The Microfinance Supervisory Committee (MSC), the microfinance regulatory body in Myanmar, reportedly set a limit of MMK 500,000 (USD 509) for loans issued by microfinance institutions (MFIs). The committee claims the cap will encourage MFIs to expand their lending to new businesses rather than repeatedly loaning to the same organizations, which it hopes will stimulate economic growth in the country. There had previously been no limit to the size of each individual loan. The new regulation also caps interest rates at 2.5 percent per month and 30 percent per year. Skeptics argue that the microloan cap is too limiting and will inhibit small-business growth. It is reported that multiple MFIs hope to challenge the ruling and have MSC reassess the limit.
An estimated 150 MFIs serve 2.8 million microfinance clients in Myanmar, with a total loan portfolio of USD 283 million. The average microloan size in Myanmar is reported to be between USD 150 and USD 300.
By Megan McGowan, Research Associate
Sources and Additional Resources:
[1] Myanmar Times: “Myanmar Firms Decry Low Regulator Loan Cap,” http://www.mmtimes.com/index.php/business/9569-microfinance-firms-decry-low-regulator-loan-cap.html
MicroCapital: “Myanmar Mobile Money, Mobilemate Telecommunications Launch Mobile Money Services in Myanmar,” February 17, 2014, https://www.microcapital.org/microcapital-brief-myanmar-mobile-money-mobilemate-telecommunications-launch-mobile-money-services-in-myanmar/
MicroCapital: “Bagan Capital’s BC Finance Launches Microfinance Services in Myanmar,” October 24, 2013,https://www.microcapital.org/microcapital-brief-bagan-capitals-bc-finance-launches-microfinance-services-in-myanmar/
Do you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at https://www.microcapital.org/products-page/
Similar Posts:
- MICROFINANCE PAPER WRAP-UP: “Mobile Money, Interoperability and Financial Inclusion;” by Markus K Brunnermeier et al; published by National Bureau of Economic Research (NBER)
- MICROFINANCE PAPER WRAP-UP: “Microfinance in India: Issues, Challenges and Opportunities;” by Mohammad Abu Saleh, Zubair Ahmad
- MICROCAPITAL BRIEF: Gojo Raises $48m in Equity for Microfinance, Eyeing Digitalization in Asia, Expansion to Africa
- MICROCAPITAL BRIEF: QR Codes to Facilitate Retail Payments Across Cambodia-Laos Border
- MICROFINANCE PAPER WRAP-UP: “Driving Digital Financial Services in Africa Through Merchant Acceptance of Digital Payments,” published by Alliance for Financial Inclusion (AFI)