All Publications

• 

  Indian Microfinance: Looking Beyond The AP Act and its Devastating Impact on the Poor

  PUBLISHED: March, 2012

  READ MORE
• 

  Indian Microfinance Looking Beyond the AP Act and its Devastating Impact on the Poor

  PUBLISHED: March, 2012

  READ MORE
• 

  Indian Microfinance Looking Beyond the AP Act and its Devastating Impact on the Poor

  PUBLISHED: March, 2012

  READ MORE
• 

  Indian Microfinance: Looking Beyond The AP Act and its Devastating Impact on the Poor

  PUBLISHED: March, 2012

  Tags: Financial Services

  Region: Asia

  READ MORE
• 

  Finish Line in Sight but Hurdles Remain: A Perspective on the Draft Microfinance Institutions Bill 2011

  PUBLISHED: July, 2011

  Tags: Financial Services

  Region: Asia

  READ MORE
• 

  Beyond Profit Special Issue: Property Rights, Identity and Dignity

  PUBLISHED: March, 2011

  Tags: Financial Services

  Region: Asia

  READ MORE
• 

  The Perfect Balancing Act with an Imperfect Outcome: Malegam Committee Recommendations on Microfinance Sector

  PUBLISHED: February, 2011

  READ MORE
• 

  The Perfect Balancing Act with an Imperfect Outcome: Malegam Committee Recommendations on Microfinance Sector

  PUBLISHED: February, 2011

  Tags: Financial Services

  Region: Asia

  READ MORE
• 

  Finish Line in Sight But Hurdles Remain: A Perspective on the Draft Micro Finance Nstitutions (Development and Regulation) Bill 2011

  PUBLISHED: January, 2011

  READ MORE
• 

  The Perfect Balancing Act with an Imperfect Outcome: Malegam Committee Recommendations on Microfinance Sector

  PUBLISHED: January, 2011

  READ MORE


Indian Microfinance: Looking Beyond The AP Act and its Devastating Impact on the Poor
PUBLISHED: March, 2012
In December 2010 the Government of Andhra Pradesh (“AP”) passed a law (the “AP Act”, originally conceived in October 2010) which effectively shut down private sector microfinance in the State. The AP Government stated that its goal was to protect the poor. Now, 18 months later, the impact of the AP Act is clear: rather than protecting the poor, it has had the opposite effect, harming the poor by starving them of access to credit and basic financial services.
Over 9 million households in AP have been affected as access to finance has dried up and lending by MFIs in AP has dropped to virtually zero from INR 7,494 crore (Cr.) (USD 1.5 billion1) in the year prior to the AP Act. This means that millions of people that depend on MFIs to finance their entrepreneurial pursuits and smooth household incomes have been left with no alternative, other than to return to the village moneylender.
The damage has not been limited to AP alone; indeed the impact already has and will continue to affect access to finance for the poor in other states, making this not just an AP problem, but rather a pan-India problem.
The AP Act eliminated private sector microfinance by making it impossible for MFIs to collect outstanding amounts or provide fresh loans to clients. As of today, over INR 6,000 Cr. (USD1.2 billion) of uncollected loans remain outstanding in AP. Because the MFIs are not permitted into the field, they cannot collect the outstanding amounts nor make fresh loans to the millions of poor households that depend on them as their primary mainstream source of credit. And since MFIs cannot collect the funds locked up in AP, they are unable to pay back their lenders, which include India’s large public and private sector banks such as SBI, SIDBI, ICICI and others.
Download Pdf Here


Indian Microfinance Looking Beyond the AP Act and its Devastating Impact on the Poor
PUBLISHED: March, 2012
In December 2010 the Government of Andhra Pradesh passed a law (the “AP Act”) which effectively shut down private
ector microfi nance in the State. The AP Government stated that its goal was to protect the poor. Now, 15 months
ater, the impact of the AP Act is clear: rather than protecting the poor in AP, it has had the opposite effect and
ndeed harmed the poor by starving them of access to credit and basic fi nancial services.
Download Pdf Here


Indian Microfinance Looking Beyond the AP Act and its Devastating Impact on the Poor
PUBLISHED: March, 2012
In December 2010 the government of Andhra Pradesh (“AP”) passed a law (the “AP Act”,originally conceived in October 2010) which effectively shut down private sector microfinance in the State. The AP Government stated that its goal was to protect the poor. Now, 18 months later, the impact of the AP Act is clear: rather than protecting the poor, it has had the opposite effect, harming the poor by starving them of access to credit and basic financial services.
18 months later, the impact of the AP Act is clear: rather than protecting the poor, it has had the opposite effect, harming the poor by starving them of access to credit and basic financial services.
Over 9 million households in AP have been affected as access to finance has dried up1 and lending by MFIs in AP has dropped to virtually zero from INR 7,494 crore (Cr.) (USD 1.5 billion5) in the year prior to the AP Act. This means
that millions of people who depend on MFIs to finance their entrepreneurial pursuits and smooth household incomes have been left with no alternative, other than to return to the village moneylender.
The damage has not been limited to AP alone; indeed the impact already has and will continue to affect access to finance for the poor in other states, making this not just an AP problem, but rather a pan-India problem.
The AP Act has severely impacted the viability of private sector microfinance in India by making it impossible for MFIs to collect outstanding amounts or provide fresh loans to clients. Because the MFIs are not permitted into the field, over INR 6,000 Cr. (USD1.2 billion) of loans remain uncollected in AP today. For the same reason, MFIs cannot make new loans to the millions of poor households that depend on them as their primary source of credit. And since the uncollected funds are locked up in AP, they are unable to pay back their lenders, which include India’s large public and private sector banks such as SBI, SIDBI, ICICI and others.
Download Pdf Here


Indian Microfinance: Looking Beyond The AP Act and its Devastating Impact on the Poor
PUBLISHED: March, 2012
In December 2010 the Government of Andhra Pradesh (“AP”) passed a law (the “AP Act”, originally conceived in October 2010) which effectively shut down private sector microfinance in the State. The AP Government stated that its goal was to protect the poor. Now, 18 months later, the impact of the AP Act is clear: rather than protecting the poor, it has had the opposite effect, harming the poor by starving them of access to credit and basic financial services.
A study by Legatum Ventures, with contributions from Intellecap.
Download Pdf Here


Finish Line in Sight but Hurdles Remain: A Perspective on the Draft Microfinance Institutions Bill 2011
PUBLISHED: July, 2011
The Ministry of Finance of the Government of India unveiled draft legislation earlier this month,
aimed at bringing the microfinance industry within a central regulatory framework, and has
opened it up for comment and feedback from various stakeholders.
The draft „Micro Finance Institutions (Development and Regulation) Bill 2011‟ comes nearly
nine months after the Andhra Pradesh State Government passed an ordinance – later passed into
state law – that imposed stringent restrictions on microfinance firms, particularly in terms of
recovery and interest rates, and practically froze bank lending to the sector.
The size of the microfinance industry in India is estimated to be about Rs24,000 crore, of which
Andhra Pradesh alone is estimated to account for almost a quarter, or Rs7,400 crore.
The AP law practically paralysed the microfinance industry, forcing some of the largest MFIs to
enter corporate debt restructuring programs. The effect on smaller firms has been even more
catastrophic.
Even now, the AP government is defending a court case filed in the state High Court against its
MFI Act.
The draft Bill, though late in coming, is welcome, and will help resolve long-festering
uncertainties about interest rates, margins, and an appropriate regulatory structure for the
industry, while freeing up MFIs from the purview of differing state-level moneylending statutes.
However, the industry might have to wait a while before it can breathe entirely easy – the
monsoon session of Parliament is due to run August 1 through September 8, and it is anybody‟s
guess if the Bill will be taken up in this session, or indeed if it will pass.
Download Pdf Here


Beyond Profit Special Issue: Property Rights, Identity and Dignity
PUBLISHED: March, 2011
Beyond Profit was a social enterprise magazine launched by Intellecap in 2009 to present the stories, people and ideas behind innovative social enterprises. It brought together first-hand insights and expert commentary across Intellecap’s Focus Sectors and related themes.
This special issue of Beyond Profit looks into “property rights” – an important, but often overlooked, aspect of poverty alleviation. Tackling the problem of how to improve access to and implementation of property rights poses real challenges to policy-makers and development practitioners because of the complexity of the issue and its controversial nature.
Download Pdf Here


The Perfect Balancing Act with an Imperfect Outcome: Malegam Committee Recommendations on Microfinance Sector
PUBLISHED: February, 2011
The Malegam Committee was constituted by the Reserve Bank of India’ as a Sub-Committee of its Board of Directors (referred to in this paper as “the Malegam Committee” or simply “the Committee”), to review the definition and practice of microfinance in India, delineate a regulatory framework, and make related recommendations.
The Committee’s recommendations” were released on 19 January 2011. This paper represents Intellecap’s effort to examine the Malegam Committee’s recommendations for the private-sector commercial microfinance industry (referred to in this paper as “the industry”), some questions that its recommendations raise, and the impact of its recommendations on the industry.
Download Pdf Here


The Perfect Balancing Act with an Imperfect Outcome: Malegam Committee Recommendations on Microfinance Sector
PUBLISHED: February, 2011
In the fall of 2010, a microfinance crisis started in the southern Indian state of Andhra Pradesh, and had implications for the industry nationwide. One of these had been the recommendations put forth to the Reserve Bank of India (RBI) by the Malegam Committee. Intellecap released a white paper responding to these recommendations.
Download Pdf Here


Finish Line in Sight But Hurdles Remain: A Perspective on the Draft Micro Finance Nstitutions (Development and Regulation) Bill 2011
PUBLISHED: January, 2011
The Ministry of Finance of the Government of India unveiled draft legislation earlier this month, aimed at bringing the microfinance industry within a central regulatory framework, and has opened it up for comment and feedback from various stakeholders.
The draft „Micro Finance Institutions (Development and Regulation) Bill 2011‟ comes nearly nine months after the Andhra Pradesh State Government passed an ordinance – later passed into state law – that imposed stringent restrictions on microfinance firms, particularly in terms of recovery and interest rates, and practically froze bank lending to the sector.
The size of the microfinance industry in India is estimated to be about Rs24,000 crore, of which Andhra Pradesh alone is estimated to account for almost a quarter, or Rs7,400 crore.
The AP law practically paralysed the microfinance industry, forcing some of the largest MFIs to enter corporate debt restructuring programs. The effect on smaller firms has been even more catastrophic.
Even now, the AP government is defending a court case filed in the state High Court against its MFI Act.
The draft Bill, though late in coming, is welcome, and will help resolve long-festering uncertainties about interest rates, margins, and an appropriate regulatory structure for the industry, while freeing up MFIs from the purview of differing state-level moneylending statutes.
Download Pdf Here


The Perfect Balancing Act with an Imperfect Outcome: Malegam Committee Recommendations on Microfinance Sector
PUBLISHED: January, 2011
The Malegam Committee was constituted by the Reserve Bank of India’ as a Sub-Committee of its Board of Directors (referred to in this paper as “the Malegam Committee” or simply “the Committee”), to review the definition and practice of microfinance in India, delineate a regulatory framework, and make related recommendations.
The Committee’s recommendations” were released on 19 January 2011. This paper represents Intellecap’s effort to examine the Malegam Committee’s recommendations for the private-sector commercial microfinance industry (referred to in this paper as “the industry”), some questions that its recommendations raise, and the impact of its recommendations on the industry.
Download Pdf Here