Regulatory Requirements for Microfinance: A Comparison of Legal Frameworks in 11 Countries Worldwide

This paper aims to provide those involved in drafting legal texts for microfinance with a commented inventory of regulatory requirements for MFIs across eleven countries. The paper highlights the different regulatory options that arise from a comparison of different countries, and highlights where possible the benefits and drawbacks of these different options:

The paper looks at:

• Different ways to stipulate rules;
• Delegation of rule-making power;
• Responsibilities for supervision and follow-up;
• Different ways of distinguishing microfinance from mainstream banking and the unregulated microfinance sector;
• Most important quantitative and qualitative regulatory requirements.

The paper concludes by recommending that more in-depth assessments of legal frameworks should consider:

• Appropriateness of regulatory requirements in the relevant country context;
• Enforcement of legal provisions (including, as a minimum looking at capacity, incentives and autonomy vs. accountability;
• Development of clear recommendations for improving the regulatory framework for microfinance.