Publication: Dvara Research

A recent article in the Economist notes approvingly about the growing phenomenon of Village Savings and Loans Association (VSLA) as a means for low-income clients to save securely and earn high returns.

IFMR Finance Foundation is working on the agenda of consumer protection in finance as part of its mandate on financial systems design.

NBFCs play a critical role in furthering the goal of financial inclusion. It is our view that in order to make access to financial services universal, while ensuring systemic stability, we need to build on the separate natural strengths of banks and NBFCs.

Following the sessions by Dr. Isher Ahluwalia and Mr. Vikram Kapur, (covered in this post) the workshop participants discussed critical topics such as decentralisation and governance, political economy and institutional fragmentation, revenue generation and infrastructure financing, water and sanitation, capacity building, and land and city growth.

Mr N Vaghul, chairman emeritus of ICICI Bank, recently delivered the Talwar Memorial Lecture on the topic “The Future of Finance in India”.

The first IFMR Conference on Financial Systems Design was held at our office in Chennai on Aug 5-6, 2011. The objective of the conference was to engage in an in-depth conversation on the future of the Indian financial system and some of the underlying design challenges being faced in various markets.

Subsequent to our earlier posts detailing the three broad themes from the IFMR Financial Systems Design Conference 2011, Day 2 of the conference witnessed participants identify pathways to achieve the specific visions that were formulated across the sessions in Origination, Risk Transmission and Aggregation.

The structured finance approach has given MFIs access to a new class of debt investors, thereby reducing over-dependence on traditional sources of funds. This therefore enables risk transfer over a larger gamut of financial institutions and also provides access to mainstream capital market investors. The need for continuous and reliable sources of capital is critical for growth and sustenance in this sector.

In February 2010, I had the opportunity to visit Pudhuaaru KGFS in Thanjavur. This is a remarkable project which helps us see the interface between households and the financial system in a wholly new light.

The Draft Micro Finance Institutions (Regulations and Development) Bill 2011 (the Bill) seeks to cover all entities engaged in ‘microfinance activities’ under a single regulator (the Reserve Bank of India) and prescribes various rules for such institutions.