Regulating Microfinance

According to Reuters, India is planning to introduce legislation to regulate microfinance. Microlending organizations in the country have recently been accused of using coercive practices to collect repayments.

The microfinance sector in India is on the verge of collapse- it seems like the sector has been charging ridiculous amounts of interest, which have contributed to the accumulation of debts. The sector is currently unregulated.

It's important to note that these seem to be for-profit MFIs...

UPDATE: Here's another Reuters story that goes into more depth.

Kiva now includes student loans?

I'm not quite sure how I feel about this!

As fall rolls around, we have a back-to-school special to share: Kiva is now offering student loans to students in Bolivia, Paraguay, and Lebanon.

This is a natural expansion of our mission to help alleviate poverty through lending, and it's just the first step. In the coming months, we'll be expanding beyond the current three countries and into markets where student lending doesn't even exist.

Delinquency Rates

Kiva has announced a new way of calculating its delinquency rates.

New Loans! Here are the stats

Thanks to the students of RPOS473Z, we have made some new lending decisions! Full details are up on our lender page.

Take a look at the summary statistics for our loans to date: by sector, gender, country, and field partner.

Update from Kiva Fellow in Bolivia

My name is Alexis Guild and I have had the privilege of working with the
staff of IMPRO over the past three months as a Kiva fellow. As you may
know, all entrepreneur profiles on Kiva's web site are posted by local
field partners (microfinance institutions) such as IMPRO, which are
organizations that lend to the working poor to help lift themselves out
of poverty.

You are receiving this e-mail because you have made a Kiva loan through
IMPRO and we thought you might be interested in learning more about this
Kiva partner.

IMPRO is a small, family-run NGO (non-governmental organization) that
works in the cities of La Paz, El Alto and the surrounding rural areas.
The partnership with Kiva, which began in 2007, has allowed IMPRO to
expand their services while maintaining low interest rates. Bolivia,
which is known for its expansive and relatively successful microfinance
sector, is a competitive marketplace. IMPRO has been able to distinguish
itself through its customer service and varied loan products beyond
microenterprise such as health and education loans. The most distinctive
and perhaps the most successful loan product offered by IMPRO is their
"Mejoramiento de Habitat y Vivienda" (Housing and Living Conditions
Improvement) program.

What distinguishes this program from other loan products is that the
lead loan officer, Enrique, is also a trained architect. He dedicates
himself exclusively to the "Mejoramiento de Habitat y Vivienda" program.
Beyond credit consultation and monitoring of the loan, Enrique also
offers his professional services advising the clients on such issues as
design as well as the type and cost of materials.

Meet Eufracio Mita, one of IMPRO's housing loan clients (pictured, in
the red jacket). He used his loan to start construction on a bathroom in
the house he lives in and to repair the bedroom walls of a second house
he rents out. While he encountered some difficulties due to the
increased price of labor, he has been able to complete this
construction. In describing his relationship with IMPRO, he thanked
Enrique for his advice and help as he gathered the necessary materials.
The repairs allowed him to improve the quality of life of his family.
Not only did the value of the houses increase, but he also was able to
ensure the continued additional income of the house he rents out. In the
future he hopes to continue with the construction of his home, building
a second story to create more living space. Eventually, he told us, he
hopes his children will be able to live in the house he currently rents
out.

Eufracio's relationship with Enrique is not unique at IMPRO. The loan
officers and other dedicated staff, many of whom have worked with the
organization for more than 10 years, pride themselves on their high
quality of customer service. I have continually been impressed with the
commitment of the staff to their clients. On numerous visits with
various loan officers, I have seen the warmth and trust built in the
relationship with the client. To the clients, the IMPRO loan officers
are also friends.

My experience over the past three months has shown me that microfinance
is about more than providing loans – it is about providing
opportunities and building relationships. You, as a Kiva lender, play an
important role in this relationship (hopefully you have received or will
receive an update on a loan you supported). Each time I explained Kiva
to a client, they were impressed and honored by the wide breadth of
support from all over the world. Some even asked for the web site
address so they could see Kiva for themselves. Your impact is tangible.

On behalf of the IMPRO loan officers and staff, I would like to thank
you for your continued support. Please consider joining the Friends of IMPRO lending
team to keep up with currently fundraising loans and to connect with
other IMPRO lenders.

It has been an honor working with Kiva and the entrepreneurs in Bolivia.

Saludos,

Alexis Guild

KF11, Bolivia

UPDATE: Movimiento no pago

Kiva is displaying the following information about loans to MFIs in Nicaragua:

Update from Kiva Staff on July 19, 2010: In order to help you better understand the potential risks of lending to entrepreneurs in Nicaragua, Kiva continues to provide information on the “No Pago” movement (a movement for non-repayment of loans).

The momentum behind the No Pago movement appears to have largely dissipated, as a result of the National Assembly's passage of a law in April 2010. This new law allows delinquent borrowers (as of June 2009) to re-negotiate loans with more favorable interest and terms. Borrowers who were part of the No Pago movement were required to approach MFIs to re-negotiate their loans by May 12th of this year. While many borrowers did approach MFIs to re-negotiate their loans, it still only accounted for a small percentage of the members of the No Pago movement.

For Kiva lenders who previously lent to Nicaraguan borrowers:

• if your loan had default coverage, then even if your loan was affected, the MFI will cover your loan for the full amount.
• if your loan did not have default coverage by the MFI: If the borrower you lent to did not approach their MFI before May 12th, their loan cannot be re-negotiated under the terms of the No Pago movement resolution. Kiva is working closely with its Field Partners in Nicaragua to see if any Kiva clients have re-negotiated their loan under this law and will message to lenders accordingly.

For Kiva lenders considering making new loans in Nicaragua: it seems that as a result of the passage of this law and since the term for re-negotiation has passed, the microfinance situation is calmer in Nicaragua that previously. Kiva will continue to update the Kiva lender community if the situation changes significantly.

Nicaragua and the Movimiento no Pago

There's been some interesting activity lately in Nicaragua, with the "Movimiento no Pago" (a non-payment movement among groups in the North of the country) protesting against microcredit loans. Things have got a lot harder in the country since the economic crisis. Kiva put out this statement:

"Recent information indicates that the situation may be improving as the President of Nicaragua has spoken out against this law and would not support its passage in its current form. The network of microfinance institutions in Nicaragua (ASOMIF) has been negotiating with the government in support of an alternative proposal. Kiva, along with 25 other funders from 9 countries, has signed onto a letter to the Nicaraguan government urging a resolution to this situation without enacting a moratorium on debt repayment. The potential passage of the debt moratorium increases the risk of lending in Nicaragua."

There's a copy of the anti-movement advert available on David Roodman's blog that gives a really good picture of exactly which microfinance organizations are operating on the ground there.

At the moment, I can't find much information on who's in Movimiento no Pago and what the extent of support for them is among ordinary people, but I'll keep looking.