Microfinance Industry in Kyrgyzstan: Supervision and Regulation Issues
How does the current regulatory framework affect microfinance sector development in Kyrgyzstan?
This essay discusses the current regulatory framework for microfinance institutions (MFIs) in the Kyrgyz Republic. The essay:
- Provides an overview of the current microfinance market in Kyrgyzstan;
- Introduces the laws and regulations governing MFIs, and discusses how the author's microcredit agency met these requirements;
- Discusses the existing legal and regulatory barriers to the development of microfinance. These include:
- Low minimum capital requirements;
- Onerous auditing requirements for small organizations;
- Lack of access to the payment system;
- Transformation issues, such as restrictions on sources of capital, ownership limitations, inability to fund capital requirements with loan portfolio.
The essay concludes with the following recommendations for improving the regulatory environment:
- Revising the current laws and regulations for MFIs;
- Simplifying the regulation process by transferring all MFIs that do not accept deposits to the authority of the Ministry of Finance;
- Allowing MFCs access to the payment system;
- Allowing MFIs to provide microinsurance services.