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MF Policy, Regulation and Supervision

Language

English

Programs:

Boulder MFT

Description

This course will explore a broad range of regulatory policy issues affecting microfinance, including:

  • Rationale for different types of financial system regulation, and applicability in the microfinance context
  • How to decide when and how to regulate microfinance
  • Prudential issues – how to decide which institutions require prudential regulation and supervision and what the applicable prudential standards should be
  • Hot regulatory topics outside the prudential regulation arena, such as transparency-driven regulation of non-depository institutions, consumer protection, legal feasibility of ‘transformations,’ regulatory infrastructure for credit bureaus and newly emerging regulatory regimes for combating money laundering and financing of terrorism
  • Policy and regulatory issues in 'branchless banking' through nonbank retail
    agents
    The political process of tackling microfinance-related regulatory reform
  • How to measure and test microcredit loan portfolio quality (this is the only hands-on supervision topic that the course will cover)

Participants

The course is designed to present material of interest to regulators, supervisors and financial system policymakers, as well as both donors and practitioners who are considering becoming involved in microfinance-related policy reform initiatives.

Outline

COURSE OBJECTIVE:

Participants will be aware of issues and experience with respect to the following topics in microfinance policy, regulation and supervision:

Introductions
Opening questions:  What do you think now?

Terminology – Broad overview of terms/terminological shorthand we’ll be using

When to regulate – Rationales for regulation and eliminating terminological confusion around ‘microfinance regulation’

Prudential issues – Which kinds of institutions call for prudential regulation and what kind?

Special prudential standards in microfinance:

  • Minimum capital and capital structure requirements
  • Capital adequacy
  • Unsecured lending limits, loss allowances
  • Loan documentation
  • Physical security and branching rules
  • Reporting
  • Limits on number and nature of owners

Hot regulatory topics outside the prudential regulation arena:

  • Transparency-driven regulation of non-depository institutions
  • Consumer protection/interest rate limits
  • Tax issues in microfinance
  • Legal feasibility of ‘transformations’
  • Regulatory infrastructure for credit bureaus
  • Newly emerging regulatory regimes for combating money laundering and financing of terrorism

Supervision – Cost and location

Supervision – Portfolio quality measurement and testing

Policy and regulatory issues in ‘branchless banking’ through nonbank retail agents

Political process – Who plays what role in microfinance-related regulatory reform?  What policy issues outside regulation and supervision arena most affect development of microfinance?

Summary case – Discussion

Open discussion of topics of special interest that emerged during the course or topics that could use further time/discussion