With a vast majority of the Indian population living in the rural hinterland, its economy and growth are linked to developmental efforts. Crucial to this is in ensuring that the fruits of financial inclusion reaches their doorstep. An article in today’s Economic Times, showcases the work of IFMR Trust and KGFS towards this endeavor.

Click here to read the article.

There was an article published an Financial Chronicle about IFMR Capital and its future plans. The article quoted Sucharita Mukherjee, CEO of IFMR Capital saying “We have a strong pipeline from existing clients, with whom we have built deep relationships. Increasing product suites to cater to both on-balancesheet and off-balancesheet financing needs of clients, as well as meet specific requirement of key investor classes such as private wealth investors.”

Click here to read the article.

There was an article on the Tamil Nadu Socioeconomic Mobility Survey in Times of India, quoting Amy Mowl of CMF and Dave Wallack of IFMR Trust. The article highlights the comprehensive nature of the study and its potential significance in aiding financial policy in the future. The article also reveals the importance of such study in a developing country like India.

Excerpt: “If you thought rural households were all about agriculture, here is some fact for thought. In heavily urbanised Tamil Nadu, a rural household may no longer depend only on farming, despite the strong farmland sentiment….Researchers conducting an ongoing baseline survey covering 80 villages and cities across Tamil Nadu as part of a larger 15-year study on financial behaviour have come across such interesting patterns…“

Click here to read the article.

Jim Rosenberg, Communications Officer for the CGAP (Consultative Group to Assist the Poor)  Technology Program, recently interviewed Bindu about how the financial system in India might be configured to deliver complete financial service access.

Excerpt below from the CGAP Technology Blog:

What is the approach IFMR advocates for that is different from all the other models being used in India, such as scaling up microfinance institutions (MFIs), reforming the cooperatives, promoting the self help group/bank linkage model, or the current favorite of policymakers, the business correspondent model linked to the use of technology?

Our vision for the Indian financial system has three parts:

• An adequate number of local, high-quality financial providers that provide complete access to financial services. (We have borrowed heavily from Prof. Jonathan Morduch in defining complete access to be: reliability + continuity + convenience + flexibility + increasing financial well-being.)
• Orderly ways for systematic risk to be transferred from these local providers to risk aggregators. This would be done through mechanisms like reinsurance and securitization, among others.
• The presence of well-regulated and well-capitalized aggregators like commercial banks, mutual funds, and insurance companies.

To read the full interview click here.

IFMR capital closed a Rs. 264.7 million securitisation transaction with Grameen Koota, introducing a new bank investor to the microfinance capital markets.

The transaction is unique as it proves the robustness of capital markets access for microfinance institutions that have consistently originated high quality assets, and the competitive advantage of capital market securitisations even in peak priority sector season.

To view the official press release – click here.

An article penned by Bindu and Nachiket in today’s edition of Livemint:

Excerpt:

In a country of 1.2 billion individuals, if we exclude children, we should at least have 900 million bank account holders before we can say the job of basic inclusion in banking is complete. No matter how we count, however, the actual number of bank account holders do not seem to cross 200 million. This is appalling to say the least—and may also, in part, explain why we escaped the subprime crisis; many people were simply outside the financial system. The real mystery is why this should be the situation at all?

To read further click here

ET article quoting Bindu Ananth on Rural Tourism Network Enterprise (RTNE): “By 2013, we will be present in 20 states with over 38,000 properties that sell 35 lakh room nights to tourists”

Click here to read the article

Visit RTNE Website for bookings.

In a first transaction of its kind, IFMR Capital concluded a multi-originator securitisation of micro-loans originated by four  microfinance institutions in India. The Rs. 308 million ($ 6.5 million) transaction is backed by around 42,000 micro-loans originated by Asirvad Microfinance Pvt Ltd, Sahayata Microfinance Pvt Ltd, Satin Creditcare Network Ltd, and Sonata Finance Pvt Ltd.

IFMR Capital was the structurer, arranger and an investor in the subordinated strip of the transaction. Using the multi-originator securitization structure, IFMR Capital has been able to help a number of MFIs access mainstream capital markets. Given the size of the institution and the limited availability of unencumbered portfolios, accessing capital markets on their own is an unviable option for most small and medium MFIs. By pooling together the loan portfolios of these high-quality MFIs, IFMR Capital has demonstrated that these MFIs can access funding at a much lower cost than their average cost of funds. This is the first multi-originator securitization of micro-loans in the world.

Photos (Above & Below): At the signing of multi originator transaction in Mumbai between the MFIs, investor and the trusteeship company.

IFMR Capital Mosec I, the multi-originator Special Purpose Vehicle, has issued two tranches of securities: a 77 percent senior-rated tranche with an expected maturity of 6 months, and a 23 percent subordinated strip with an expected maturity of 11 months. CRISIL assigned the highest short term rating of   P1+ (so) to the senior tranche, which was subscribed to a Bank. The closing of this transaction has resulted in the emergence of a new pricing benchmark in the less than 6-month maturity asset class.

As per the waterfall mechanism in the structure, the senior tranche will be fully paid out before the subordinated strip begins to receive cash flows.  The IFMR Capital Mosec I securitization has an average credit enhancement of 13 percent in the form of cash collateral provided by the four MFIs.  The senior tranche has additional credit enhancement provided by the junior strip which has been subscribed to by IFMR Capital. The originators will continue to service the underlying loans. The structure has been designed to align the interests of the originator and structurer with the interests of investors.

This is a landmark transaction in the microfinance sector because it is for the first time that small MFIs have been able to access the capital markets. The purchase of the P1+ rated senior tranche by the treasury department of a bank demonstrates that microfinance can form a mainstream asset class that can be benchmarked to comparable assets like P1+ rated commercial paper, and not just be relegated to the priority sector portfolio of banks. Apart from opening the sector to a new class of investors, the use of securitisation would ensure round the year funding to MFIs at a lower cost of funds.  This would eventually result in a lower cost of borrowing to the end customer.

Official Press Release

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Article on the microfinance industry in The Hindu Business Line, quoting Sucharita Mukerjee, CEO, IFMR Capital. She lays stress on the need for systems which are IT-driven.

Click here to read the article

A recent micro-loan securitisation, completed by IFMR Capital and Equitas Micro Finance, has enabled the first ever mutual fund investment into the Indian microfinance sector. The Rs. 480 million ($10.4 million) transaction is backed by over 55,000 micro-loans originated by Equitas Micro Finance, a Chennai-based microfinance institution with approximately 700,000 low-income clients. The transaction was structured by IFMR Capital, which operates as a financial guarantee company for sectors impacting low-income households, and which co-invested in the junior tranche of the securitisation.

Official Press Release

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