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Proposed Guidelines for the Microfinance Industry (Basle II)
20 Jul 2010, Graziosi, A.
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Framework for regulating MFI activities

This paper proposes guidelines to regulate the microfinance industry. These regulations are set within the new regulations proposed by the Basel Committee.

The microfinance industry has grown to include sophisticated, socially-oriented services, new management and evaluation methodologies, and social performance management. The paper welcomes the consultative document produced by the Basel Committee on banking supervision, and views it as an opportunity to gain insights on the future of the industry. The Basel Committee guidelines:

Propose a tiered framework to encourage previously unregulated MFIs to gradually upgrade management quality, governance and operations;
Identify four consistent themes with regard to implementation, namely, allocation of resources, specialized knowledge, management and control practices, and permitted activities;
Define three groups of institutions, namely, banks, other deposit taking institutions and microcredit institutions.

The paper states that the implementation of the Basel principles for the MFI industry requires some adjustments according to the type of institution and its activities. Finally, the paper recommends providing guidelines on how to design a country-specific regulatory framework that takes into account MFI categorization.

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14 Aug 2010
Deceiving Title, Disappointing Expectations

It has been for some time now that the Bank of International Settlements (BIS) has seemed to want to be more involved in microfinance and develop guidelines for the integration of MFIs into the banking sector in order to build a more inclusive sector. This paper is written by a private consultant who does not work on behalf of the BIS and, furthermore, does not really add anything specific to the issue of BIS's involvement or to any GL-s. Quite disappointing and deceiving indeed.

peter van dijk Indonesia

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Publisher(s):
Microfinance Association