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Noticias de 2012
December 12, 2012


Tags: payment instruments, Latin America, Spain | by Álvaro Martín Enríquez
The TECNOCOM Report on Trends in Payment Instruments 2012 was presented yesterday. The Report was commissioned to Afi, Analistas Financieros Internacionales S.A., founding member of remEX.  

Let us start with a few “Highlights of the Tecnocom Report 2012” and an invitation to read the full document here.  



Over the past twelve months, some of the trends flagged in our first Tecnocom Report gained traction, while other new developments emerged. The intensity and scope of the changes being wrought by technological innovation, the effort being made by governments to foster the use of electronic payment instruments, the attempts by sector players to build a new mobile payments ecosystem and ongoing shifts in consumer preferences prompt the need to analyze where the industry is headed in Latin America and Spain. 

One of the issues most commented on by the executives working in the payment instruments industry across Latin America is regional financial development, often underpinned by significant support from the authorities. The launch of basic savings accounts and the switch from cash to electronic instruments for the settlement of government support (G2P) payments are two good examples of how the financial sector is reaching out to the masses. Retailers, meanwhile, have played a key role in extending the use of electronic payment instruments in several countries. At present we are witnessing migration away from private label cards to international payment gateways. 

Executives in the Spanish payments industry stress that despite the profound economic crisis engulfing the country, which is taking a toll on consumer spending and driving a reduction in the number of active cards, payments using electronic instruments continue to rise as the cash substitution phenomenon continues. This gradual shift is logical in a country that is highly banked and in which credit cards are more often seen as a payment instrument than as a financing tool. 

On both sides of the Atlantic, the executives interviewed believe that it will take several more years for NFC technology to take significant hold. However, many see contactless technology as a first step, and one that will be a reality in Spain in the near term and in Latin America in the medium run. Notably, even before NFC takes off, we are witnessing a race by all sorts of players (international payment brands, telecommunications operators, banks, Internet companies) to launch e-wallets. Against this backdrop, it is hardly surprising that the executives interviewed for this report highlighted the importance of newcomers to the market, which include recently-created brands such as China Union Pay, the Chinese market leader, which has also been flexing its muscles in broader Asia of late. 

One of the trends common to all the countries analyzed, particularly Spain and Portugal, is the significant decline in the use of checks, the most expensive non-cash instrument from a processing standpoint. The gradual decline of the check contrasts with the dynamic growth in credit transfers, which have achieved notable prominence. In fact, credit transfers accounted for 77.9% of total payment transactions by value (USD9.38 billion) in Latin America in 2011. This growth has been largely powered by the development of automated clearinghouses (ACH) that process the electronic fund transfer orders placed by the banks or their clients, natural and legal persons alike. Growth in direct debits, however, has lagged; this form of payment barely surpassed USD21 billion in 2011.




Analyzing these payment transaction figures by volume reveals that cards take precedence, being used in more than half of electronic transactions (specifically 59.2% for the six Latin American countries analyzed). This phenomenon is attributable to growth in card usage but also to an increase of cards in circulation, particularly in Brazil.

The most important factors contributing to this surge in Latin America include growth in employment and GDP per capita, a growing culture of finance among lower-income earners, driven by the efforts and campaigns conducted by governments, banks and retailers, and the progress made on financial inclusion. On the latter front, countries such as Brazil, Colombia and Mexico have championed noteworthy and large-scale initiatives to ensure that government transfers to households under various social welfare programs take the form of electronic payments.  

Read more

November 20, 2012

The Indian microfinance sector is back on track

Tags: India, microfinance | by Agustín Vitórica, Ambers & Co Microfinanzas


Author: Agustín Vitórica -  Ambers & Co Microfinanzas - remEX Founding member

The microfinance sector in India covered many front pages of international media in late 2010 and 2011 when Andhra Pradesh, the state that had been the hub for microfinance in India, imposed in an act tight regulations on micro-lending firms, citing usurious interest rates and the use of coercion to recover loans. Now, efforts from the Federal Government and the central bank are beginning to produce results and the sector is starting to grow again in a country where financial inclusion is tremendously needed. The Indian census released in March 2012 confirmed that 48% of the Indian population lacks access to financial services, which represents nearly 500 million people. So far, microfinance institutions are only serving 35 million people and except for the State of Andhra Pradesh, overindebtedness is practically non-existing according to data provided by the credit bureau High Mark.

The policy that is being implemented by the federal authorities has pivoted around three main areas:

  • A new regulatory framework: following the start of the Andhra Pradesh crisis, the Federal Government decided to set up a Committee to study all the issues claimed by the Andhra Pradesh government, called the Malegam Committee as the chairman of the committee was Shri Y H Malegam, a senior member on the Reserve Bank’s Central Board of Directors. The Malegam Committee issued in January 2011 a report with recommendations to the Reserve Bank of India (RBI) that would result in a new regulatory framework for the sector. The recommendations where included in a new microfinance bill that has been tabled for approval in the Indian Parliament. In the meantime, the RBI has effectively implemented all the regulations that are included in the new bill in its 2011 and 2012 circulars. A new category of Non Bank Financial Companies (NBFC) has been created called NBFC-MFIs implying a strong support from the RBI to financial inclusion. In addition, the new microfinance bill will bring one important addition to the regulatory framework: it will reserve to the RBI the regulation and supervision of the microfinance institutions, not letting Indian States to issue new acts that affect the microfinance institutions.
  • Client protection: the new framework is very strong in client protection. The new bill and the RBI circulars impose caps to the maximum interest rates that microfinance institutions can charge their clients, caps on the maximum loan amount, caps on the client’s total permitted indebtedness and limits to the maximum tenure and the profit margin that the microfinance institutions can obtain.
  • Limit on the number of players: The Indian microfinance sector had an excess of players servicing the same clients that can result in overindebtedness. The limitation in the number of credits that one client can take along with the 10% margin cap imposed by the RBI to microfinance institutions will force consolidation in the sector and will push institutions to professionalize and centralize their internal credit processes as only large institutions will be able to cover all their operating expenses in the 10% margin cap that the RBI has imposed.
  • Strong microfinance credit bureau: an essential factor that caused the Andhra Pradesh crisis was the absence of a credit bureau where information was available for microfinance institutions about the number of loans already taken by clients and their credit history. Following the RBI regulations a strong microfinance credit bureau called High Mark is already in place. 98% of the NBFC-MFIs report already to the bureau, including both positive and negative information. Information shows that there are only 35 million unique clients and only 30-40% have more than one loan. The credit bureau is currently working to include information from the Self Help Group programs offered by the local state governments.

Ambers&Co Capital Microfinanzas team with Indian women clients in a recent trip to India

Ambers & Co Capital Microfinanzas team with Indian women clients in a recent trip to India.

As a result of all these changes, lending has returned to the microfinance institutions in India from commercial local banks and international microfinance funds. Additionally, international and national microfinance funds have joined forces to large international social investors and multilaterals to inject more equity in microfinance institutions. Both equity and debt funding are essential to finance the much needed growth of microfinance in India in order to extend financial inclusion among the poor Indian population.

October 10, 2012

XV FOROMIC: Responsible Finance, Green Finance and Flexible Finance

Tags: foromic, Latin America, microfinance, responsible finance, green finance | by microfinance, Latin America and the Caribbean, FOROMIC, responsible finance

We would like to share with all of remEX members, observers and friends the main conclusions that

September 28, 2012

A Warm Welcome to the Spanish Microfinance Network ¿ REMEX

We are happy to have contributed to the creation of this space for meeting, sharing, coll

Initiative financed by: Initiative financed by AECID
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