Presentations & Unpublished Papers
Development of Rural Financial Services: Asian Experience on Government Interventions
Rural financial services - defined as provision of financial services for rural farm and non-farm population at all income levels - have an important role to play in inclusive rural development. Virtually in all developing Asian economies, the demand for rural financial services is large but there remains a large gap between this demand and the supply from formal and semi-formal sources. Most Asian governments have attempted to reduce this gap through a variety of ways. These include establishment of new state-owned institutions, directed credit programs, provision of concessional refinancing facilities to state-owned financial institutions for onlending to rural people and ceilings on interest rates on rural loans. Other measures include mandatory requirements on opening rural branches and debt forgiveness or loan write-offs. With the paradigm shift in rural finance from state-driven to market-based rural finance, a few countries have adopted a different approach to increase the supply of rural financial services. The government intervention measures may be grouped under two broad categories: conventional measures under the old paradigm and constructive measures under the new paradigm.
Nimal A. Fernando, Practice Leader for Microfinance, made a presentation at the Asia-Pacific Finance and Development Center in Shanghai in a rural finance training program (19 - 23 November 2007) for Chinese provincial government officials, focusing on both type of measures and discussed their outcomes on the structure and performance of rural financial markets. The presentation concludes that most conventional measures of government interventions have produced negative outcomes while constructive measures have produced remarkably positive and sustainable outcomes.
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Banking at the Bottom of the Pyramid
The Asian Development Bank (ADB) co-sponsored, with Calmeadow Foundation, Citi Foundation, Consultative Group to Assist the Poor, and the International Finance Corporation, the Conference on Banking at the Bottom of the Pyramid on 20-21 September 2007 at the ADB Headquarters in Manila.
The conference encouraged discussion among the best experts and practitioners on the significance of bank downscaling or banking at the bottom of the pyramid. Downscaling is one of the most interesting developments taking place in the commercial microfinance industry. The conference participants were able to familiarize themselves with business strategies at the bottom of the pyramid including success factors for bank downscaling and adaptation of bank systems and lending procedures. Particpants also learned from the lessons of experience from Asia, Africa, and Latin America and assessed opportunities and issues facing banking at the bottom of the pyramid.
Please see various presentations of conference resource speakers as well as the welcome remarks from Mr. H. Satish Rao, Director General, East Asia Department of ADB.
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Modern microfinance industry has achieved a remarkable progress during the last two decades. However, diversification of services in the industry has been relatively limited and much of the progress has revolved around the provision of credit facilities. This credit focus has come under increasing criticisms in recent years because most empirical studies conclude that the demand for financial services among the poor and low-income households are characterized by a high degree of diversity and the mismatch between the diversity of demand and the narrow focus of the industry on credit tend to limit the potential impact of the industry on the socioeconomic welfare of the clients. The studies suggest that poor and low-income households in particular demand products and services that can address their risk management requirements. In the absence of such products and services, they rely on informal mechanisms including insurance substitutes. In this context, microinsurance has attracted significant attention in recent years.
The Asian Development Bank (ADB) held a regional workshop on Microinsurance
Sector Development in Colombo, Sri Lanka in 28-29 June 2007. The workshop was
organized in association with the Insurance Board of Sri Lanka. Nimal A. Fernando,
Principal Finance Specialist (Microfinance) and Editor of the ADB's quarterly
microfinance newsletter, Finance for the Poor , made a presentation
at this workshop to discuss major characteristics of microinsurance markets.
What are these characteristics? Find out from his presentation
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Modern microfinance industry has grown rapidly during the last two decades. Most flagship microfinance institutions, such as BRAC, Association for Social Advancement, Grammen Bank, ACLEDA Bank, Spandana, Share Microfin and SKS Microfinance in Asia and Compartamos and Mibanco in Latin America have reported dramatic growth rates. With the rapid growth, many aspects of the industry have changed significantly. However, many other aspects seem to continue. What has changed and what appears to continue?
Nimal A. Fernando, Principal Finance Specialist (Microfinance) and editor of the Asian Development Bank's Quarterly microfinance newsletter, Finance for the Poor, made a presentation at the Japan Microfinance Symposium held on 10 May 2007 at the Asian Development Bank Institute in Tokyo and addressed these questions. Read his presentation and paper to find out his views on this subject.
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The breadth, depth and scope of outreach of microfinance institutions(MFIs) have grown dramatically during the last two decades. With this growth, the industry has become increasingly complex, and risk profile of MFIs has significantly changed. MFIs that ensured their early growth through better credit and liquidity risk management now face a wide range of other risk, in addition. These include mission drift risk, foreign exchange risk, operational risks and strategic risks. What are the sources of these risks? What is the industry experience with losses due to inadequate risk management ? What progress have MFIs made in managing risks? What is the current state of affairs in relation to risk management in MFIs? What factors should MFIs take into account in improving risk management in general and management of risk associated with agricultural microfinance in particular?
Nimal Fernando, ADB's Focal Point for Microfinance, made a presentation on the captioned subject at the Regional Experts' Meeting on "Overcoming Obstacles to Agricultural Microfinance in Southeast Asia" held at the Heritage Hotel (Manila) during 1-2 March 2007. Find out from the presentation his observations and suggestions.
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Rural finance continues to play an important role in inclusive development in most developing countries. However, most rural finance institutions are faced with a range of financing problems and challenges. Marc de Sousa Shields, Director of SME and Capital Markets at the Enterprising Solutions Global Consulting, discussed with ADB staff these problems and challenges based on experience from Latin America, Africa, and Asia at a Brown Bag on Financing Rural Finance Institutions held on 31 January 2007. View his presentation
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Microfinance institutions can adopt different growth strategies. What are these strategies? What does empirical evidence indicate about implications of these different strategies? What are the ways in which these institutions can ensure sustainable organic growth?
Find out from the presentation that Nimal Fernando made at the workshop on Sustainable Development of Microcredit Institutions, held at Erdos in Inner Mongolia Autonomous Region of the People's Republic of China during 12-13 October 2006. Nimal Fernando is Principal Microfinance Specialist at ADB.
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The microfinance industry has grown and continues to grow. It has achieved a lot and has made significant contributions to poverty reduction. Although the industry has expanded in different dimensions, many challenges remain.
Find out from the presentation of Nimal Fernando, at the First Anniversary of ASA Philippines Foundation held in Manila on 9 July 2005. Nimal Fernando is Head of Focal Point for Microfinance at ADB.
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Is it correct to assume that poor households are not sensitive to microcredit interest rates? Conventional wisdom has been that they are insensitive to interest rates. But it seems that a fresh look at this view is needed. Do microcredit interest rates have to be necessarily high? Can the poor afford high interest rates? How can the rates be reduced?
Find out from the presentation of Nimal A. Fernando, at the ADBI-UNCDF-WB Microfinance Distance Learning Training of Trainers, held on 12 May 2005. Nimal A. Fernando is ADB's Lead Rural Finance Specialist.
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The microfinance industry has been changing. The changes may be
observed in concepts, vision, practice and opportunities. Although
the industry has expanded in different dimensions, it continues
to face many challenges. What are the changes in the industry? What
are the challenges facing the industry?
Find out from the presentation of Nimal Fernando, at the Microfinance Forum organized
by the Small Economic Activity Development, Incorporated (Philippines)
and held in Bohol on 3 July 2003. Nimal Fernando is ADB's Lead Rural
Finance Specialist.
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From 1992 until March 2003, at least 39 NGOs have been transformed
into regulated financial institutions in 15 countries. Of these,
23 are in Latin America, 15 in Asia, and 1 in Africa. Why are NGOs
transforming themselves into regulated financial institutions? What
have the transformed institutions achieved? Have they been able
to accelerate their growth and expand different dimensions of the
outreach? What are the current views on NGO transformations?
Find out more in Nimal Fernando's presentation
. Nimal Fernando is ADB's
Lead Rural Finance Specialist.
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According to Joseph Stiglitz, a Nobel prize-winner in Economics,
"the role of the government in financial market development is one
of the long-standing, and unresolved debates that has engaged economists
around the world." But this debate, until recently, has not covered
the issues relating to financial services for the poor, although
they are a majority of the population in most developing countries.
The scope of the debate, is fortunately expanding to include the
once neglected issues of the poor.
ADB's Lead Rural Finance Specialist, Nimal A. Fernando, discusses
this subject and provides his own reflections. Find
out what he has to say in his paper .
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