SKS and Citi announce $40 Million (Rs.180 crores) rural microfinance
program
Partnership establishes Sector precedents
Hyderabad -
May 09, 2007
SKS Microfinance and Citibank today announced a $40 Million
(Rs.180 crores) groundbreaking financing program involving Citibank
India purchasing loans that are originated by SKS. Representing
Citibank�s increased foray into rural microfinance, the program will
deliver income-generating loans of between $120 (Rs.5,000) to $485
(Rs.20,000) to a population of over 200,000 unbanked customers
spread across 7000 villages in 11 States of the country by financial
year 2007-08. The partnership combines SKS� robust customer
acquisition and management model with Citi�s extensive experience in
financial structuring for microfinance institutions, networks and
investors in emerging markets to fulfill a shared objective of
greater financial inclusion and poverty alleviation through
commercially viable and sustainable lending programs.
The highlight of the Citi-SKS agreement is in the fact that each
individual loan originated by SKS is purchased by Citibank which
shares credit risk in the transaction. Grameen Foundation (GF), as
part of its global USD 50 million Growth Guarantees program launched
in late 2005, will provide a limited guarantee to SKS and be an
integral element of the innovative risk-sharing structure. This
global guarantee program recognizes and responds to the needs of
growing microfinance institutions in India, such as SKS, and
encourages sector participants to expand their portfolio and
presence through expanded access to local banking finance.
Vikram Akula, Founder and CEO of SKS, said, �We are pleased to
partner with Citibank in this ground-breaking initiative to bring
greater financial inclusion to India�s poor. The partnership will
enable us to provide increased economic opportunity to hundreds of
thousands of poor families across the country and move us closer to
our goal of scaling to 5 million families by 2010.�
The Citi-SKS program encompasses 49 rural branches of SKS in the
states of Andhra Pradesh, Karnataka, Madhya Pradesh, Maharashtra,
Orissa, Jharkhand, Uttar Pradesh, Bihar, Rajasthan, Chattisgarh and
West Bengal. Under the partnership, the origination and servicing of
loans will rest with SKS. SKS utilizes a five-member group
methodology, in which this group serves as the ultimate guarantor
for each of its members. As additional groups are formed within a
single village, a �center� emerges which is composed of up to 10
groups or 50 members. Center members also provide social collateral,
and are responsible for repayments if one member is unable to pay an
installment. SKS currently has approximately 650,000 clients, a
portfolio of $65 Million (Rs.301 crores), and has so far disbursed
$170 Million (Rs.770 crores) in 304 microfinance branches in the
states of Andhra Pradesh, Karnataka, Maharashtra, Orissa and Madhya
Pradesh, Bihar, UP, Rajasthan, West Bengal, Jharkhand, and
Chhattisgarh.
Speaking on the occasion, Robert Annibale, Citi's Global Director of
Microfinance, said, �SKS has demonstrated that providing financial
services to rural communities and microentrepreneurs in India can be
achieved on a sustainable and scalable basis. This innovative
financing structure provides risk participation and funding
diversification that will support SKS�s significant growth plans.�
Alok Prasad, Citi India�s business manager of the Bank�s
microfinance group, added, �As a prominent corporate citizen, we are
committed to the country�s larger developmental goals through
financial inclusion. Through this partnership, we strengthen our
vision of providing financial products and services to unbanked and
underserved segments with special financial needs such as
marginalized women and in making a positive impact on human
development indices.�
"Grameen Foundation�s Growth Guarantee program is central to our
vision of expanding financial services to poor families by
strengthening the relationships between microfinance organizations
and their local financial sector, and we are pleased to join with
SKS and Citibank in supporting this innovative transaction,� said
Alex Counts, president of Grameen Foundation. SKS has been a Grameen
Foundation partner since 2002.
About Citi�s Microfinance Group
The Citibank Microfinance Group works with Micro Finance
Institutions (MFIs) as partners and clients to expand access to
financial services and products to the �unbanked� in urban and rural
areas who are not currently reached by the formal banking sector.
The focus of the business group is to increase MFI access to
capital, develop capacities, and support the microfinance sector as
a whole. In addition to credit products, the Group offers innovative
savings facilities for first-time savers, including access to
biometric ATMs.
About SKS
Launched in 1998, SKS Microfinance is one of the fastest growing
microfinance organizations in the world with a growth rate of 170%
and 60,000 new customers per month. Recognized for its use of a
for-profit methodology, and application of business best practices
and technology to scale and reduce costs, SKS has provided over $170
Million (Rs. 770 crores) in income-generating loans to 650,000 women
clients in 11 states of India. SKS also offers life insurance to 1.3
million customers and has recently piloted health insurance for the
poor and urban microfinance for India�s thousands of slum-dwellers.
Its NGO affiliate, SKS Ultra Poor Program, is one of the first
programs in the country focused on bringing ultra poor populations
into the realm of mainstream microfinance.
About Grameen Foundation
Grameen Foundation is a global non-profit organization that combines
microfinance, technology, and innovation to empower the world's
poorest people to escape poverty. It has established a global
network of partners in 23 countries that has impacted an estimated
16 million lives in Asia, Africa, the Americas, and the Middle East.
Grameen Foundation was founded by Alex Counts, who began his work in
microfinance with Grameen Bank founder, and 2006 Nobel Peace Prize
Laureate, Dr. Muhammad Yunus. Dr. Yunus is a founding and current
member of Grameen Foundation�s board of directors. For more
information on Grameen Foundation, please visit
www.grameenfoundation.org.
Citi
Citi, the leading global financial services company, has some 200
million customer accounts and does business in more than 100
countries, providing consumers, corporations, governments and
institutions with a broad range of financial products and services,
including consumer banking and credit, corporate and investment
banking, securities brokerage, and wealth management. Citi�s major
brand names include Citibank, CitiFinancial, Primerica, Citi Smith
Barney and Banamex. Additional information may be found at
www.citi.com.
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