Guidelines of Principles for Effective Regulation and Supervision of Microfinance Operation

This document presents principles of international best practice on regulation and supervision of microfinance operations executed by deposit-taking financial institutions.

A microfinance working group of banking supervisors, consulting firms, experts in MFI regulation and supervision, consultants on public consultation processes and MFI managers developed the guidelines during March 2008-March 2010. The document consists of an introduction and two chapters. The first chapter analyzes the relevance of application of the core principles for effective banking supervision, as well as Basel II principles issued by the Basel Committee on Banking Supervision to MFIs. The proposed recommendations aim to be consistent with these principles, so that the World Bank and International Monetary Fund can analyze their application during assessments of Basel Core principles compliance.

The second chapter presents recommendations that synthesize conclusions from the process developed in the document. They include preconditions and principles for effective regulation and supervision of microcredit portfolios and MFIs. The recommendations aim to facilitate development of microfinance.