Overview
South Asia has a highly diverse microfinance landscape. From the fledgling microfinance market of Afghanistan starting afresh, to the nearly four decades of experience of modern style microfinance in Bangladesh. India today is home of the largest influx of private equity investment and the fastest growing MFIs of any country in the world. Other countries such as Pakistan, Nepal or Sri Lanka are expanding microfinance albeit at slower rates. The South Asia region was relatively immune to the global financial crisis, in part due to the closed economic nature of the region. Microfinance continues to perform reasonably well overall, although repayment problems emerged in Pakistan and there are signs of stress in Bangladesh and India. As microfinance grows the industry is grappling with how to better manage competition, establish credit information bureaus and balance increasing commercialization with responsible finance.
Policy for microfinance remains an important issue. Pakistan and Nepal have established a special class of bank for microfinance and Bangladesh recently created a new regulatory authority for microfinance. India, Sri Lanka and Bhutan are contemplating what kind of regulatory structures might make sense. Interest rates remain a sensitive topic, though there are few examples of interest rate caps. There is increasing emphasis on interest rate measurement and disclosure.
Contact Regional Representative Greg Chen.
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