Comments on: Global Microfinance Institutions Ratings http://www.defeatpoverty.com/2008/01/global-microfinance-institutions-ratings.html A conversation on global economic issues, ideas & data to help us all become better contributors to defeating the scourge of extreme global poverty Thu, 02 Feb 2012 03:26:56 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Dave Richards http://www.defeatpoverty.com/2008/01/global-microfinance-institutions-ratings.html/comment-page-1#comment-137 Dave Richards Mon, 21 Jan 2008 15:00:00 +0000 http://www.defeatpoverty.com/2008/01/global-microfinance-institutions-ratings.html#comment-137 Yogesh, good question. The reality is that the Reserve Bank of India is already quite in involved in regulating Indian MFIs. In general, this is a good thing as this brings legitimacy to MFIs and protects consumers from irresponsible and fraudulent operators. Additionally, the RBI has provided a lot of political air cover from meddling politicians who would like to have more personal control over to whom MFIs lend in order to manage political patronage. We've seen a number of examples where the RBI has told politicians "hands off" on MFIs defending MFI practices and legitimacy in delivering financial services for the working poor.<br/><br/>I believe the single most important change that the RBI can make is to authorize MFIs to accept and then mobilize (lend out) savings. There is a strong and positive precedent for this already in Bangladesh and some Latin American countries. This would provide MFIs will a significant new source of capital...reducing their cost of capital, reducing their dependence on big banks (and venture capital) and diversifying their capital portfolio for better risk management. I am hopeful that we'll see MFI savings enabled within the next year or so. Yogesh, good question. The reality is that the Reserve Bank of India is already quite in involved in regulating Indian MFIs. In general, this is a good thing as this brings legitimacy to MFIs and protects consumers from irresponsible and fraudulent operators. Additionally, the RBI has provided a lot of political air cover from meddling politicians who would like to have more personal control over to whom MFIs lend in order to manage political patronage. We’ve seen a number of examples where the RBI has told politicians “hands off” on MFIs defending MFI practices and legitimacy in delivering financial services for the working poor.

I believe the single most important change that the RBI can make is to authorize MFIs to accept and then mobilize (lend out) savings. There is a strong and positive precedent for this already in Bangladesh and some Latin American countries. This would provide MFIs will a significant new source of capital…reducing their cost of capital, reducing their dependence on big banks (and venture capital) and diversifying their capital portfolio for better risk management. I am hopeful that we’ll see MFI savings enabled within the next year or so.

]]> By: yogesh http://www.defeatpoverty.com/2008/01/global-microfinance-institutions-ratings.html/comment-page-1#comment-135 yogesh Mon, 14 Jan 2008 17:30:00 +0000 http://www.defeatpoverty.com/2008/01/global-microfinance-institutions-ratings.html#comment-135 Hi Dave..<br/><br/>Congrats for your blog and a very happy newyear... <br/><br/>you know some how i really like the whole idea of a greater role of central bank in the micro finance institutions, but at the same time i am not able to arrive at a concrete conclusion for a reason that the same central banks have greater deal of influence over the traditional banking channels(distribution networks)... at least in india, if the central banks wants to increase money supply then the banks would do so or vice-versa... now how far would you like the interference of central banks in these micro-finance instutions.. Hi Dave..

Congrats for your blog and a very happy newyear…

you know some how i really like the whole idea of a greater role of central bank in the micro finance institutions, but at the same time i am not able to arrive at a concrete conclusion for a reason that the same central banks have greater deal of influence over the traditional banking channels(distribution networks)… at least in india, if the central banks wants to increase money supply then the banks would do so or vice-versa… now how far would you like the interference of central banks in these micro-finance instutions..

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