Microfinance & COVID-19: Examples of Regulatory Responses Affecting Microfinance Providers
The table below provides country examples for regulatory responses identified in the Briefing Microfinance and COVID-19: Principles for Regulatory Response. Listed measures and choice of countries are indicative only, updated on available information as of June 2020, with select updates through July 2020. The objective is to illustrate the range of measures and provide links to relevant legal documents. The structure broadly follows the steps to be taken at the level of regulation described in Microfinance in the COVID-19 Crisis: A Framework for Regulatory Responses. You can also download a copy of this table.
For other resources, please see the following:
Financial Sector Support Measures in Response to COVID-19. The World Bank maintains and regularly updates this comprehensive list of financial sector support measures.
Financial Consumer Protection responses to the Covid-19 crisis. The G20/OECD Task Force on Financial Consumer Protection maintains this list.
Steps to be taken at the regulation level:
- Enable microfinance providers (MFPs) to operate during lockdown
- Provide relief to MFP clients
- Support MFP liquidity by relaxing prudential requirements
- Adjust supervisory burden
- Consumer protection measures related to response measures or other
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1. Enable microfinance providers (MFPs) to operate during lockdown
Measures |
Country Examples |
Classification as “essential service” or similar
Measures that allow or require MFPs and ancillary services (including agents) to operate during the lockdown |
INDIA JORDAN NIGERIA RWANDA UGANDA |
Facilitation of digital payments and transactions
Measures that reduce obstacles for MFPs to increase use of or migrate to digital transactions, account opening or loan underwriting, as well as public encouragement by authorities, for people to use digital payments. |
EGYPT INDIA KENYA NIGERIA PAKISTAN PERU RUSSIA RWANDA UGANDA ZAMBIA |
2. Provide relief to MFP clients
Measures |
Country Examples |
Optional or mandated relief to MFP borrowers
Measures that allow or mandate MFPs to provide moratoria or otherwise restructure loans, which will benefit from special prudential rule |
EGYPT INDIA KENYA KYRGYZSTAN MEXICO NIGERIA PAKISTAN PERU RUSSIA RWANDA TUNISIA UGANDA UZBEKISTAN VIETNAM ZAMBIA |
Special prudential and accounting rules for loans benefiting from relief
Measures setting the special prudential rules for the above moratoria or restructuring (classification, provisioning, credit reporting, accounting) |
BRAZIL INDIA KYRGYZSTAN MEXICO PAKISTAN PERU RUSSIA UGANDA UZBEKISTAN ZAMBIA |
3. Support MFP liquidity by relaxing prudential requirements
Measures |
Country Examples |
Relaxation of prudential requirements
Prudential measures to encourage MFP lending and release liquidity, including reduction or acceptance of non-compliance with minimum standards. |
BRAZIL INDIA KENYA KYRGYZSTAN MOROCCO NIGERIA PAKISTAN PERU PHILIPPINES RWANDA SRI LANKA UGANDA ZAMBIA |
Limitation to discretionary distributions by MFPs
Measures that temporarily prohibit or limit discretionary payments such as dividend, share buybacks and bonus payments. |
BRAZIL INDIA MEXICO PAKISTAN PERU SRI LANKA UGANDA ZAMBIA |
4. Adjust supervisory burden
Measures |
Country Examples |
Reduction in supervisory burden
Measures that postpone or reduce non-essential supervisory activities and deadlines. |
INDIA INDONESIA PAKISTAN PERU PHILIPPINES RUSSIA SRI LANKA UGANDA ZAMBIA |
Enhanced supervisory monitoring
Measures that implement new or enhanced reporting or monitoring of crisis-related issues |
INDIA MEXICO PAKISTAN PERU SRI LANKA UGANDA ZAMBIA |
5. Consumer protection related measures
Measures |
Country Examples |
Limit fees on restructured loans and prohibition of discrimination, or other consumer focused measures
Measures limiting fees for loan restructuring and prohibiting denial of service or other discrimination against borrowers |
EGYPT Nonbank MFPs are required by the FRA to collect deferred payments only at the end of the loan term. Moreover, MFPs are required to reduce financing costs for borrowers paying their dues regularly, exempt clients from accelerated payment fees, and pay, on behalf of their clients, the value of the compulsory credit life microinsurance premia until the end of the current turbulent and exceptional period. Banks are required to inform customers of the costs of their moratoria. INDIA KENYA KYRGYZSTAN MEXICO PAKISTAN PERU UGANDA Fees on loan restructuring can be imposed but must be reasonable and justifiable. UZBEKISTAN ZAMBIA |
Abbreviations
ATM |
Automated teller machine |
BNR |
National Bank of Rwanda |
BOU |
Bank of Uganda |
BOZ |
Bank of Zambia |
BSP |
Central Bank of the Philippines |
CBB |
Central Bank of Brazil |
CBE |
Central Bank of Egypt |
CBJ |
Central Bank of Jordan |
CBK |
Central Bank of Kenya |
CBN |
Central Bank of Nigeria |
CBR |
Central Bank of Russia |
CBSL |
Central Bank of Sri Lanka |
CBU |
Central Bank of Uzbekistan |
CBV |
Central Bank of Vietnam |
CIC |
Credit information company |
CNBV |
National Banking and Securities Commission |
DFI |
Development finance institution |
FRA |
Financial Regulatory Authority (Egypt) |
FSP |
Financial services provider |
G2P |
Government-to-person |
IFRS |
International Financial Reporting Standards |
LCR |
Liquidity coverage ratio |
MFB |
Microfinance bank |
NADRA |
National Database and Registration Authority (Pakistan) |
NBFC |
Nonbank financial company |
NBFI |
Nonbank financial institution |
NBKR |
National Bank of the Kyrgyz Republic |
NBMFC |
Nonbank microfinance company |
NPA |
Non-performing asset |
NPCI |
National Payments Corporation of India |
NPL |
Non-performing loan |
OJK |
Financial Services Authority |
POS |
Point-of-service |
PSP |
Payment services provider |
QR |
Quick response |
RBI |
Reserve Bank of India |
SBP |
State Bank of Pakistan |
SBS |
Superintendence of Banking, insurance and Private Pension Funds |
SECP |
Securities and Exchange Commission of Pakistan |
SFB |
Small finance bank |
SME |
Small and medium enterprise |
UMRA |
Uganda Micro Finance Regulatory Authority |
Resources
A set of CGAP background documents examine the impact of the COVID-19 crisis at the country level. These documents provide a snapshot of the policy and regulatory responses adopted by financial authorities in four countries: Peru, India, Pakistan, and Uganda.