Thumbs up, thumbs down for Microfinance

Thumbs up: Obopay and Grameen Solutions partner together to provide microfinance services to clients. The initiative will be called the “Bank A Billion Initiative.”

The premise of the project is to provide access to basic financial services through cell phones, reducing the need for costly personal contact between financial institutions and their customers. The initiative hopes to take advantage of the rapid spread of cell phones in developing areas, especially in areas without access to microfinance services.

Thumbs down: Hot off the heels of their decision to stifle mobile banking services, the RBI has now increased the capital adequacy requirements for MFIs, which have concerned many of them in the field.

The Reserve Bank of India (RBI) recently tightened capital adequacy standards governing microfinance institutions (MFIs) in India, and several local MFIs worry the change may lead to the need to raise additional capital and increase interest rates.