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International Conference on Rural Finance Research: Moving Results into Policies and Practice

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Where is growth likely to come from? Transformation of NGOs into banks Niche micro-finance banks International Conference on Rural Finance Research: ... – PowerPoint PPT presentation

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Title: International Conference on Rural Finance Research: Moving Results into Policies and Practice


1
International Conference on Rural Finance
ResearchMoving Results into Policies and
Practice
  • The Impact of Regulatory Policies on Provision of
    Financial Services to the Poor

2
Objective of the study, relevance to conference
and theme
  • To assess how regulation impacts the delivery of
    micro-finance services to the poor in rural areas
    and the lessons for policy makers seeking to
    design supportive policy frameworks.

3
Hypotheses, key research questions studied
  • What has helped to shape regulation?
  • Does micro-finance work better with or without
    regulation?
  • Does regulation increase the cost of service
    delivery and typically leave out the poor?
  • How can one design regulation to better serve the
    poor?

4
What shapes regulation?
  • Underlying philosophy
  • State
  • Civil Society
  • Genesis of the sector institutions
  • Policy
  • Culture
  • Operations

5
What shapes regulation? Balancing competing
demands
  • Access and Outreach
  • directed subsidized lending vs a financial sector
    approach)
  • Poverty Alleviation
  • loan size, interest rates, collateral
  • Types of Services
  • loans
  • Savings
  • Transfer services

6
What Shapes Regulation?Competing Perspectives
  • Regulatory Authorities
  • Protection of Depositors
  • Security (branch operations)
  • supervision mechanisms
  • Micro-Finance Providers
  • Cost of operations
  • Sustainability
  • Repayment
  • Collateral

7
What shapes regulation?Balancing Competing
Demands
  • Rural vs Urban
  • Poor vs Non-poor

8
Does regulating the sector leave out the poor?
  • Disadvantages
  • Cost of operations increases (MCR, CAR, PAR)
  • Proportion of assets in high-return loan
    portfolio
  • Taxation
  • Interest rate barriers
  • Reporting requirements
  • Volume of funds?

9
Does regulating the sector leave out the poor?
  • Advantages
  • Types of services
  • Protection of clients
  • Source of financing
  • Cost of financing
  • Loan size
  • Interest rate ceilings

10
Projected Growth of Selected Micro-Finance
Institutions in Pakistan
11
Does micro-finance work better with or without
regulation?
Bangladesh Little or no regulation
Bolivia Special regulatory category
Colombia No special pathway
Mexico Focus on Co-operatives
India Financial Inclusion
Indonesia Directed subsidized credit lines and financial system approach
12
Institution Genesis Market Share
Bangladesh BRAC and Grameen Special license to operate but mostly NGOs 35
India ICICI Mainstream commercial banks via Self-Help Groups
Bolivia BancoSol First private commercial micro-finance bank transformed from NGO to Bank
Indonesia BRI From cooperative to state owned bank to limited liability corporation to public company
Brazil Banco do Nordeste Mainstream commercial bank 200,000 clients
13
Market Share of Micro-Finance in Pakistan
14
Where is growth coming from?
15
Where is growth coming from?
16
Where is growth likely to come from?
  • Transformation of NGOs into banks
  • Niche micro-finance banks
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