Microcredito , macro profitti

[Gaudente]

http://www.bangkokpost.com/business/...-from-the-poor

The massive investments by private equity firms coupled with an initial public offering (IPO) by SKS Microfinance have ignited a debate about the ethics and objectives of microfinance institutions (MFIs) in India.

SKS Microfinance, the largest MFI in India with substantial investments by private equity firms and hedge funds, is planning to raise 11 billion rupees ($250 million) through an IPO.

According to media reports, the original promoters of SKS Microfinance have sold part of their stake to a hedge fund, making a 12-fold profit even before an IPO. This shrewd act by promoters and top management not only raises doubts about their long-term commitments but, more importantly, questions the real motives of promoters who have become instant millionaires while their borrowers remain desperately poor.

Though initially started by women's groups and non-governmental organisations to empower poor people at the local level, microfinance is no longer a micro or local phenomenon. Globally, the microfinance industry controls more than $50 billion in assets.

In India, MFIs are increasingly dominated by corporate structures with large-scale funding by commercial banks and private equity firms. Commercial bank lending to Indian MFIs alone was $2.5 billion in 2009.

To private equity funds, microfinance in India offers new avenues of profit-making since interest rates range from 30% to 60% annually yet repayment rates are more than 95%, far above those for commercial lending.

Unlike commercial banks, MFIs are not regulated and supervised by the Reserve Bank of India or any other agency. The deregulated environment provides an incentive to unscrupulous operators and their financiers to charge very high interest rates from poor borrowers and make super profits. The Microfinance Bill which mandates the National Bank for Agriculture and Rural Development (Nabard) to regulate MFIs was recently introduced in Parliament.

One reason some MFIs cite for high interest rates is that their administrative costs are higher than at commercial banks. Indeed, delivery of small loans to people living in remote areas entails higher costs. But these could be substantially offset by economies of scale, which unfortunately has not happened in most cases.

The other argument that greater competition will lead to lower interest rates is yet to be demonstrated in India. It is well known that given the widespread existence of information asymmetry, microfinance cannot be a market with perfect competition.

Why should poor borrowers pay the price for the inefficiencies of MFIs? Why should poor borrowers be exploited in the name of promoting financial inclusion? Isn't profiteering from poor people in the name of financial inclusion? What about social and developmental objectives of MFIs?

No one is arguing that MFIs should seek subsidies from donors to serve their clients. Rather, they should pursue financial sustainability by removing operational inefficiencies and charging interest rates high enough to cover lending costs.

There are plenty of MFIs in India that follow a balanced approach between financial sustainability and social objectives in terms of collective action, borrower empowerment, and an integrated approach toward building sustainable livelihoods. It is critical that such MFIs voice their concerns against greedy promoters and financiers who are no better than loan sharks.

Throughout the world, MFIs are drawing greater public attention. In 2007, Banco Compartamos, a Mexican MFI, issued an IPO and its original investors became instant millionaires. They received $450 million for selling 30% ownership. The high valuation of Banco Compartamos reflected its super profits (returns on equity at 55%), arising out of interest charges at 85% a year.

In September 2009, CARE (a US-based humanitarian aid agency) pocketed $74 million when it sold a 77% stake in a Peruvian MFI, Financiera Edyficar, to a local bank.

This author has come across several cases of malpractice by some MFIs in Andhra Pradesh and Karnataka in order to meet lending targets. The practice of multiple lending and loan recycling (which ultimately increases the debt liability of poor borrowers) is very widespread.

There are many instances of aggressive lending by MFIs with negative outcomes. In 2005, many poor borrowers (mostly women) landed themselves in a spiral of indebtedness in Andhra Pradesh. For these borrowers, MFIs were no better than traditional moneylenders as they charged exorbitant rates of 80% and above. Some also used coercive methods of loan recovery that were humiliating to women borrowers, including making them stand in the hot sun and locking up their homes.

All these recent instances suggest that lending by MFIs could also be counter-productive if not properly regulated. In some countries, legislated interest rate caps for MFIs are under discussion. The RBI should examine the relevance of interest rate caps and other measures, particularly for large MFIs in India.

Given the growing public concern, efforts are being made to launch a self-regulation code to discipline MFIs. But self-regulation code is voluntary and non-binding and therefore can not stop greedy promoters from reckless profiteering. At best, self-regulation code can complement the regulatory measures.

As the numbers of MFIs in India multiply, a proper regulatory framework must be developed to ensure that these institutions follow minimum norms and standards. Otherwise, MFIs may simply end up as an exploitative form of organised money lending with no public responsibility and accountability.

Rather than becoming institutional moneylenders, MFIs should give a strong competition to traditional moneylenders in India.

The author works with Public Interest Research Centre, New Delhi. He can be reached at kavaljit.singh@gmail.com.

Potessi fare anch'io lo strozzino ...

[Gaudente]

estratto dal bilancio 2009 del Banco Compartamos:

The performance of our shares was outstanding, as the share price of COMPART O went from Ps.
25.0 at the end of 2008 to Ps. 67.5 at the end of 2009, representing a yield of 170.2%, which compared
favorably with the 43.5% growth of the IPC, the main benchmark index of the Mexican Stock
Exchange.

[Gaudente]

azzarola, capitalizza undici volte il valore di libro http://www.bmv.com.mx/ (mettete il simbolo Compart o nella casella "cotizacion")
vabbeh, sull'usura ai poracci sono arrivato tardi

[Gaudente]

http://www.compartamos.com/wps/wcm/c..._CONVERT=false pag.97:
equity nel 2008 2.856 milioni di pesos , utile 2009 1.490 , ovvero un RoE del 50%
Queste cose mi fanno capire come ho sbagliato tutto nella vita, l'ipocrisia e la menzogna sono requisiti essenziali per il successo e mi accorgo di averli stupidamente accantonati

[San Siro]

Originalmente inviato da Gaudente

azzarola, capitalizza undici volte il valore di libro http://www.bmv.com.mx/ (mettete il simbolo Compart o nella casella "cotizacion")
vabbeh, sull'usura ai poracci sono arrivato tardi

Scusa, ci fai o ci sei?

Secondo me ci sei.

In ogni caso, non sembra proprio che tu sia un esperto di questi temi.

[Gaudente]

Originalmente inviato da San Siro

In ogni caso, non sembra proprio che tu sia un esperto di questi temi.

verissimo, non c'ho in testa tutte le stronzate che c'hai tu.

[San Siro]

Originalmente inviato da Gaudente

verissimo, non c'ho in testa tutte le stronzate che c'hai tu.

Complimenti per la sintesi della risposta, che ti qualifica al 100%.

[Gaudente]

http://www.bloomberg.com/apps/news?p...aAdcHps&pos=10 crescono i defaults sui microprestiti. Potessi shortare le relative azioni