Preparedness for Regulatory Compliance

This presentation describes the different aspects of regulation in the field of microfinance. It lists the following regulated microfinance activities:

• Financial transactions;
• Reporting;
• Personnel office establishment, etc.

The presentation then:

• Describes the stages in the evolution of a microfinance institution (MFI);
• Lists the financial transactions made by an MFI;
• Examines the challenges faced by MFIs, which include:
  • Capital adequacy;
  • Mobilizing savings.
• Discusses the sources of capital.

The presentation discusses:

• Regulation, and argues that:
  • It is neither supportive nor restrictive;
  • It is over emphasized as a hurdle;
  • The regulatory environment is supportive.
• Reporting and compliance, and states that:
  • An average MFI has good systems to comply with;
  • Reporting is straightforward for both deposit-taking and non deposit-taking MFIs.

The presentation concludes by recommending steps for the future:

• Non-governmental organizations should be allowed to invest in MFIs;
• New regulations for MFIs may not solve the capital adequacy problem or the ownership issues;
• There has to be a change in the mindset towards regulation.