Research & Analysis

Regulation and Supervision of Microfinance Institutions

In November 1995, ACCION International brought together 21 high-level officials from bank regulatory institutions in 15 Latin American countries and the United States, along with 200 development professionals, to address issues related to supervision and regulation of microfinance institutions (MFIs).

Why Is MFI Regulation Necessary?
There is a huge unmet demand for financial services in the microenterprise sector. Despite some success stories, MFIs probably reach fewer than 5 percent of the potential clients. Serving this market will require access to funding far beyond what donors and governments can provide. Thus, many MFIs want to expand their outreach by raising funds from commercial sources, including deposits. Some commercial banks are also looking to extend their financial services into the microenterprise market.