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The Protection of the Borrower in the Microfinance Environment
2009, Berrueta, J.
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Exercising consumers’ rights in the microfinance environment

This paper studies the rights of consumers in the microfinance environment. It analyzes how these rights should be implemented to protect microfinance consumers.

In the microfinance environment, lenders, investors and governments receive most of the attention, while borrowers tend to be neglected.. Borrowers have the right to accurate, comparable and transparent information about cost of loans. Consumers should be protected from abusive lending practices, particularly from usury.

The paper states that consumer protection should be provided by MFIs as well as regulators. Governments and regulatory authorities have an important role to play in implementing policies and strategies necessary for protecting borrowers. They should:

Establish appropriate laws and institutions to facilitate entry of MFIs;
Require MFIs to disclose relevant information to consumers;
Require MFIs to teach basic skills related to earning, spending, budgeting, saving, borrowing and investing money;
Regulate usury not only by criminal laws, but also by financial laws and regulations;
Oversee the collection practices of MFIs.

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19 Feb 2011
Additional Research

Please make sure you at least research basic regulatory terms before you put forth a paper describing the should and should-nots of regulation. Prudential is a defined type of regulation, it does not simply mean "what is prudent."

India

05 Jun 2009
The Protection of the Borrower in the Microfinance Environment


Jose Berrueta Boston University Mexico

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Journal Volume/Pages:
6