Theme: Debt Distress

Microfinance has long been seen by many as a panacea for fighting poverty by providing access to financial services to low-income population considered unbankable by the traditional financial system.

I recently had an opportunity to read an interesting book on farmer suicides in the Yavatmal district of Maharashtra by Secretary Health Meeta Rajiv Lochan1 (meeta29 [at] hotmail.com) and Professor Rajiv Lochan2 (mrajivlochan [at] hotmail.com).

This post takes off from where our article on the current status of Indian debt markets ended. The peculiar issue with the Indian corporate debt market is not that it faces challenges due to a lack of adequate infrastructure.

This post marks the beginning of our new blog series on Long Term Debt Markets in the Indian context. In this series we will explore current status of the Indian debt market, importance and issues in relation to these markets, profile select developed debt markets and identify key learnings for the Indian debt market.  

While the corporate insolvency framework has seen a lot of activity, the individual insolvency framework in India consists merely of a pair of statutes legislated in the British era which today lie dormant for all practical purposes.

IFMR Finance Foundation is working on understanding the regime for corporate and individual insolvency in India, as part of our mandate on financial systems design. We will be regularly showcasing our learnings on this front as a part of this new blog series called “Insolvency in India”. We start off by looking at the legal framework for corporate insolvency in India.

The Indian microfinance sector has seen a series of rapid changes in the past decade.

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.

Credit Derivatives are great financial tools that help entities manage their risk in a better, more efficient way.

In the wake of recent reports of dramatic decline in the availability of capital, microfinance service providers struggling to keep afloat, and the recent proposal by the finance minister to create a dedicated fund for providing equity to smaller MFIs