Analyzing legal and regulatory framework for microfinance
This document presents results of a survey of legal and regulatory frameworks in Bangladesh, Japan, Lao PDR, Malaysia, Nepal, Pakistan, the Philippines, Sri Lanka and Vietnam. The survey was commissioned by the Asian Productivity Organization.
Legal and regulatory frameworks impact MFI sustainability and the safety of deposits mobilized from the public. Survey reports discuss the emerging regulatory frameworks for microfinance and makes recommendations for developing an appropriate regulatory architecture. The countries in the survey:
Recognize microfinance as a vital instrument that has contributed to development, growth, employment and poverty reduction;
Recognize that emerging regulatory architecture will enhance MFI capability to become sustainable institutions;
Want regulatory frameworks to take MFI diversity into account;
Recognize NGOs' pioneering work in microfinance innovations, and want to legitimize their operations;
Want deposit-taking to be confined to regulated MFIs;
Indicate a desire to find the right approach to regulate MFIs.
Finally, the survey acknowledges that regulatory authorities are still developing an understanding of microfinance, making sincere attempts to flesh out an appropriate regulatory framework, and building the required capacity for effective regulation.