The South Korean Financial Services Commission, South Korea’s financial industry regulator, announced that it will begin an investigation into the interest rates charged by microfinance institutions on loans and that it will implement corrective action as necessary.
Category: Regulation
MICROCAPITAL BRIEF: All Commercial Banks in Fiji Establish “Microfinance Units”
The Reserve Bank of Fiji (RBF) has reportedly completed an initiative in which all commercial banks in Fiji have complied with a requirement to establish a “microfinance unit.”
MICROCAPITAL BRIEF: Regulation in Kenya’s Mobile Industry Leads to Increase in Banked Population as Phone Operators Seize Opportunity to Encourage Mobile Bank Accounts
As a result of new Kenyan government regulation which requires registration of Subscriber Identity Module (SIM) cards by mobile phone users, the country is experiencing growth in the mobile banking population because mobile phone operators in Kenya are encouraging subscribers to simultaneously activate a mobile bank account.
MICROCAPITAL BRIEF: Small Enterprise Education and Promotion (SEEP) Network Adds Updates and New Standards to Its “Microfinance Reporting Standards Initiative”
The Small Enterprise Education and Promotion (SEEP) Network, a US-based non-governmental organization (NGO) with the goal of connecting microenterprise practitioners, has recently announced that it will be adding updates and new standards to its “Microfinance Reporting Standards Initiative,” a voluntary compliance effort to bring together stakeholders on reporting standards for MFIs. The “Microfinance Reporting Standards Initiative” is an update to SEEP Network’s 2005 financial performance publication entitled “Measuring Performance of Microfinance Institutions: A Framework for Reporting, Analysis, and Monitoring” (SEEP FRAMEWORK).
MICROCAPITAL BRIEF: Sri Lankan Government Plans to Establish Microfinance Regulatory and Supervisory Authority
The government of Sri Lanka has recently approved a draft microfinance bill to set up a Microfinance Regulatory and Supervisory Authority. An article from LankaBusinessOnline.com, a Sri Lankan business news website, reports that new authority will license, register, regulate and supervise micro-finance institutions whether they are companies, non-governmental organizations or cooperative societies.
MICROCAPITAL BRIEF: More Details Emerge After Examination of Microfinance Institutions (MFIs) by Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC)
Following growing complaints of fraudulent practices leveled against several microfinance institutions (MFIs) and the failure some, the Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC) conducted an examination of the sector, which has revealed some irregularities and unethical practices.
MICROCAPITAL BRIEF: Russia Finance Ministry May Establish Microfinance Institution Supervisory Unit
The Russian Finance Ministry recently announced that a supervisory unit of the Finance Ministry may be established due to the expanding microfinance institution (MFI) industry in Russia and in connection with new microfinance regulation recently signed.
MICROCAPITAL BRIEF: International Finance Corporation (IFC) Implements Advisory Services Project Totaling $382,000 at Microfinance Bank, Asociacion Dominicana para el Desarrollo de la Mujer (ADOPEM), in Dominican Republic
The International Finance Corporation (IFC), a member of the World Bank Group, has signed an agreement with Asociacion Dominicana para el Desarrollo de la Mujer (ADOPEM), a microfinance bank in Dominican Republic, to implement an advisory services project for the institutional strengthening of the bank to enhance the financial services provided to low-income clients in the Dominican Republic. A press release from IFC states that the project will focus on improving the efficiency of the bank’s credit processes, strengthening its risk management and increasing savings mobilized. The overall amount of the project will be USD 382,000.
MICROCAPITAL BRIEF: Mr Vijay Mahajan, President of Microfinance Institutions Network (MFIN) and Chairman of CGAP (Consultative Group to Assist the Poor), Argues Banks Should Charge Microfinance Institutions Less than 10%
In a recent interview featured on LiveMint, an Indian business newspaper owned by the Wall Street Journal, Mr Vijay Mahajan, President of the Microfinance Institutions Network (MFIN), a network of 39 microfinance institutions (MFIs) in India, argued that “banks should charge less than 10 percent while lending to MFIs.”
MICROCAPITAL BRIEF: Blue Financial Services Limited Warns Borrowers to Repay Outstanding Loans in Rwanda
Blue Financial Services Limited, a South African microfinance institution (MFI) that lost its operating license in Rwanda recently, has announced that it may take legal action against Rwandan borrowers who do not pay back outstanding loans.
MICROCAPITAL BRIEF: Ministry of Investment in Egypt Releases Set of New Laws and Amendments for Nonbanking Financial Services Including Microfinance and Services for SMEs
The Ministry of Investment in Egypt has prepared a set of new laws and amendments to develop and modernize nonbanking financial services with a focus on serving small and medium-sized enterprises (SMEs). The ministry has released eight draft laws that deal with “managing business procedures for public and private companies, licensing, mortgage finance, private insurance funds and voluntary pensions companies, healthcare firms, financial leasing and movable property registry.” The new laws will also establish rules and conditions for licensing microfinance companies, as well as companies working in financial leasing.
MICROCAPITAL BRIEF: National Bank of Rwanda (NBR) Revokes Blue Financial Services’ Operating License
The National Bank of Rwanda (NBR), the central bank of Rwanda, recently reported that Blue Financial Services, a South African microfinance institution (MFI) with reported assets of ZAR 1.5 billion (equivalent to USD 200 million), has lost its operating license in Rwanda after operating in the country for three years, because of “fiscal fraud.”
MICROCAPITAL BRIEF: Reserve Bank of India Proposes Regulation for Securitizations by Microfinance Institutions
The Reserve Bank of India, India’s central banking authority, recently proposed new regulations for securitizations by non-bank finance institutions, which includes microfinance institutions (MFIs).
MICROCAPITAL BRIEF: India’s Insurance Regulatory and Development Authority Launches Consumer Protection Regulation
The Insurance Regulatory and Development Authority (IRDA), India’s insurance regulator, recently announced several draft insurance regulations, with the aim of reducing “unfair practices” and closing an “information gap,” according to A. Giridhar, executive director of IRDA.
MICROCAPITAL BRIEF: Microfinance Institutions Network (MFIN) Aims to Increase Accountability in India with Appointment of Ombudsmen
An article from Business Standard, a business newspaper based in India, reports that the Microfinance Institutions Network (MFIN) of India, a self-regulated network organization of 39 microfinance institutions (MFIs) in India, will appoint four regional ombudsmen in the next three months to encourage transparency in the microfinance sector. While specific duties of the proposed regulators were not provided, MFIN stated that no appointees would be from MFIs.
MICROCAPITAL EVENT: The 2010 Asia Microfinance Forum in Colombo, Sri Lanka, from October 12 – October 15, 2010
Event Name: The 2010 Asia Microfinance Forum
Event Date: October 12 – October 15, 2010
Event Location: Cinnamon Grand Hotel, Colombo, Sri Lanka
MICROCAPITAL BRIEF: G20’s Financial Inclusion Experts Group (FIEG) Releases Nine “Principles for Innovative Financial Inclusion” at Leadership Summit in Toronto, Canada
The Financial Inclusion Experts Group (FIEG), a division of the G20 – a group of twenty finance ministers and central bank governors that discuss key issues in the global economy – released nine “Principles for Innovative Financial Inclusion” at the recent G20 leadership summit in Toronto. The principles are intended to form the basis of a concrete action plan for improving access to financial services for the poor, which will be released at the Seoul Summit in November.
MICROFINANCE PAPER WRAP-UP: Where Does Microfinance Flourish? Microfinance Institution Performance in Macroeconomic Context, by Christian Ahlin, Jocelyn Lin and Michael Maio
By Christian Ahlin, Jocelyn Lin and Michael Maio, published by the Journal of Development Economics, April 27, 2010, 16 pages, available at: http://news.msu.edu/media/documents/2010/06/8d6d8126-97dd-4569-b65b-736f700fc844.pdf
Mr Ahlin, Ms Lin and Mr Maio study whether and how the success or failure of microfinance institutions (MFIs) depends on the country-level context, particularly macroeconomic and macro-institutional features. In order to explore these questions, the authors reviewed data on 373 MFIs from 74 countries. The authors rely on two groups of MFI performance variables: operational self-sufficiency (the ratio of revenues to costs) and loan portfolio growth. Operational self-sufficiency is broken down into three components: financial revenues and costs, losses due to default and operating costs, so that, in some cases, the authors are able to identify the channel through which a given macroeconomic variable is correlated with the financial sustainability of a MFI. MFI portfolio growth is decomposed into two components: growth in number of borrowers (extensive growth) and growth in average loan size (intensive growth).