Paper
Regulatory and Supervisory Mechanism for MFIs in Bolivia
How are Bolivian MFIs regulated?
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The paper describes the present scenario of the Bolivian financial sector which consists of first tier financial institutions - commercial banks (CBs), Non-banking Financial Entities (NBFEs) and second tier financial institutions – FUNDAPRO (private), FONDESIF (public) and NAFIBO (public). The paper defines the processes for regulation and supervision of the MFIs by:
- Regulatory norms: Portfolio evaluation and portfolio classification;
- Prudential norms: Capital adequacy, provisioning and avoiding double or multiple financing.
Finally the paper presents the study team’s learning:
- User friendly technology through standardization of accounting systems and computerization helps the management in taking appropriate policy and operational decisions;
- Transparency in credit operations builds borrower confidence and puts all operations above board;
- Though compensation packages based on basic salary, plus incentives based on business generated, help in business development, they also have an inbuilt bias against smaller loans.
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