'Serving financially excluded, transforming lives' article published in Business Today
  January 2014

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  'MICRO FINANCE THE ROAD AHEAD' article in Business Today
  06 January 2013

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   SHARE Microfin raises Rs 50 crore through NCD
   26 April 2010

Hyderabad: SHARE Microfin Limited (SHARE), one of the largest microfinance institutions in India, has raised Rs 50 crore through a private placement of 2-year non-convertible debentures (NCD). The issue, assigned an LBBB+ rating by ICRA on its long-term rating scale and placed with institutional investors, will be traded on the Bombay Stock Exchange.

“The listing of the issue on the stock exchange will not only provide SHARE greater capital market exposure but also ensure further assurance of the company’s transparency and governance standards,” said Mr Udaia Kumar, the Managing Director of SHARE. “The funds raised will also help further the company’s expansion plans.”

Standard Chartered Bank is the sole book runner and lead arranger of the issue. Complimenting SHARE on closing the transaction successfully, Mr Joseph Silvanus, Head, Development Organisations, Southern Asia, Standard Chartered Bank, said the transaction was in line with the Bank’s agenda of helping MFIs diversify their funding sources by facilitating access to the capital markets.

“Over the past year, we have successfully helped several leading MFIs raise an aggregate Rs 200 crore via NCDs,” Mr Silvanus said. “A heartening feature of the SHARE issue is its two-year tenure, compared to the one-year tenure of the previous issues. Given the importance of microfinance institutions in India’s economic development, Standard Chartered will continue to support these organisations in raising long-term funds at competitive rates through capital market structures.”

   SHARE Microfin raises Rs 100 crore Subordinated Debt from SIDBI
   05 April 2010

Hyderabad: SHARE Microfin Limited (SHARE), one of the largest micro-finance institutions in India, has raised Rs 100 crore by way of issuing eight-year unsecured, redeemable Non-Convertible Debentures (NCDs) on a private placement basis, the first of its kind in the industry. ICRA has already assigned LBBB rating to this long-term debt instrument. The debentures, issued in dematerialized format, would be listed on the Bombay Stock Exchange (BSE).

The entire issue of 1,000 redeemable, transferable, unsecured, Non-Convertible Debentures of Rs 10 lakh face value each, aggregating to Rs 100 crore have been subscribed by Small Industries Development Bank of India (SIDBI), the country’s premier financial institution for small and medium enterprises and the microfinance institutions in India.

Announcing the development, Mr Udaia Kumar, the Managing Director of SHARE, said, “NCD issue is a relatively new avenue for microfinance institutions and the eight –year unsecured NCD issue is a significant event for SHARE Microfin Limited. As it is treated as subordinated debt, this instrument will qualify for Tier II capital of the company. This will also address the growing debt and capital needs of SHARE. The new funding channel will diversify the funding sources for SHARE and will provide further exposure to the capital markets.”

   SBI sanctions Rs 200 crore for SHARE Microfin Limited
   22 March 2010

Hyderabad: For the very first time in the MFI sector, State Bank of India (SBI), the country’s largest commercial bank in terms of profits, assets, deposits, branches and employees, has sanctioned a term loan of Rs 200 crore for SHARE Microfin Limited (SHARE), one of the oldest and largest microfinance institutions in India, for its on-lending operations in Chhattisgarh, Madhya Pradesh, Maharashtra, Karnataka, Tamil Nadu and Andhra Pradesh. This is for the first time SBI has sanctioned a term loan of this size to any microfinance institutions in India. The term loan would help SHARE promote the agri, animal husbandry, micro, small & medium enterprises and cottage industry structure providing alternative and additional income to a large number of poor women in these states.

Announcing this landmark transaction, Mr Udaia Kumar, the Managing Director of SHARE, said, “SHARE is the first to get such a big amount from the State Bank of India group and also from a public sector bank. This is a significant event for the company. This would certainly help SHARE in its efforts to reduce poverty, thereby pulling out millions of people from Below Poverty Line.”

Cash Management Services

In addition SBI has offered to provide integrated Cash Management Services (CMS) to SHARE, initially to its 50 branches spread across the country. Through an Internet banking platform, the CMS would seamlessly network with these branches. This breakthrough facility would help SHARE manage the cash flows in a more efficient way. The integrated online CMS would also strengthen the MIS and facilitate the bank reconciliation process as bank balances would be available at a click. SHARE already has ‘stand alone’ accounts with more than 300 SBI branches in rural areas, which would be integrated into the CMS network soon.

“As most of the disbursements and collections are done in cash, robust and efficient cash management system is crucial. Cash movement is always a great risk and the CMS facility is a tool for mitigating this risk and improving the efficiency and controls of the system,” said Mr Udaia Kumar.

   London Mayor, Mr Ian Luder visits SHARE
   19 October 2009 - Business Line

Muminpet (Medak Dist): “Why many in India continue to live in poverty when the United Kingdom is rich and developed?

“Why the English people are fair/red in complexion when compared with their Indian counterparts?

“Are you going to give us more money?”

These were some of the questions that were posed to Mr Ian Luder, Lord Mayor of the City of London, during his visit to SHARE Microfin woman loan clients at Muminpet in Medak district on Monday.

While the Mayor had no answer for the first question, he gestured upwards to the sky showing the sun replying that climate had a role in shaping the complexion of a person to the second.

Being the most ‘unlikely’ guest at a centre where the women clients of the Hyderabad-based company were meeting, Mr Luder attempted to know the nature of spending of the loans and the positive impact it made on the lives of the rural women and their families.

“Four years back, I took a loan of Rs 3,000 and purchased two goats. Now, I own three acres of agricultural land,” Ms Mangalamma, a wage labourer, who earns Rs 70 a day in agricultural season, told the Mayor in Telugu which was translated into English by Mr Udai Kumar, Managing Director, SHARE Microfin.

The Mayor enquired whether there was a bank in the village. “It is within one kilometre, but nobody there was willing to give a loan to us,” was the answer by Ms Lakshmi, who runs a grocery store.

Making a presentation on the operation of micro finance, Mr Udai Kumar said the company did not lose a ‘single rupee’ in the last 18 years due to the effective implementation of the programmes and the customised loans which were being offered. “The banks are not willing to give loans to these women. We focus on human relationships and extend finance to the 40-member groups in a phased manner,” he said.

When asked on the rate of interest, he said: “We are charging 23.6 per cent. The cost of funds is 14 per cent and operational costs are at 8 per cent.”

Later, speaking to Business Line, the Mayor said UK might replicate the microfinance model to take care of the financial needs of the poorer sections.

“The MFI model, as is being implemented in India, is quite impressive. In the UK too, there would be some situations where micro finance can be vital in some areas where poor people are living,” he added.

   Highest MFI rating for SHARE
   03 August 2009

Hyderabad: SHARE Microfin Limited has been assigned MFI 1, the highest grading (on a five-point scale from MFI 1 to MFI 5 with MFI 5 being the lowest) ever issued to a microfinance institution in the country. The rating, carried out by Credit Analysis and Research Limited (CARE), a premier rating agency, has assessed the operational and financial capability of SHARE to undertake and sustain the targeted level of operations under a four-point framework of transparency, operational set-up, scale of operations and sustainability.

Mr Udaia Kumar, the Managing Director of SHARE, said, “The highest rating assigned to SHARE for the current year is a recognition that was long overdue. Apart from providing greater comfort to the existing funders, the highest rating will help SHARE reach the mainstream financial market through innovative structured products such as securitisation, non-convertible debentures and buy-outs.”

In another significant development, ICRA Limited, an associate of Moody’s Investors Service, has upgraded the existing pool rating of SHARE from A2+ (SO) to A1 (SO). This would further enable increased access to the capital markets and adequate funds to provide financial services to those sections of the poor who have no access to mainstream banking services.

   SHARE Microfin Inks First Rated Loan Assignment with YES Bank
   21 March 2009

Hyderabad: SHARE Microfin Limited successfully executed a unique rated loan assignment transaction of Rs 49.34 crore with YES Bank on 21 March 2009. With YES Bank, India’s new age private sector bank, as the exclusive financial adviser, manager and arranger, the transaction involved rating identified loan receivables from micro clients, numbering around 104,000 borrowers, with an average loan size of Rs 4,700. The transaction has been rated A2+ (SO) by ICRA Limited (an associate of Moody’s Investors Service).

Elated over the development, Mr Udaia Kumar, Managing Director of SHARE said, “Such types of structured credit products would enable increased access to the capital markets and adequate funds to provide financial services to those sections of the poor who have no access to mainstream banking services.” SHARE, one of the largest and innovative microfinance institutions with more than 1.8 million clients spread over 16 States in India, has made a total disbursement of Rs 5100 crore with an outstanding portfolio of Rs 1100 crore. “SHARE has plans to reach out to more than 15 million clients in 20 States with a total disbursement of Rs 39,610 crore in the next four years,” Mr Udaia Kumar added.

Somak Ghosh, Group President - Corporate Finance and Development Banking of YES Bank said, “YES Bank takes great pride in partnering with SHARE in creating a milestone in the development of microfinance market. This is in continuation of our efforts to open up new avenues of finance through the use of Sophisticated Structured Transactions. Till now, the Indian MFIs have been relying heavily on simple term loans to fund their growth. Now they have become large and sophisticated enough to potentially engage structured credit products. From a long-term perspective, this transaction is also likely to stimulate demand for more innovative financially structured products in the sector.”

   ICRA assigns LBBB and M2 grades to SHARE
   10 March 2009

Hyderabad: As per the Basel II guidelines of the Reserve Bank of India, ICRA, one of the premier rating agencies in India and associate of Moody’s Investors Service, has assigned the grade of LBBB to the Rs 1185 crore long-term bank limits of SHARE Microfin Limited, indicating moderate credit quality rating. The agency has given A2 rating to the Rs 15 crore short-term bank limits of SHARE, showing the above average credit quality rating against short-term debt instruments.

ICRA has assigned the grade of M2 on the scale of M1 to M5 to the microfinance operations of SHARE. M2 is the highest grade assigned to any microfinance institution so far. The grading shows that the ability of SHARE to manage its microfinance activities in a sustainable is very high.

   SHARE crosses Rs1000 crore outstanding portfolio
   8 Feb 2009

Hyderabad: SHARE MICROFIN LIMITED has crossed an outstanding portfolio of Rs 1000 crore, marking a new phase in its two decades of growth in the microfinance sector.

Commenting on this magnificent growth during a recent Bankers meet, Mr. M. Udaia Kumar, Managing Director, SHARE said, “It is a significant moment for us at SHARE to have crossed the Rs 1000 crore mark. With a current clientele count of more than 1.75 million across 16 states in the country and a cumulative disbursement of Rs 4,787 crore , SHARE will now focus on achieving a target of reaching 15 million clients with a total disbursement of Rs. 67,387 crore by 2012-13.”

Mr Udaia Kumar sought the bankers continued assistance in meeting this ambitious target and further added, “Banks should come forward to support microfinance institutions in reaching out to the poor sections in society, thereby sharing our social commitment.”

Mr Udaia Kumar said the Board was in the process of strengthening the senior management and the middle management. Deloitte is conducting a study on the organisational structure of the company. He informed that the pilot phase of health insurance services for the clients in Maharashtra, Madhya Pradesh and Chhattisgarh has been successful and the company plans to spread this programme to other states of the country as well.

   ‘Udyog Rattan Award’ and ‘Award of Excellence’ conferred on SHARE
   17 July 2008

New Delhi: Dr M Udaia Kumar, the Managing Director of SHARE Microfin Limited (SHARE), has been conferred the ‘Udyog Rattan’ Award in recognition of his outstanding performance in the field of Micro-finance and Socio-economic Development of the country.

SHARE, a premier microfinance institution serving the poor across India for the past two decades, has also been conferred the “Excellence Award” for its excellence in productivity, quality, innovation and management.

The awards were given away by Dr Blaram Jakhar, the Governor of Madhya Pradesh and Dr Bhishma Narayan Singh, the former Governor of Tamil Nadu and Assam in New Delhi on 17 July 2008.

The Udyog Rattan Award and the Award for Excellence are conferred every year by the Institute of Economic Studies, an organisation established in New Delhi in 1980 to study and promote various aspects of the economy and economic development in India.

   Call for united global initiative to reduce poverty
   11 July 2008

Johannesburg: All the stakeholders involved in alleviating poverty programmes should come together and work to achieve the objective of poverty reduction, according to Mr M Udaia Kumar, the Managing Director of SHARE Microfin Limited.

Delivering a paper on ‘Banking on Africa’s growth and untapped potential’ in Johannesburg on 8 July 2008, Mr Udaia Kumar said, “Microfinance institutions in India are facing capital constraints and none of them are licensed to accept savings deposits not even from members. The investors are limited in number and there is no sustainable legal form that encourages the growth of microfinance.” He hoped that the proposed Microfinance Act, which is expected to be approved by Parliament of India, should help solve some of the key problems faced by MFIs today.

The summit was organised to discuss on banking in Africa and the untapped potential it holds, along with conferences on ‘Banking the Un-banked’, Retail Banking and Risk Management’, ‘Payments and Transactions’. The participants included 42 industry leaders representing 17 countries, including India and China.

   SHARE signs pact with UAE Exchange to offer International Money Transfer Services: Xpress Money & Money Gram
   31 March 2008

Hyderabad: SHARE Microfin Ltd, one of the largest Microfinance Institutions in India, has entered into an agreement with UAE Exchange & Financial Service Ltd to offer International Money Transfer Services: Xpress Money and Money Gram through its extensive network of 457 branches. SHARE is built upon the vision to improve the quality of life of the poor by giving them access to financial and support services. SHARE is more focussed on rural regions of the country and offering Money Transfer service would be a boon to the its clients.

This is an innovative model, as it supports the network expansion plans of Xpress Money & Money Gram in India as well as enables SHARE to enrich its services. The association brings together two diverse leaders in their specialised fields to offer Xpress Money & Money Gram services through the branches of SHARE all over India, thus contributing greatly to its customer convenience. Customers can now walk in to any of the branches of SHARE to receive money from abroad, including countries from Middle East, the United States and the United Kingdom.

   Investment by Legatum and Aavishkaar-Goodwell to Support SHARE's Growth
   15 May 2007

Hyderabad: Legatum and Aavishkaar Goodwell announce a landmark equity investment in SHARE Microfin Limited, India's leading microfinance institution. Legatum, a private firm that invests in capital markets and in initiatives that support human and social development, will invest US$ 25Mln acquiring a majority stake in SHARE. The India-focused microfinance development company Aavishkaar Goodwell will invest US$ 2Mln in SHARE. The investment represents the largest equity investment to-date in the global microfinance sector.

Udaia Kumar, Chairman and Managing Director of SHARE Microfin Ltd., said that the transaction exemplifies the important role that experienced global investors will play in helping to develop the microfinance industry.  According to Mr. Kumar, SHARE is now ready for the next stage in its growth. Mr Kumar welcomes the global experience and vision of Legatum and the business experience and on the ground presence of Aavishkaar Goodwell's team.

Mark Stoleson, President of Legatum, said "SHARE is at the forefront of the transformation of the sector in India and is an excellent example of how well-run businesses are able to deliver social solutions that are both scalable and sustainable. With over a million clients across 8,000 villages, SHARE has already established itself as India's leading microfinance institution. Along with Aavishkaar Goodwell India Microfinance Development Company, we will seek to support SHARE in setting new standards for best practices and governance, while providing high quality financial services to the unbanked in India."

Mr Vineet Rai, who leads Aavishkaar Goodwell's team in India, said "The track record of Mr Udaia Kumar and his team is impressive. That Mr Kumar welcomes us on board is a clear recognition of our strategy to provide hands-on support to fast growing organizations such as SHARE and help them integrate into the mainstream. We believe SHARE has a bright future ahead and will be leading the field as the sector in India is growing very rapidly and becomes more mature."

   Interview of Mr. Udaia Kumar with

This is an excerpt of Mr. Udaia Kumar’s interview with Mr. Kumar is the Chairman and Managing Director of SHARE Microfin Limited.

   How did SHARE enter into Micro Finance?

Initially, when I was exposed to reasons for poverty in the country, I found that literacy, education, health, income generation and self governance are the major issues that needed to be tackled to address the problem of poverty.

Then we analyzed the situation very carefully, we found that the Government is not expected to give the capital, it was considered as the job of the commercial banks. When you look at the commercial banks, you see that the design of the banking system is such that whoever has some sort of an asset base gets the access to the loans provided by these banks. This means that 40% of the population in this country that is poor and doesn't have an asset base is deprived of getting access to this working capital.

It is only the big and the rich strata which avail of this capital and are able to multiply. Moreover this deposit comes from public deposits i.e. this is public money which is used by only 60% of the population but balance 40% doesn't have access. On one hand, the government has been spending on training but they are unable to link the commercial banks with these training programs and I wanted to address this gap.

For this I did a study and I realized that financial services can be provided even without collateral provided you are able to develop the techniques and the appraisal system. If you study a money lender, he gives a loan to others but he doesn't take any collateral. So the individual to individual borrowing takes place but if you are able to institutionalize it, you have succeeded. This is how the initiative of SHARE was born.

   SHARE was started as a not for profit entity, today SHARE Microfin Ltd is a Public Limited Company.
   Are these two different entities or they are same. If two different entities, they why? And what is the role of each one?

In the year 1989-90, I did some kind of a study and then came out with an action research project in terms of SHARE which was an NGO. So when I started out with this project, the main aim was to try out the idea of providing financial services to poor people without collateral. At that point of time I don't think any microfinance project existed in this part of the world. It was present in Bangladesh but was not widely known. I started it in the form of an ngo, as I realized that the action research project , we were very careful as I had borrowed Rs 18 lacs and NGOs were not used to borrowing money when free grants were available. Nobody believed me initially when I said that I was borrowing 18 lacs from the bank and lending the money to the poor to improve their quality of life. Moreover there was no prior model in this country in which you give borrowed money to poor people and recover it back. But I was confident as I had studied every aspect and I was sure that this action project would succeed.

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