Understanding the Opportunities and Challenges of the Market_9 pptx

304 • References
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Chapter 10
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Chapter 12
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Chapter 13
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Wright, Graham A. N., and James Mwangi, “Equity Building Society’s Market-led Approach
to Microfinance,” MicroSave, September 2004.
Triodos Bank
Annual Report, Acleda Bank, 2006.
Annual Report, Findesa, 2006.
Global Reporting Initiative, www.globalreporting.org.
Lassche, Hans-Peter, “More Than Cool Hard Numbers,”
www.triodos.com/com/whats_new/latest_news/general/190050.
Lessiderinska, Teodorina, presentation at the Annual SEEP Network Meetings,
October 23, 2007.
——, discussions with ACCION, October 2007.
Minnar, Jacco (senior investment officer, Triodos Investment Management), discussions with
ACCION, October 2007.

Nnawauba, Stephen (chief accountant, Centenary Rural Investment Bank), discussions with
ACCION, October 2007.
Solorzano, Gabriel (chairman of the board, BANEX), discussions with ACCION,
October 2007.
Triodos Bank, www.triodos.com.
van Golstein Brouwers, Marilou, “Will There Still Be a Role for MFIs? Microfinance
Pioneers Aiming to Become Leaders in Socially Responsible Business,” Microfinance
Matters, issue 17, October 2005.
——, discussions with ACCION, October 2007.
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ABN/AMRO Bank (Netherlands), 146–147,
159–161
Access
to funds, as competitive advantage, 58
managing informality risk, 24
to markets, 245–246
vs. stability, enabling environment
infrastructure, 99–100
value of, 191
ACCION International
beginning to microlend, 57
CEMEX Patrimonio Hoy Program
restructuring, 146
corporate social responsibility (CSR)
positioning, 55–56
Credifé (Ecuador), 53, 63, 183–187
Credit Builder loan in U.S., 104
credit scoring, 107
dealing with physical money, 112
direct delivery model, 51–52

group lending, 28
Latin America Bridge fund, viii, 81–82
managing informality risk, 24
Principles of Consumer Protection in
Microfinance, 155, 157
public offering, 90
shareholdings in Compartamos
Banco, 152, 246
SOCIAL assessment framework, 163
Acleda Bank (Cambodia), 276
Aditya Birla (India), 74
Adoption rates, card-based payments, 115–116
Advisors, capital market building, 126–127
Africa. See specific countries
Africap Microfinance Fund (Africa), 87–88
Agents
banking correspondent (agent) model,
67–71, 95, 172–173
informal finance sources as potential, 12
in partner-agent models, 67–71, 73–75, 95,
172–173
microinsurance, 36
Akhmedov, Anvar, 233
Akula, Vikram, 89, 253–254
Alternative financial institutions
consumer lenders, 15–17
described, 14
housing financing, 29, 40–41
microfinance institution (MFI), 9, 14–16
supply channel, BOP market, 14–17

American International Group (AIG), 54,
74–75
Ananth, Bindu, 48–50
Andean Development Corporation (CAF), 82
Annibale, Robert, 47–49, 51, 55, 176
ANZ Bank (Asia-Pacific)
as case study, 261–265
endpoints and references, 297–298, 314–315
Global Reporting Initiative (GRI), 159–161
partnering model with UNDP, 54
social responsibility in financial services,
144–145
specialized financial products, 262–265
understanding client needs, 21
Application service providers (ASPs)
models, 125
ARGOZ (El Salvador), 40–41
Arnold, Debbie, 121–122
Asia. See specific countries
Assessment, social, 161–163
Asset class, microfinance as, 91
Associated Credit Bureaus, 110
ATMs, 43, 112, 114–116, 121, 168–169
Australia New Zealand Banking Group.
See ANZ Bank (Asia-Pacific)
Automation. See Technology
• 317 •
INDEX
Banamex (Mexico), 43, 246–247
Banco Azteca (Mexico)

as case study, 195–203
client needs, understanding, 21
collections policies, 154
competition, 201
as consumer lender, 16
consumer protections, 202
delivery channels, 200
direct delivery model, 52–53
growth, profitability and expansion,
199–200
regional strategy, 200–201
retailers founding banks, 72, 196–199
technology, 196–199
transaction cost reduction, 23
transparency, 202
Banco Bradesco (Brazil)
access, value of, 191
Banco Postal, 71, 189–191
banking agents, 71
as case study, 188–192
double bottom-line results, 189–191
Global Reporting Initiative (GRI), 159–161
partnerships and transaction cost
reduction, 23
replication, 191–192
Banco Caja Social (Colombia), 53
Banco Pichincha (Ecuador)
as case study, 181–187
Credifé, 53, 63, 183–187
direct delivery model, 52–53

microfinance involvement, ix
service company model, 62–63, 183–187
understanding client needs, 21
Banco Real (Brazil), 53, 147
Banco Solidario (Ecuador), viii, 43, 181
Banco Wiese Sudameris (BWS, Peru), 62
BancoSol (Bolivia), 37, 98, 133
BANEX (Nicaragua), 274–275
Bangladesh, 13–14, 36
See also BRAC (Bangladesh); Grameen
Bank (Bangladesh)
Bank “downscaling,” 57–65
attitudes toward BOP, 59–60
competitive advantages, 58–59
creating distinct microlending organizational
space, 60–61
credit cards, 65
external factors, 57–58
financial subsidiaries, 64
lessons learned, 64–65
models of, 62–64
service company models, 62–64, 183–187
Bank of America, 65
Bank Rakyat Indonesia (BRI), 57, 90, 124,
164, 251
Banking correspondent (agent) model, 67–71,
95, 172–173
Banks and banking
bank branches, 13–14, 22–23, 161, 187
bank cards and ATMs, 43, 112, 114–116,

121, 168–169
bank loans to MFIs, 81–82
banking hours, 100–101
bank-retail partnering and delivery, 66–76,
172–173
BOP population’s mistrust of, 21
branchless banking, 22–23, 67
case studies
Banco Azteca (Mexico), 195–203
Banco Bradesco (Brazil), 188–192
Banco Pichincha (Ecuador), 181–187
Citigroup, 175–180
Compartamos Banco (Mexico), 245–251
Credit Suisse, 245–251
ICICI Bank (India), 167–174
choosing right bank for microfinance,
64–65
competitive advantage, 5–6, 58–59
computers and software for banking,
123–125, 226–230
Credifé as service company model, 186
housing financing, 29, 40–41
remittances, 41–43
retailers founding, 71–72, 196–199
schools into business nodes, 268
software platforms, 123–125, 226–230
Banks-retail partnering and delivery, 66–76,
172–173
Banorte (Mexico), 247
Barclays Bank, 12, 19, 30

Barth, Steve, 12, 102
BASIX (India), 115
BCP (Bolivia), 69
Benchmarks, MFI performance, 78, 133, 276
Beshouri, Christopher, 31
Betagro Group (Thailand), 143
BIMBO (Mexico), 72
Biometric identification, 25, 114, 116
Blacklock, Carolyn, 262
BlueOrchard, 83, 127
BOLD I and BOLD II, 83, 128
Bolivia
BancoSol, 37, 98, 133
BCP, 69
consumer lending crisis, 16, 149
credit reference companies, 108
financial-sector liberalization, 96
Finrural, 108
318 • Index
independent supervision and regulation, 98
in-store banking model, 69
overlending, 149, 151
political risks, 102
BOMSI (BlueOrchard Microfinance
Securities I), 83
Bonds, 82–83, 177–178
BOP (“bottom of the pyramid”) market
clients, understanding, 19–22, 24
credit bureaus, value of, 104
critical challenges, 18–26

described, 3–10
financial education, 71
financial inclusion indicators, 161
industry building, 20, 25–26
managing informality risk, 20, 24–25,
99–100, 104
Prahalad on, 9–10
predatory lending, 149
supply channel, 11–17
transaction costs, reducing, 19–20, 22–23
vulnerabilities, 8, 21, 34–35
See also Clients; Financial service products
BRAC (Bangladesh)
as case study, 239–244
loan origination and arrangement, 51, 85,
239–242
MF Analytics and Citibank, 85, 239–244
portfolio risk analysis software, 124, 241–242
remittances, 43
structure and government approval,
242–243
Branchless banking, 22–23, 67, 100–101
Branding, 58, 69, 73, 187
See also Financial service products
Brazil
Banco Real, 53, 147
banking correspondent (agent) model and
regulation, 67–68, 70–71, 95
banking sector involvement, 13–14
banking-retailing partnering, 23, 73–74

credit bureaus, 110
Lemon Bank, 73
Real Microcredito, 146–147
Seresa, 110
social responsibility in financial services,
146–147
See also Banco Bradesco (Brazil)
Bridge Fund (ACCION guarantee fund),
81–82
Birla Sun Life Insurance (India), 74
Bulgaria, 85
Business strategy
corporate social responsibility integration,
141–142
entry points
bank “downscaling,” 57–65
bank-retail partnering and delivery, 66–76
corporate choices, 47–56
insurance distribution channels, 74–76
MFI investment models, 77–92
microfinance as, 175–180
BusinessWeek, 152
Cabacheco, Jesse, 60–61
Callaghan, Ian, 83
Calmeadow (Canada), 87
Calvert Foundation (United States), 130
Cambodia, 276
Canada, 74, 87
Capital
credit bureau development, 234

market building, for investing, 126–136
venture capital and Indian microfinance,
255–256
Card-based payment products
adoption rates, 115–116
ATMs, 43, 112, 114–116, 121, 168–169
bank cards, 43, 112
benefits, 220–221
cost of cash, 111–116
credit cards, 71–72, 114–115, 199
delivery channel technology, 113–116
examples of, 221–224
prepaid cards, 23, 44, 76, 113, 221
remittances, 43
smart cards, 113–114, 223
transaction cost reductions, 23
types of, 113–114
See also Visa
Caribbean, 133
CariCRIS (Caribbean), 133
Case studies
banking, 167–192
corporate social responsibility (CSR),
261–278
industry developers, 219–236
models, 239–257
partnering, 195–216
retailers, 195–203
telecommunication companies, 204–216
Cash

banking agents, 70
bank-retail partnering models, 69
cost of, 111–113
dealing with physical money, 112
delivery channel technology, 111–116
preferred, for remittances, 43
Cell phones. See Mobile phone services
CEMEX (Mexico), 40–41, 146
Index • 319
Center for Financial Inclusion of
ACCION, xi, xiii
Central America. See specific countries
Central Bank of the Philippines, 101
Centre for Microfinance Research (CMFR), 173
Chadha, Sumir, 89, 253
Champions of inclusive finance, 47–48, 64–65
Chedraui Group (Mexico), 72
China, view of corporate social responsibility, 140
Chu, Michael, 59
Citibank and Citigroup
ATMs and POS devices, 115
BRAC loan securitization, 85, 239–244
as case study, 175–180
Citi Microfinance Group, 127, 176–180
Citibank Foundation, xiii–xiv, 175
factors of success, 180
foreign exchanges, 135
Global Reporting Initiative (GRI), 159–161
as inclusive finance champion, 47–48
international funding for, 51

microfinance as business strategy, 175–180
remittances, 43
Client protection
Banco Azteca (Mexico), 202
Campaign for Client Protection in
Microfinance, 156
collections policies, 154–155
corporate citizenship, 159
Equator Principles, 160–161
financial inclusion indicators, 161
ideas for action, 156
interest rates, 152–155, 250–251
overlending, 151
predatory lending, 149
pricing transparency, 152–155, 157, 228,
250–251
Principles for Consumer Protection in
Microfinance, 157
reputation risk, 148, 153, 155–156
responsibility for, 155–156
socially responsible investing 148–157
subprime mortgage crisis in U.S., 150–151
Clients
BOP critical challenges, 19–22, 24
characteristics, 21
counting, in social assessment, 162
credit bureau reporting, 106
identification systems, 106
informality, 23–25
loan officer relationship, 60

profiles, 4–9
understanding, 60–61, 262
See also BOP (“bottom of the pyramid”)
market; Client protection
Collateralized debt obligations (CDOs), 83–84,
128, 150
Collateralized loan obligations (CLOs),
83–84
Collections policies, 154–155, 157
Colombia, 13–14, 53, 76, 83
Commercial banks. See Banks
Commodity-based farmer finance, 171
Community support, corporate citizenship, 159
Compartamos Banco (Mexico)
access to markets, 245–246
bonds, 82–83
as case study, 245–251
initial public offering, 16, 86–87, 90–91,
127, 152–153, 246–250
interest rates and pricing transparency,
152–153, 250–251
international funding for, 51
life insurance distribution, 75
retailers founding banks, 72
return on equity, 133
Competition
Banco Azteca (Mexico), 201
consumer lending, 16
credit bureau development, 232–233
informal finance sources as, 12

internal, and microfinance service
decision, 65
remittances, 42
Competitive advantage, banks, 5–6, 58–59
CompuScan (South Africa), 109
Computers. See Technology
Consultative Group to Assist the Poor (CGAP),
14, 67, 123, 129, 154
Consumer lending, 15–17, 196–199
Consumer products, 11–12
See also Mobile phone services
Consumer protection. See Client protection
Consumption smoothing in BOP market, 7–8
Corporate choices, 47–56
champions of inclusive finance, 47–48, 64–65
in-house vs. partnering, 52–55
service delivery vs. financing, 50–52
strategic questions, 48–49
See also Corporate social responsibility
(CSR); Strategic entry points
Corporate citizenship indicators, 159–161
Corporate culture as entry barrier, 59
Corporate social responsibility (CSR)
approaches to, 139–147
case studies
ANZ Bank (Asia-Pacific), 261–265
Equity Bank (Kenya), 266–271
Global Reporting Initiative (GRI), 272–278
Triodos Bank (Netherlands), 272–278
320 • Index

changing views of, 139–142
double bottom line, 141, 189–191
in financial services, 142–147
of microfinance institution (MFI), 16
positioning, 55–56
social metrics, 158–164
See also under Clients
Costs. See Transaction costs
Council of Microfinance Equity Funds
(CMEF), 87, 129
Coverage by credit bureaus, 105, 235
Credifé (Ecuador), 53, 63, 183–187
Credit. See Microfinance
Credit Builder, 104
Credit bureaus, 103–110
client identification systems, 106
coverage, 105, 235
credit scoring, 26, 107, 110
MFI participation, 108–109
public and private, 107–108
reporting, negative and positive, 106
value in BOP market, 104
viability, 105–108
Credit cards, 71–72, 114–115, 199
Credit life insurance, 35–37
Credit ratings. See Ratings
Credit reference companies, 108–109
Credit scoring, 26, 107, 110
Credit Suisse (Switzerland)
and Compartamos Banco IPO, as case study,

245–251
endpoints and references, 295–296, 313
international funding from, 51
investments by, 86, 127
Creditinfo (Iceland), 235
Creditinfo in Kazakhstan
as case study, 231–236
development of First Credit Bureau, with
Pragma Corporation, 232–234
CreditRegistry Corporation (Nigeria), 106
CRISIL (India), 133
Cruz Salud (Venezuela), 76
CSR. See Corporate social responsibility (CSR)
Cultural concerns and customs, 36, 61
Currency, 135, 177–178
Currency risk, 85
Customer relationship management (CRM),
197–198
Danel, Carlos, 90, 246, 250
Data. See Investment, information and data
Davis, Ian, 140–141
De Soto, Hernando, 9–10
Debit cards, 44, 113
Debt instruments in MFI investment, 81–86
Default, managing informality risk, 24–25
Delgado Travel, 31, 42
Delia’s story (Peru), 4–6, 9
Delivery channels, 9, 12, 74–76
Banco Azteca (Mexico), 200
banks-retail partnering and delivery, 66–76,

172–173
vs. financing, as corporate choice, 50–52
for government payments, 219–225
microinsurance, 36
mobile phone banking, 116–119, 204–216
remittances, 43
technology, 111–119
transaction cost reduction, 22–23
Delta (Bangladesh), 36
Department for International Development,
UK (DFID), 204–205
Department stores founding banks, 71–72
Depository accounts. See Savings accounts
Deutsche Bank (Germany)
foreign exchanges, 135
Global Reporting Initiative (GRI), 159–161
Global Social Investment Funds, 84
investment banking services, 127
microfinance unit, 127
securitization of ProCredit Bulgaria
debt, 85
venture capital, 256
Developing World Markets, 83, 127
Development finance institutions (DFIs), 129
Dexia Microfiance Fund, 83
DICOM (El Salvador), 108–109
Disability security, 33
Disruptive entrants, financial service products,
30–31
DoCoMo (Japan), 117–118

Documentation
biometric solutions, 25, 114, 116
credit bureau reporting, negative and
positive, 106
Global Reporting Initiative (GRI), 159–161,
272–278
identification, 25, 43, 106, 114, 116
sustainability reporting, 274
Doing Business in 2006, 105
Downscaling. See Bank “downscaling”
Ecobank (Ghana), 64
Ecobank (Nigeria), 112
The Economist, 126
Ecuador, 13–14, 43
See also Banco Pichincha (Ecuador)
Education loans. See Equity Bank (Kenya)
Egypt, 8
El Salvador, 40–41, 108–109
Index • 321
Electronic payment systems, 121–122,
220–221
See also Card-based payment products
Elektra (Mexico), 16, 21, 52, 72, 195–196
See also Banco Azteca (Mexico)
eMerge/T24 MCB, 227–228
Employer corporate citizenship, 159
Enabling environment, 96–102
access vs. stability, 99–100
branchless banking, 100–101
as competitive advantage, 58

financial-sector liberalization, 96
political risks, 96, 101–102, 132
regulatory environment, 97–101
risk management flexibility, 99–100
supportive conditions, 96–99
Environmental protections, 159–161
Equator Principles, 160–161
Equifax (United States), 109–110
Equity Bank (Kenya)
as case study, 266–271
education loans, 33, 56
endpoints and references, 298, 315
Equity Foundation, 268–270
private-budget schools, 266–271
public listing, 16, 87, 90, 251
schools into business nodes, 268
social responsibility in financial services, 145
Equity instruments, MFI investment models,
86–91
Etandikwa program (Uganda), 102
Ethical staff behavior, proconsumer
principles, 157
Eurogiro, 42
Euromoney, 15, 55, 134
Europe
banking sector involvement, 13–14
European Investment Fund, 85
Global Commercial Microfinance
Consortium, 84
view of corporate social responsibility, 140

See also specific countries
Exit options, microfinance institution
investments. See also Equity; Initial
public offerings, 136
Experian (United States), 26, 110
Face-to-face client visits, for social metrics, 164
Fair Isaac and Company, 107
Family, as informal financing source, 8, 12
Farmer finance, ICICI Bank (India), 171
Faulu Kenya, 54, 206–207
Feedback mechanisms, proconsumer
principles, 157
FICO scores, 107
Financial Diaries, 164
Financial inclusion, definition, ix–x, xiii
financial crisis impact on, xi
indicators, social metrics, 161–163
Financial Information Network and Operations
(FINO), 172–173
Financial infrastructure building. See Enabling
environment
Financial literacy, 161, 263–264
Financial service products
for BOP market, 27–44
effective product design, 28–31
Equity Bank (Kenya), 266–271
G-Cash (Philippines), 209–216
housing finance, 28, 38–41
identifying service gaps, 31–33
informal finance sources as indicators, 12

insurance, 32, 34–38
range of, 61
remittances, 41–44
simplification, 22, 29–30
socially responsible investing in, 142–147
specialized, from ANZ Bank (Asia-Pacific),
262–265
Visa, 219–225
Vodafone, 204–208
Financial Times, 152
Financial-sector liberalization, 96
Financing vs. service delivery, as corporate
choice, 50–52
FINCA (Uganda), 75
FinComún (Mexico), 72
Fingerprint readers, 25, 116, 199
Finland (Nokia), xv, 144–145
Finrural (Bolivia), 108
First Credit Bureau (Kazakhstan), 231–236
See also Creditinfo in Kazakhstan
Fitch (ratings service), 131
Fitch Ratings, 90
FMO Bank (Netherlands), 161, 242–243,
256
Forbes, 152
Foreign exchange, 135
Formal financing sources, 13–17
Foundations. See Philanthropic approach to
microfinance
France 24 (television network), 154

Franchise operations, BOP market, 6–7
Friends, as informal financing source, 8, 12
Fuchs, Zach, 55, 134
Gates, Bill, 140
Gates Foundation (United States), 31, 140
322 • Index
G-Cash (Philippines)
building the market, 210–211
as case study, 209–216
market demands, 211–214
mobile phone banking, 117, 119, 209–216
partnering, 214–216
product, 209–210
regulation, 215–216
remittances, 43, 213–214, 216
rural microfinance, 212–213
technology, 210–214
GE Healthcare (United States), 12
Geographic regions. See specific countries;
specific topics
Germany. See Deutsche Bank; KfW
Entwicklungsbank
Ghana, 30, 33, 64
Global Credit Bureau Program, 109
Global Microfinance Investment Program
(GMIP), 88
Global Reporting Initiative (GRI), 159–161,
272–278
Globe Telecommunications. See G-Cash
(Philippines)

Governance, Credifé as service company
model, 186
Government
-based financial services, xvii, 98
BRAC securitization approval, 242–243
enabling environment, 76
See also Regulation
Government Savings Bank (GSB, Thailand),
102, 143
Grameen Bank (Bangladesh), 16
banking software, 124–125
collections policies, 154–155
financial service products, 28
as MFI, 16
social responsibility in financial services,
144–145
Grameen Foundation (United States),
162–163
Grameen Koota (India), 37–38, 124–125
Group-based loans, 4–6, 9, 28–30
Growth
long-term growth, as investor benefit,
78–81
market, for mobile phone banking, 116–117
and partnering, 199–200
Grupo Elektra (Mexico), 16, 21, 23, 52, 72,
195–196
See also Banco Azteca (Mexico)
Grzybowski, Ed, 89
Guarantees, on bonds, 82

Haiti, 53, 62–64, 183–187
Harpe, Stefan, 87
Harvard Business Review, 141
Health insurance, 35, 37–38
Honduras, 41
Housing finance, 28–29, 38–41
HSBC, 71
Hughes, Nick, 204
Human resources, 59, 70, 157, 186
IBM (United States), 25
ICICI Bank (India)
ATMs and POS devices, 115, 167–168
as case study, 167–174
biometric identification, 25
collections policies, 154
commodity-based farmer finance, 171
financing MFIs, 50–51, 169–170
Foundation for Inclusive Finance, 173–174
as inclusive finance champion, 48
microinsurance, 37–38, 171
remittances, 43
research, 173
securitization of microloans, 85
Sonali’s story, 9
technology, 172–173
vision of inclusive finance, 168–169
ICICI Lombard (India), 37–38, 171
Identification
biometric solutions to, 25, 114, 116, 199
national identification systems, 106

for remittances, 43
i-flex banking software, 125
Immigration and bank accounts, 100
Impact investing, 128–129, 163–164
India
Aditya Birla, 74
banking correspondent (agent) model, 68
BASIX, 115
Birla Sun Life Insurance, 74
CRISIL, 133
financial-sector liberalization, 96
government financial services, 98
Grameen Koota, 37–38, 124–125
interest rates and transparency, 154
Know Your Customer (KYC) rules, 100
life insurance distribution, 74–76
M-CRIL, 132, 163
national identification systems, lack of, 106
political risks, 102
Share Microfin Ltd., 90
Sonali’s story, 7–9
Swadhaar FinAccess, 9, 25, 115–116
Tata-AIG, 36, 75–76
Index • 323
India (Cont.)
Unit Trust of India (UTI), 33
venture capital and microfinance in,
255–256
See also ICICI Bank; Sequoia Capital; SKS
Microfinance

Indonesia
Bank Rakyat Indonesia (BRI), 57, 90,
124, 251
formal vs. informal sector, 8
Inflation, 96–97
InfoRed (El Salvador), 108–109
Informal business sectors, 4–5, 8
Informal financing sources
family and friends, 8, 12
managing informality risk, 20, 24–25,
99–100, 104
moneylenders, local, 5–6, 8, 12–13
remittances, 41
supply channel, 12–13
Information. See Investment, information
and data
Information technology (IT), 121–125,
226–230
Initial public offerings (IPOs)
Bank Rakyat Indonesia (BRI), 57, 90,
124, 251
Compartamos Banco (Mexico), 86–87,
90–91, 127, 152–153, 246–250
Equity Bank (Kenya), 87, 251
Innovation, 9, 31
Institute for Financial Management Research,
Centre for Microfinance Research, 48
Insurance
Banco Azteca (Mexico), 199
credit life insurance, 35–37

distribution channels, 74–76
health insurance, 35, 37–38
microinsurance, 34–37, 74–76, 171, 178
remittances, 32
Inter-American Development Bank, 63
Inter-American Dialogue, 43
Inter-American Investment Corporation,
43, 129
Interest rates
bonds, 82
client protections, 152–155
Compartamos Banco (Mexico), 250–251
as competitive advantage for banks, 5–6
inflation, 96–97
regulatory environment, 97–98
transparency, 152–155
International Association for Microfinance
Investors (IAMFI), 88, 129, 134
International Finance Corporation (IFC), 82,
89, 104–105, 109, 122, 160, 256
International finance institutions (IFIs),
134–136
International Financing Review, 239
International Fund for Agricultural
Development, 41
International Labour Organization (ILO), 35
Internet
kiosks, 43, 172
microfinance investment vehicles (MIV),
129–130

Investment
banking services, 127–128
capital market building, for investing,
126–136
MFI investment models, 80–81, 84
case studies, 239–257
long-term growth, as investor benefit,
78–81
MFI investment models, 77–92
amounts invested, 78–79
debt instruments, 81–86
equity instruments, 86–91
information, 80–81
microfinance as asset class, 91
supply and demand, 78–80
Wall Street interest in, 77–78
proconsumer ideas for action, 156
types of investors, 79
Investment Dealers Digest, 127
IPOs. See Initial public offerings (IPOs)
Japan, 117–118, 141–142
J.P. Morgan, 77, 87, 127
Kamath, K.V., 174
Kazakhstan. See Creditinfo in Kazakhstan
Kenya
banking agents, 71
banking sector involvement, 13–14
Faulu Kenya, 54, 206–207
mobile phone banking, 117
M-Pesa, 117, 204–208

private-budget schools, 266–271
See also Equity Bank; Vodafone in Kenya
KfW Entwicklungsbank (Germany), 85,
242–243
Khosla, Vinod, 254
Kiosks, 43, 172
Kiva, 129–130
Know Your Customer (KYC) rules, 99–100
Kramer, Mark, 141
Kumar, Udaia, 255
324 • Index
Labarthe, Carlos, 90, 246, 250
Last mile. See Delivery channels
Latin America. See specific countries
Latin America Bridge Fund, 81–82
Legal considerations, 98–99, 233–234
Legatum Capital (Dubai), 90
Lemon Bank (Brazil), 73
Lending methodology, in bank
“downscaling,” 61
Lessidrenska, Teodorina, 275
Liberalization, financial-sector, 96
Licensing rules, 97
Life insurance, 74–76
Liquidity. See Cash management and
liquidity
Literacy
biometric solutions to lack of, 25, 114, 116
financial, 161, 263–264
Pacific Island countries, 261–262

Loan accounts, bank, 13–14
Loan syndication, 177
London Business School, 12
Low-income. See BOP market
Macroeconomic factors, enabling environment,
96–97
Mahmood, Asad, 84, 127
Malaysia, 106
Market
knowledge of, as entry barrier, 58
market-determined interest rates, 97–98
for microinsurance, 36
for mobile phone banking, 116–117,
211–214
potential of, informal finance sources as
indicators, 12
presence in, as competitive advantage, 58
research on, 30, 73
See also BOP market
Marketing. See Branding; Delivery channels;
Partnering
Massachusetts Institute of Technology Poverty
Action Lab, 164
MasterCard, 115
Maxis Communications Berhad (Malaysia), 43
McKinsey, 140
McKinsey Quarterly, 31
M-CRIL (India), 132, 163
“Merry-go-round” informal financing source,
12–13

Mexico
Banamex, 43, 246–247
banking sector involvement, 13–14
Banorte, 247
BIMBO, 72
CEMEX, 40–41, 146
Chedraui Group, 72
FinComún, 72
formal vs. informal sector, 8
Grupo Elektra, 16, 21, 23, 52, 72, 195–196
(See also Banco Azteca [Mexico])
immigration risk management, 100
life insurance distribution, 76
remittances, 43
retailers founding banks, 16, 72, 196–199
Wal-Mart banking, 16, 72
See also Compartamos Banco (Mexico)
MF Analytics (United States), 85, 239–244,
294–295, 312–313
Mibanco (Peru), viii
average loan size, 15
bank loans, 82
bonds, 82–83
credit scoring, 107
Delia’s story (Peru), 4–6
housing microfinance, 29, 39
international funding for, 51
loan officers, 60–61
microlending organizational space,
60–61

return on equity, 133
as successful microfinance institution, 15
women as majority of clients, 15
Microagent models (barefoot agents), 74–75
MicroBilt, 104
Microcredit Summit, 15
Microfinance
as asset class, 91
as Citibank business strategy, 175–180
number of borrowers, 15
Microfinance Information Exchange (MIX),
15, 78, 127
Microfinance institutions (MFIs)
as alternative financial institution, 9, 14–16
banking software, 123–125, 226–230
vs. consumer lending, 16–17
credit reference companies, 108–109
information available on, 80–81
investment models, 77–92
debt instruments, 81–86
equity instruments, 86–91, 252–257
information and interest, 80–81
microfinance as asset class, 91
supply and demand, 78–80
life insurance distribution, 75–76
partnering model, 53, 169–170
proconsumer ideas for action, 156
social mission of, 132
Index • 325
Microfinance investment vehicles (MIV),

128–130
Microfinance Network, 155, 157
Microfinance Opportunities, 164
MicroFinance Transparency, 153
Microfix fund, 135
Microinsurance, 34–37, 74–76, 171, 178
MicroPlace, 129–130
MicroRate, 131–132, 163
MicroRating International (MRI), 132–133
MicroSave, 30, 164
Mifos open-source software, 124–125
Mobile phone banking
banking transaction cost reductions, 23
as delivery channel technology, 116–119
growth of, 12
M-Pesa (Kenya), 117, 204–208
regulating, 101
remittances, 43
See also G-Cash (Philippines); Vodafone
in Kenya
Models
banking correspondent (agent), 67–71,
73–75, 95, 172–173
Banco Bradesco, 188–192
bank “downscaling,” 57–65
ANZ Bank, 261–265
Banco Pichincha, 181–187
microfinance investment, 81–91
BRAC (Bangladesh), 239–244
Compartamos Banco (Mexcio)

245–251
Sequoia Capital (U.S. and India),
252–257
service company, 62–64, 183–187
MoneyGram, 32
Moneylenders, local, 5–6, 8, 12–13
Money-transfer organizations (MTOs), 42–43
Moody’s (ratings), 85
Mor, Nachiket, 48–50, 55
Morgan Stanley, 83, 135
Mozambique, 6–7, 9
M-Pesa (Kenya), 117, 204–208
MTN Banking (South Africa), 117
Multinational corporations (MNCs), 11–12
The Mystery of Capital (de Soto), 9–10
National Credit Regulator (South Africa),
98–99
National identification systems, 106
Netherlands
ABN/AMRO Bank, 146–147, 159–161
FMO Bank, 161, 242–243, 256
microfinance investment vehicles (MIV), 129
See also Triodos Bank
Nicaragua, 102, 154, 274–275
Nigeria, 12, 106
Nike Village Development Project (Thailand),
142–143
Nnawuba, Stephen, 274
Nokia (Finland), xv, 144–145
Noncash fund transfers, 121–123

North America. See specific countries
NTT DoCoMo (Japan), 117–118
Oikocredit, 130
Old-age security, 33
Omidyar Network, 124
One Laptop per Child, 12
Opportunity International, 33, 76, 113–114
Ortega, Daniel, 154
Otero, María, viii
Overlending and overindebtedness, 106,
151, 157
See also Subprime lending
Overseas Private Investment Company, 83, 89
Pacific Credit Rating, 133
Pacific Islands. See ANZ Bank (Asia-Pacific)
Pakistan, 68, 162
Partnering, 30
agent network challenges, 73–74
banking correspondent (agent) model,
67–71, 95, 172–173
bank-retail partnering and delivery, 66–76
case studies
ANZ Bank and UNDP, 54, 261, 264
Citigroup, 175–180
G-Cash (Philippines), 209–216
Vodafone and Faulu, 54, 204–208
combination models, 72
financial service products, 30
founding banks, 71–72, 196–199
in-store banking model, 69–70

marketing challenges, 73
with MFIs, ICICI Bank (India), 169–170
partner-agent models, 67–71, 73–75, 95,
172–173
remittances, 43
social responsibility in financial services,
144–145
transaction cost reduction, 22–23
Patillo, Bob, 88
Payday lending, 153–154
Payment systems, 120–123
PayPal, 130
Pension funds, 129
Pensions, financial service product gaps, 33
Performance. See Return on equity
Person-to-person lending with Kiva, 129–130
326 • Index
Peru
banking correspondent (agent) model, 68, 71
Delia’s story, 4–6, 9
housing microfinance, 29
informal sector, 4–5
See also Mibanco (Peru)
Philanthropic approach to microfinance
Calvert Foundation, 130
Citibank Foundation, 175
Equity Foundation, 268–270
Gates Foundation, 31, 140
Grameen Foundation, 162–163
ICICI Bank Foundation for Inclusive

Finance, 173–174
Philippines, 13–14, 101, 117, 119
See also G-Cash
Point-of-sale (POS) devices, 72–73, 112,
114–115
Political risks, 96, 101–102, 132
Population and Community Development
Association (Thailand) (PDA), 143
Porter, Michael, 141
Portfolio risk analysis software, 124, 241–242
Postal banking. See Banco Bradesco (Brazil)
Prahalad, C. K., xiv–xv, 9–10
Predatory lending, 149, 152–155
Prepaid cards, 23, 44, 76, 113, 221
Pricing transparency, 152–155, 157, 228, 250–251
Principles of Consumer Protection in
Microfinance, 155, 157
Private sector
amounts invested, 78–79
private credit bureaus, 107–108
private equity instruments, MFI investment
models, 87–90
private payment systems, 120–121
Proconsumer policies. See under Clients
ProCredit Holding, 85, 88–89
Procter & Gamble, 11
Products. See Financial service products
Profits, short-term, as private sector benefit, xv
See also Return on equity
ProFund, 86–87, 129, 133, 136

Progress out of Poverty Index (PPI), 162–163
Public sector
credit bureaus, 107–108
enabling environment, 95–98
public payment systems, 120–121
Purchase financing, 16
Quality of service, as proconsumer principle,
157
Rahman, Ray, 241–242, 244
Randomized control trial (RCT), 164
Ratings
capital market building, 126–127, 131–133
of microfinance investments, 83, 85
social assessment, 163
Real Microcredito (Brazil), 146–147
Regulation
antiterrorism, 99–100
banking correspondent (agent) model,
67–71, 95, 172–173
enabling environment, 97–101
financial industry building, 26
interest rates, 97–98
licensing rules, 97
mobile phone banking, 100–101, 215–216
Remittances
Banco Azteca (Mexico), 199
Citi Microfinance Group, 179–180
commercial banks, 41–43
G-Cash (Philippines), 213–214, 216
technology, 44

Renewable energy loans, 32–33
Reputation risk, consumer protection, 148, 153,
155–156
Research, 9, 30, 164, 173
See also Social metrics
Retail
Citi Microfinance Group, 178–180
electronic payment systems, 121–123
founding banks, 71–72, 196–199
See also Partnering
Return on equity (ROE)
benchmarks, MFI performance, 78,
133, 276
capital market building, 133–136
double bottom line of CSR, 141, 189–191
long-term growth, as investor benefit, 78–81
Mibanco (Peru), 15
Risk and risk management
bank-retail partnering models, 68–69
currency, 84
flexibility, enabling environment
infrastructure, 99–100
immigration, 100
managing informality risk, 20, 24–25,
99–100, 104
microfinance service decision, 65
political risks, 96, 101–102, 132
reputation risk, proconsumer, 148, 153,
155–156
risksharing with Citi Microfinance

Group, 177
terrorism impact, 99–100
types of MFI investors, 79
Rural microfinance with G-Cash (Philippines),
212–213
Index • 327
Sachet marketing, 11
Safaricom, 205–207
Salesforce Microfinance Edition, 125
Santiago-Rivera, Isander, 247, 249–250
Savings accounts
Banco Azteca (Mexico), 198
Citi Microfinance Group, 178–179
depositors as MFI “investors,” 80
in developing countries, 13–14
financial service product gaps, 31–32
Scale, and capital market building, 134–135
School loans. See Equity Bank (Kenya)
Securitization of microloans, 85–86
See also BRAC (Bangladesh)
Seguros Mapfe (Spain), 76
Sekulula Card (South Africa), 223–224
Self-Employed Women’s Association (India)
(SEWA) Bank, 33
Sequoia Capital (India)
case study, 252–257
endpoints and references, 296–297,
313–314
international funding for, 51
investments by, 79, 86, 89–90

Serbia Central Securities Depository and
Clearinghouse, 120
Seresa (Brazil), 110
Service company models, 62–64, 183–187
Service gaps, identifying, 31–33
Service quality, as proconsumer principle,
157
Shampoo and related products, 11
Share Microfin Ltd. (India), 90, 170, 255
Simplification, microinsurance, 36
Sinha, Sanjay, 132
SKDRDP, 37–38
SKS Microfinance (India)
as case study, 252–257
investments by, 79, 89–90, 170
risk-sharing financing programs, 177
Small business credit scores, 107
SMART (Philippines), 119
Smart cards, 113–114, 223
Social assessment, 161–163
SOCIAL assessment framework,
ACCION, 163
Social metrics, 158–163
corporate citizenship indicators, 159–161
face-to-face client visits, 164
financial inclusion indicators, 161–163
Global Reporting Initiative (GRI), 159–161,
272–278
impact investing, 163–164
Progress Out of Poverty Index, 162–163

qualitative vs. quantitative research, 164
randomized control trial (RCT), 164
social assessment, 161–163
socially responsible investing, 158–164
Social mission of MFIs, 132
Social protections of Equator Principles,
160–161
Social rating, social assessment, 163
Socially responsible investors, 77–79, 81
Kiva, 81, 129–130
Microplace, 81, 129–130
Triodos Bank, 272–278
Soetoro, Ann Dunham, 164
Software
for banking, 123–125, 226–230
for portfolio risk analysis, 124, 241–242
Sogebank (Haiti), ix, 53, 62–64, 183–187
Solar Electric Light Company (SELCO), 33
Solidarity Card (Dominican Republic),
221–223
Solorzano, Gabriel, 274
Sonali’s story (India), 7–9
South Africa
banking agents, 71
banking sector involvement, 13–14
CompuScan, 109
consumer lenders, 16
credit reference companies, 109
mobile phone banking, 117–118
MTN Banking, 117

National Credit Regulator, 98–99
overlending, 151
regulatory environment, 98–99
Sekulula Card, 223–224
Wizzit, 117–118
South America. See specific countries
Soviet Union, former, and credit bureaus,
230–233
Spandana (India), 170, 255
Stability vs. access, enabling environment,
99–100
Staffing, 157, 186, 189
incentives, 63
loan officers, 60–61, 183–184
Standard & Poor’s (ratings), 83, 90, 131–132
Standard Chartered Bank, 50, 135
Stone, Cynthia, 131–132
Strategic entry points
bank “downscaling,” 57–65
bank-retail partnering and delivery, 66–76
corporate choices, 47–56
insurance distribution channels, 74–76
328 • Index