Multiple Indian newspapers have cited an unnamed report on Indian microfinance regulation from global ratings agency Fitch that reportedly states that a single regulatory body is crucial to ensuring a stable Indian microfinance sector and that future legislation affecting microfinance should be developed through cooperative efforts between state and federal authorities.
Alan Patricof, Founder and Managing Director of US-based venture capital company Greycroft Partners, argues in a recent issues of Fortune magazine that while microfinance institutions (MFIs) “do play an important role in development, there is an even greater need to support small and medium-sized enterprises (SMEs), which have the greatest potential for job growth in most places around the world” .
Eight years after first releasing the “Guiding Principles on Regulation and Supervision of Microfinance,” CGAP (Consultative Group to Assist the Poor) has released a revised draft of the document (with a revised name) that reflects changes in the global microfinance sector.
MFTransparency, a US-based nongovernmental organization (NGO) that provides information on credit products and pricing, has published updated pricing data for Cambodia. The updated data builds on the original data published in 2009 as part of its collection of international microloan product pricing data.
Ignacio Mas, Senior Advisor to the Financial Services for the Poor Initiative at the Bill & Melinda Gates Foundation, and John Staley, Director of Finance and Shared Services at Equity Bank of Kenya, recently posted an entry on the Stanford Social Innovation Review (SSIR) blog titled “Are We Serious About Financial Inclusion for All?” . Mr Mas and Mr Staley highlight the importance of increasing access to financial services in developing countries and outline their four suggestions for regulators and financial service providers to advance financial inclusion.
A new Focus Note from CGAP (Consultative Group to Assist the Poor) examines data from CGAP’s annual surveys on cross-border microfinance funding to provide an overview of the microfinance funding landscape and trends in cross-border funding .
T Keyzom Ngodup, co-founder and executive director at Ideas sYnergy, an Iraq-based consulting company, recently reported that there are currently six microfinance institutions (MFIs) providing Islamic microfinance services across the Anbar, Kirkuk, Ninewa and Tikrit regions of Iraq. One of these is Al-Takadum, which operates in the Anbar region, the others are not named.
Business Standard, an Indian newspaper, has reported that SEED Financial Services, an Indian consulting, planning and implementation agency; Financial Information Network and Operations Limited (FINO), an Indian technology company that seeks to enable financial inclusion; and A Little World, a technology company based in India are seeking private equity funding to scale their business correspondent operations. Business correspondents are individuals or organizations that are permitted to “raise deposits; disburse tiny loans; recover bad loans; sell micro insurance, mutual funds, pension products and other third-party products; and receive and deliver small value remittances” on behalf on banks .
Fondazione Giordano Dell’Amore, an Italian foundation, is accepting applications for its Microfinance Best Practices International Award 2011. The award aims to increase the understanding of microfinance as a tool to fight poverty and social exclusion and to encourage microfinance practitioners to share successful practices. The focus of the award for 2011 is “transparency, client protection and social impact.”
CGAP Microfinance Blog, operated by US-based think tank CGAP (Consultative Group to Assist the Poor), recently posted an article by Mohammed Khaled, a CGAP representative for the Middle East-North Africa Region, that explores the implications for microfinance institutions (MFIs) of the recent wave of demonstrations and resulting leadership changes that have occurred in the Middle East and North Africa. Mr Khaled says that while it “could be too early to analyze the impact of recent events in the Arab world on microfinance, one can conclude some general and common lessons despite differences among countries” . Mr Khaled argues that the following areas are of the utmost importance: emergency plans, strategic partnerships with clients, internal control systems and job creation .
In Bangladesh, 3.7 million people have reportedly signed a petition urging the prime minister of Bangladesh to allow Dr Yunus to continue as the head of Grameen Bank. The event, organized by “The Citizens’ Committee to Protect the Honour of Nobel Laureate Professor Yunus,” was held after the Bangladesh High Court upheld the argument of the government of Bangladesh invalidating the original appointment of Dr Yunus as the managing director of Grameen Bank.
Event Name: Developing Inclusive Financial Systems: The CGAP Course for Funders of Microfinance
Event Date: June 6 – June 10, 2011 THIS EVENT HAS BEEN CANCELLED
Event Location: Dakar, Senegal
Central Bank of Nigeria (CBN) Governor Mallam Sanusi Lamido Sanusi has reportedly explained the delay in the release a proposed microfinance regulatory framework saying, “if we are going to have 2,000 microfinance institutions, I want to know that we have the capacity to regulate and supervise those institutions” .
The Central Bank of Sri Lanka (CBSL), the country’s central banking authority, recently announced a proposal to create a central authority that would be responsible for the supervision and regulation of the microfinance sector.
The Indian federal government has proposed changes to the Micro Financial Sector (Development and Regulation) bill to cover all types of microfinance institutions (MFIs), including non-banking finance companies (NBFCs) operating in the microfinance sector . The Micro Financial Sector (Development and Regulation) bill, which was first passed in 2007, covers only MFIs not overseen by the Reserve Bank of India (RBI), India’s central bank . RBI regulates banks and most NBFCs. This leaves NBFCs operating in the microfinance sector outside of the purview of both RBI and the Micro Financial Sector (Development and Regulation) bill .
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: https://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/ .
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 .
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 . 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 .