced an equity infusion of rs 50 cr by PE fund Sequoa Capital and other. This will take networth of the institution to Rs. 70-75 cr.
Presently this organization has a client base of 6 lakh (0.6 million) women borrowers, locted across 7,200 villages in 11 states. The additional capital will help it to serve another 5 lakh (0.5 million) borrowers. It charges an interest rate of 25%. cost of borrowing presently is 11.5%. profit margin expected is 2%.
As per the SKS's lending model, only women borrowers are elgible for loans, on an individual basis.
Mr. Vikram Akula, promoter, said that the MFI will require at least Rs. 500 cr over the next three years. According to him the total demand for funds in the micro finance space would be around $50 billion. Of this only $5 billion is being presently provided.
Article in Economic Times Corporate Dossier dated 30 March 2007, page 2
There are now 10,000 microfinance institutions lending an average of less than $300 to 40 million poor borrowers worldwide.
Procredit, made up of 19 microfinance banks in countries from Moldova to Ecuador was established in 1998 by International Financial Institutions. It is now wildly successful, boasts over 2.2 million customer accounts and arrears by volume of a miniscule 1.2%.
Still only a fraction of the world's 500 million impoverished micro entrepreneurs hve access to the financial system.
-------------------------
SKS Micro announces Rs 50 cr equity infusion,
New items in Economic Times, dated 30 March 2007, Page 13
Hyderbad based SKS Microfinance, announced an equity infusion of rs 50 cr by PE fund Sequoa Capital and other. This will take networth of the institution to Rs. 70-75 cr.
Presently this organization has a client base of 6 lakh (0.6 million) women borrowers, locted across 7,200 villages in 11 states. The additional capital will help it to serve another 5 lakh (0.5 million) borrowers. It charges an interest rate of 25%. cost of borrowing presently is 11.5%. profit margin expected is 2%.
As per the SKS's lending model, only women borrowers are elgible for loans, on an individual basis.
Mr. Vikram Akula, promoter, said that the MFI will require at least Rs. 500 cr over the next three years. According to him the total demand for funds in the micro finance space would be around $50 billion. Of this only $5 billion is being presently provided.
Microfinance
Time to Take the Credit,
Article in Economic Times Corporate Dossier dated 30 March 2007, page 2
There are now 10,000 microfinance institutions lending an average of less than $300 to 40 million poor borrowers worldwide.
Procredit, made up of 19 microfinance banks in countries from Moldova to Ecuador was established in 1998 by International Financial Institutions. It is now wildly successful, boasts over 2.2 million customer accounts and arrears by volume of a miniscule 1.2%.
Still only a fraction of the world's 500 million impoverished micro entrepreneurs hve access to the financial system.
Article in Economic Times Corporate Dossier dated 30 March 2007, page 2
There are now 10,000 microfinance institutions lending an average of less than $300 to 40 million poor borrowers worldwide.
Procredit, made up of 19 microfinance banks in countries from Moldova to Ecuador was established in 1998 by International Financial Institutions. It is now wildly successful, boasts over 2.2 million customer accounts and arrears by volume of a miniscule 1.2%.
Still only a fraction of the world's 500 million impoverished micro entrepreneurs hve access to the financial system.
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