Research & Analysis

Regulation and Supervision of Microfinance

To reach large numbers of people, microfinance must eventually move institutions that are licensed and supervised by a country’s financial authorities. A licensed institution can offer savings services to its clients and multiply its own equity capital by capturing deposits. Because microfinance is different from conventional banking, the banking laws and regulations in most countries will eventually need dome adjustment to accommodate licensed microfinance. However, not all countries need to address regulation in the near term.