The Legal Environement for Microfinance Activity in Russia - Analysis and Recommendations for Reform
2003, Burtseva, N.

An analysis of the legal environment for microfinance in Russia

This paper presents the existing status of legal environment relevant for microfinance in Russia and provides guidelines for improvement for the short and long term.

The paper discusses the federal level regulation for the following areas:

• Main normative acts regulating microfinance activity,
  
• Relevant normative acts on banks and banking,
  
• Currency regulation,
  
• Foreign investments,
  
• Competency of Russian Federation (RF) subjects and local self-governments in regulating MFIs.

Further, the paper presents a detailed analysis of the legal forms of organizations that engage in microfinance activity in Russia. It goes ahead in discussing the following related aspects:

• Norms for lending and loan security,
  
• Taxation of microfinance activities,
  
• Transformation into a commercial organization.

The paper concludes with various recommendations, which are categorized into:

• Short-term reforms: To -
  
  • legalize MFIs that are established and operational in legal vacuum;
    
  • repeal or amend legal provisions that hinder or block the development of microfinance.
  
  
• Long term reforms: To ensure sustainability, market viability, and the self sufficiency of MFIs -
  
  • promote investment in microfinance,
    
  • ensure transparency,
    
  • address the gaps and inefficiencies in the effective legislation.

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Publisher(s):
Russian Microfinance Center

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