Deutsche Bank was the first global bank to establish a socially motivated microfinance fund more than a decade ago. Our activities in the microfinance sector are led by the Community Development Finance Group as part of the Bank's overall Corporate Social Responsibility commitment. We provide loans, investments and limited philanthropic grants to the microfinance sector towards the goal of enabling the poor throughout the developing world to access credit for self-employment as a poverty alleviation strategy. We have served over 120 microfinance institutions (MFIs) in 50 countries over the last decade, with $215.5 million in capital benefitting as many as 2.8 million poor entrepreneurs. While India is one of the largest potential markets for microfinance, Deutsche Bank currently does not have any loans to microfinnce institutions there due to the rapid commercialization of the sector and concerns with pricing of the loans to poor clients.
Deutsche Bank is not active in the microfinance sector as a commercial activity to realize financial gains for the bank. However, Deutsche Bank recognizes that the success of microfinance depends upon its ability to utilize business discipline and financial techniques to achieve the goal of scale and sustainability in serving the financial needs of the un-banked poor. Deutsche Bank has developed social scorecards through which it judges the social intentions and the extent of social framework of MFIs in its underwriting. Deutsche Bank's MFI clients must meet standards of good governance, transparency, and interest rates that are reasonable within the country and regional context.
Over the last decade, Deutsche Bank has been a consistent advocate and voice in emphasizing the essential social objectives of microfinance and has used its leadership position to call attention to the sector's growing riskof aggressive commercialization. Some examples of our advocacy efforts are:
With more than half of the world’s population living on less than two dollars a day, there is an urgent need to alleviate poverty. Microfinance is a business approach to helping the poor build their way out of poverty, by providing the poor access to financial services, namely credit and a safe place for their savings. Microcredit, the extension of very small loans (microloans) to poor and low-income entrepreneurs who cannot access local traditional funding due to a lack of collateral, or a credit history, has proven to be a revolutionary model for enabling the poor to rise from poverty.
With capital to grow their businesses and increase earnings, the poor can invest in their families’ health and educational needs and make a significant impact on the development of their communities. By most industry estimates, less than 20% of the demand for microcredit from the world’s poor entrepreneurs is being met, a large opportunity for social investors like Deutsche Bank to make a real impact by developing funding structures to channel capital to these communities.
DB & world-class investors discuss their goal to renewed focus on client service in microfinance