Category: Regulation

MICROCAPITAL BRIEF: “Principles for Investors in Inclusive Finance” (PIIF) Created as Separate Work Stream Within United Nations’ Principles for Responsible Investment (PRI); CGAP (Consultative Group to Assist the Poor), Global Impact Investing Network (GIIN) Standards Observed

The Principles for Investors in Inclusive Finance (PIIF) initiative has been created as a separate work stream housed within the United Nations’ (UN) Principles for Responsible Investment (PRI), a set of principles devised in 2005 by 20 institutional investors to encourage investors to incorporate environmental, social and corporate governance (ESG) issues into their internal policies and investment strategies. (As of February 2011, UNPRI has 876 signatory investors). PIIF provides a framework for responsible investment focusing on providing access to finance to poor and vulnerable populations. The seven principles of PIIF and its charter signatories are listed in the February 2011 MicroCapital.org story announcing the launch of the initiative: http://www.microcapital.org/microcapital-special-report-%E2%80%9Cprinciples-for-investors-in-inclusive-finance%E2%80%9D-launched-at-responsible-finance-forum-in-the-hague-netherlands/ [2]. Continue reading

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Written by Comments Off on MICROCAPITAL BRIEF: “Principles for Investors in Inclusive Finance” (PIIF) Created as Separate Work Stream Within United Nations’ Principles for Responsible Investment (PRI); CGAP (Consultative Group to Assist the Poor), Global Impact Investing Network (GIIN) Standards Observed Posted in Investment Funds, Key Players, Regulation, Transparency, Trends/Challenges

MICROCAPITAL BRIEF: Central Bank of Kenya to Connect Deposit-Taking Microfinance Institutions (MFIs), Savings and Credit Cooperatives (SACCOs) with Existing Reporting Systems; Small and Micro Enterprise Programme (SMEP) Announces Plans to Transform into Commercial Bank

The Central Bank of Kenya (CBK), Kenya’s central banking authority, recently announced plans to connect deposit-taking microfinance institutions (MFIs) and savings and credit cooperatives (SACCOS) with existing credit reporting systems that commercial banks have been required to use since 2008 [1]. Continue reading

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Written by Comments Off on MICROCAPITAL BRIEF: Central Bank of Kenya to Connect Deposit-Taking Microfinance Institutions (MFIs), Savings and Credit Cooperatives (SACCOs) with Existing Reporting Systems; Small and Micro Enterprise Programme (SMEP) Announces Plans to Transform into Commercial Bank Posted in Africa, Regulation, Trends/Challenges

MICROCAPITAL BRIEF: Indian Microfinance Network Sa-Dhan Introduces Code of Ethics

Sa-Dhan, a microfinance network with 251 member organizations in India, has introduced a code of conduct in an effort to ensure borrowers are treated in an ethical way. The code, which was developed through consultation with microfinance institutions (MFIs), government representatives and a range of other stakeholders, consists of ten components: integrity & ethical behavior, transparency, fair practice, assessing need for financial services, appropriate interaction & collection practices, privacy of client data, governance, client education & financial literacy, competition, and feedback & grievance mechanisms [1]. The code of conduct also outlines the role of policy makers and the steps required for implementation including: the collection of data; analysis; capacity building workshops; enforcement; and integration with policies, training and MFI implementation [2]. Continue reading

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MICROCAPITAL BRIEF: Nigerian Microfinance Institutions (MFIs) Continue to Require Collateral, Other Conditions for Loans; Lift Above Poverty Organisation (LAPO) to Cut Interest Rates

Most Nigerian microfinance institutions (MFIs) reportedly continue to place conditions on borrowers who are seeking to take out loans, despite the stated policy of the Central Bank of Nigeria (CBN) to de-emphasize such requirements. Continue reading

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MICROCAPITAL BRIEF: Smart Campaign Releases New Guidance Document, Proposed Revisions to “Client Protection Principles”

The Smart Campaign, a global initiative to improve accountability regarding client protection in the microfinance industry, has released proposed revisions to its “Client Protection Principles”, the campaign’s framework is intended to help microfinance institutions (MFIs) practice good ethics and smart business, as well as a guidance document created to act as a bridge between the principles and practice. Continue reading

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MICROCAPITAL BRIEF: Grameen Foundation Founder Alex Counts Expresses Concern Over Removal of Dr Muhammad Yunus as Managing Director of Microfinance Institution (MFI) Grameen Bank

Founder and chief executive officer Alex Counts of the Grameen Foundation, a US-based nonprofit, recently expressed his concern in an open letter over the removal of Dr Muhammad Yunus as managing director of Grameen Bank, a Bangladeshi microfinance institution (MFI) that manages total assets of USD 1.4 billion [1]. Continue reading

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MICROCAPITAL BRIEF: Dr Muhammad Yunus Says Borrowers’ Control of Microfinance Institution Grameen Bank is Key to Success

In an email exchange with US-based newspaper The Wall Street Journal, Grameen Bank founder and Nobel Peace Prize winner Dr Muhammad Yunus has been asked for his thoughts on efforts by the Bangladesh Bank (BB), the central bank of Bangladesh, to remove him from his position as managing director of Grameen Bank [1] [2] [3]. Continue reading

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MICROCAPITAL BRIEF: Malegam Proposals on Indian Microfinance Likely To Be Ratified on April 1, Bankers Defend MFIs’ Priority Sector Status

On April 1, 2011, the Reserve Bank of India (RBI) is expected to ratify some of the recommendations put forth by the Malegam Committee, headed by central bank director Y H Malegam, to amend the regulation of the Indian microfinance sector [1]. Continue reading

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MICROFINANCE PAPER WRAP-UP: Making Insurance Markets Work for the Poor: Microinsurance Policy, Regulation and Supervision – India Case Study; by Sanjay Sinha and Swetan Sagar; Published by CGAP (Consultative Group to Assist the Poor) Working Group on Microinsurance

By Sanjay Sinha and Swetan Sagar; published by CGAP (Consultative Group to Assist the Poor) Working Group on Microinsurance; January 2009; 127 pages; available at http://www.microinsurancenetwork.org/file/8_India_Impact_RSP_2009.pdf Continue reading

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Written by Comments Off on MICROFINANCE PAPER WRAP-UP: Making Insurance Markets Work for the Poor: Microinsurance Policy, Regulation and Supervision – India Case Study; by Sanjay Sinha and Swetan Sagar; Published by CGAP (Consultative Group to Assist the Poor) Working Group on Microinsurance Posted in Microinsurance, Regulation, South Asia, East Asia and Pacific

MICROCAPITAL BRIEF: International Finance Corporation (IFC) Signs United Nations-backed Principles for Responsible Development (PRI), Will Promote PRI Through Events in Emerging Markets

International Finance Corporation (IFC), the private-investment arm of the World Bank Group, recently signed the United Nations-backed Principles for Responsible Development (PRI), a framework that demonstrates the signatories’ commitment to integrate environmental, social and governance (ESG) factors into investment processes—including those in the microfinance industry. Continue reading

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MICROCAPITAL BRIEF: Dr Muhammad Yunus Appeals Bangladesh High Court Decision Upholding His Removal as Managing Director of Microfinance Institution (MFI) Grameen Bank

Grameen Bank Founder and Nobel Peace Prize Winner Dr Muhammad Yunus has appealed against the Bangladesh High Court’s recent ruling in favor of an attempt by the Bangladesh Bank (BB), the central bank of Bangladesh, to remove Dr Yunus from his position as managing director of Grameen Bank. [1] [2]. The Grameen Bank is a Bangladeshi microfinance institution (MFI) that manages total assets of USD 1.4 billion. Continue reading

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MICROCAPITAL BRIEF: Pakistan’s National Rural Support Program (NRSP) Microfinance Bank Receives Permission to Operate as Regulated Entity

The State Bank of Pakistan (SBP), the nation’s central banking authority, has granted a “business commencement certificate” for the nonprofit National Rural Support Program (NRSP), to operate its NRSP Microfinance Bank as a regulated microfinance institution (MFI) in all areas of Pakistan. NRSP has offered microfinance services on a self-regulated basis since 1991. In 2008, NRSP internally approved the transformation of these operations into a regulated microfinance bank, which was registered and licensed as NRSP Microfinance Bank in 2009 [2].
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MICROCAPITAL BRIEF: India’s Business Standard Supports Reserve Bank of India (RBI) Proposal to Establish Two Types of Banking Licenses

The Business Standard, an Indian financial newspaper, recently extended its support of the introduction of two types of licenses for banks in India: one for basic banking services to serve the purpose of financial inclusion and the other for providing a full-range of banking services such as is offered by commercial banks. The proposal comes as the Reserve Bank of India (RBI) is reviewing draft guidelines that would bring additional entities such as industrial houses into the banking sector. RBI reportedly proposed provision of “full banking license” to industrial and business houses and some non-banking finance companies (NBFCs). A basic banking license would be issued to other NBFCs and nonprofit microfinance institutions (MFIs) [1]. How NBFCs would be divided between the groups was not specified. Continue reading

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MICROCAPITAL BRIEF: Central Bank of Nigeria (CBN): No More Time For Microfinance Banks (MFBs) to Recapitalize

The Central Bank of Nigeria (CBN) recently announced that it will not allow 121 microfinance banks (MFBs) that received provisional operating licenses in October 2010 more time to recapitalize. CBN gave the 121 MFBs, the surviving portion of 224 MFBs that had their operating licenses revoked in October 2010, a deadline of January 31 to increase their minimum capital from NGN 10 million (USD 64,200) to NGN 20 million (USD 131,000), shutdown branches engaging in illegal activities and embrace “good” corporate governance. Continue reading

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MICROCAPITAL BRIEF: State Bank of Pakistan (SBP) Announces Launch of $16m Financial Innovation Fund, Support for Mainstreaming Microfinance into Formal Banking System

State Bank of Pakistan (SBP), the central banking authority in Pakistan, recently announced its launch of a GBP 10 million (USD 16 million) “Financial Innovation Fund” that aims to encourage innovations in financial products and delivery channels for financial services.

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MICROCAPITAL BRIEF: Indian Budget Plans Include Partnering with Small Industries Development Bank of India (SIDBI) to Create $22m India Microfinance Equity Fund

The Indian government began review of a draft 2011-2012 budget, which reportedly includes a partnership with the Small Industries Development Bank of India (SIDBI), a government-owned bank providing credit to microfinance institutions, to allocate funds totaling approximately INR 100 crore (USD 22 million) to traditionally underserved groups via a newly established India Microfinance Equity Fund. Continue reading

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MICROCAPITAL BRIEF: Federal Microfinance Bill May Replace Existing State Microfinance Legislation in India

The Ministry of Finance in India recently unveiled its plan to pass a new microfinance bill to regulate the microfinance sector. The ordinance passed by the government of the Indian state of Andhra Pradesh in October 2010, in response to a series of farmer suicides, severely curtailed lending activity in the region. The bill, which is reportedly being drafted along the lines of the recommendations made by the Reserve Bank of India’s Malegam Committee which was formed in the wake of the unrest in Andhra Pradesh, is likely to render state legislation on microfinance null and void. Continue reading

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MICROCAPITAL BRIEF: Philippines Looks to Curtail Direct Microfinance Lending by Government Agencies

In an effort to counter political patronage, the administration of Philippine President Benigno Aquino III has indicated its intention to alter current microfinance policies, which confer power to government agencies to lend directly to poor people. Continue reading

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