Citigroup enters China Microfinance

Courtney

Commercial Banks & Microfinance? In China?

While its a surprise to see banks entering the China microfinance sector, its no surprise that Citigroup is the US bank leading the charge. Citi Foundation has long been involved in China microfinance - funding various MF initiatives and programs across China. We are excited about this large step towards the commercialization of microfinance in China through the integration of banks into the sector. We are even more excited that the bank leading that movement is Citigroup as they have a real understanding of the space, specifically in regards to China.

How does this affect Wokai?

It could potentially be big. These big commercial players are going after the low hanging fruit, mainly the productive microfinance organizations that are getting involved in large size loans almost microenterprise size, well beyond the average Wokai loan size of $300. They are not going after the poorest of the poor who live in remote rural areas and need loans ranging from $150-500. Therefore Wokai is still in business serving those compeletly left out of the loop.We still have a mission to provide the 200,000,000 people living below the poverty line with access to financial credit. IN addition, the commercialization fo the sector can only mean good things for Wokai on the financial and legal side. One day - sooner rather than later - Wokai might be able to offer 100% of the loan back to contributors for removal from their Wokai account. Right now, contributors can only reallocate that money. it will be great to allow them the same benefits as on Kiva - a full 100% reimbursement.

See article below:

Citigroup Inc, the largest US bank, said yesterday that China's banking watchdog has approved its plan to open two microcredit firms in Hubei province, tapping the nation's vast rural market.

Citigroup, the first overseas lender allowed to establish such institutions in the country, plans to set up the two firms in Gong'an county and the city of Chibi, which are scheduled to open in the next few months.

The move comes as major rivals including HSBC and Standard Chartered are opening rural outlets in order to expand in the nation's underdeveloped regions and the government is relaxing controls on private financing to support thousands of small and cash-strapped manufacturers.

Citigroup, which has eight branches and 20 sub-branches on the mainland, was one of the first locally incorporated foreign banks in China. The financial giant, which has a stake in Shanghai Pudong Development Bank as well as de facto management control of Guangdong Development Bank, said Gong'an and Chibi have tremendous lending needs due to their rapidly developing agriculture and robust economies.

"We feel very excited and proud of being allowed to set up the microcredit firms," said Citi China CEO and Chairman Andrew Au. "It's a very important new element in the process of Citi's operation and investment in China. We deeply understand the urgency to expand finance services in China's rural areas, a goal we believe could be achieved by the mode of setting up microcredit companies."

See: http://www.chinadaily.com.cn/bizchina/2008-10/08/content_7086453.htm

Comments

[Joel]

I came across your site while reading the Crossroads blog. I saw in your bio section that you both met while studying at Tsinghua University. Was that the IUP program?

[Drs Ronnij Jansen]

Hi thre i will start also a found in China . At the moment i be in shanghai with my becomming wife. So can you give me some information Drs Ronnij Jansen Private Investigator Atty