NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, May 9, 2013

Between 2006 and 2010, a lot of funds from private equity (PE) and venture capital (VC) poured into microfinance, and the subsequent pressure to grow saw companies in the sector commit many excesses and indiscretions while dealing with poor borrowers. “Microfinance did not have a self-regulatory body. We’ve seen the problems,” says Rai. “Being accountable is a good thing, especially being accountable to ourselves.”

IIIC has nine leading impact investors as its founding members. These include Aavishkaar, Omidyar, Elevar Equity and Unilazer Ventures, the family office of Ronnie Screwvala. “This council will differentiate us from regular PE/VC players because we make high-risk investments,” says Rai.

The council expects to form a charter and have 30 members by end of the year. Prominent in the list of potential members are large developmental finance institutions (DFIs) like DFID, USAID and IFC. “We will come in. No harm in supporting the council,” says Anil Sinha, regional head, advisory services, South Asia, IFC. “It’s a good idea.”