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Srijan 2008

Srijan 2008 focused on expanding its outreach and aimed at selecting motivated entrepreneurs, capable of addressing the challenges of the microfinance industry and building companies that would transform the sector and accelerate its integration into the mainstream financial services space.

Srijan Discussion Forum

Srijan 2008 was the first of the Srijan discussion series. These panel discussions raised a great deal of excitement within the financial inclusion segment as it was the only platform that brought together critical stakeholders and raised pertinent issues in this space. Srijan 2008 focused on the two panels:

The Credit Squeeze in Microfinance: Do we need a new Debt Institution?

Panel Overview
Targeted at the issues in financing Tier-3 and start-up MFIs, the key objectives of the panel was to:
  • Explore the extent of debt funding available to start ups, Tier 2 and Tier 3 MFIs and identify key challenges and constraints;
  • Evaluate solutions, strategies, and roles required to create debt access to such MFIs;
  • Specifically, evaluate the need and design elements of a specialized debt financing facility for Indian microfinance.
Discussion Questions
The panel broadly deliberated on the following questions:
  • Is there a credit squeeze for smaller MFIs?
    • Is there a ‘pulling back’ amongst banks in the last one year?
    • If yes, what are the key contributing factors and what should be changed in in the MFI/larger ecosystem?
    • What are the constraining factors for MFIs (especially tier III) in accessing debt?
    • What has worked in terms of accessing debt?
  • What alternate measures would give banks more confidence?
  • What solutions/strategies could help improve access?
    • On the part of MFIs.
    • On the part of the debt providers.
    • On the part of other actors in the microfinance space.
  • Is there a need for a specialized microfinance debt financing institution?
    • If yes, what do you think should be some of the critical design elements on this institution?
Panelists
  • Mr. Joseph Silvanus, CEO South Asia, Standard Chartered Bank
  • Dr. Ajit Kanitkar, Program Officer, Development Finance and Economic Officer, Ford Foundation
  • Mr. Wim Van Der Beek, Partner, Aavishkaar Goodwell
  • Mr. P. N. Vashudevan, Managing Director, Equitas
  • Ms. Smita Aggarwal, Executive VP Rural and Corporate Social Initiatives, Fullerton
  • Ms. Manju Mary George, Vice President, Intellecap - Moderator


Beyond Term Loans: Innovations in Debt Financing

Panel Overview
The key questions that this panel looked towards answering were:
  • Are the capital markets ready for the Microfinance sector?
  • Are the MFIs ready to access a larger base of investors in the capital markets?
This panel sought to take off from the discussions around the 'credit squeeze in the MFI sector' in the first panel and address some of the above questions with a special focus on 'Securitization'. It sought to discuss some current alternatives that exist beyond conventional term loans such as:
  • Direct Assignments or Portfolio Sale - Bilateral
  • On-tap Securitization - Bilateral
  • Securitization of micro-loans through a true sale – CLOs and CDOs
  • Corporate Bond Issue
Discussion Questions
The key issues raised during the discussions surrounding this panel were:
  • Securitization versus Portfolio Sale versus Corporate Bond Issue: What are the different instruments and what should an MFI choose?
  • Placement of securitized debt:
    • What are the characteristics of the debt instruments that Mutual Funds invest in?
    • Is there appetite for instruments that are rated AA- and below?
    • Is there appetite for instruments that have more than a 2 year tenor?
  • Rating of micro-loan tranches: The challenges in rating a Microfinance Portfolio, estimating Credit Enhancement, issues related to bankruptcy remoteness and true sale
  • Technology: Role played by technology in securitization or innovative debt financing.
  • Costs - Impact of using Securitized Debt on overall cost of funding for MFI
  • Regulation: Restrictions on issuing securitized debt to foreign investors, classification of Pass Through Certificates under the Priority Sector, structure of the transaction - revolving structures not allowed in India as it is not considered a 'true sale'
Panelists
  • Mr. Royston Braganza, CEO Grameen Capital India
  • Mr. Umesh Sharma, Lotus India Asset Management Co.
  • Mr. Siddharth Sharma, Independent Consultant
  • Mr. Prasad Koparkar, Head, Structured Finance Rating, CRISIL Limited
  • Mr. Atreya Rayaprolu, Vice President, Intellecap - Moderator