Nay Pyi Taw, Myanmar, December 11, 2017
—IFC, a member of the World Bank Group, in collaboration with the Myanmar Microfinance Association, is offering a training program on responsible finance for microfinance institutions (MFIs) and regulators. Launched in October 2017, this six-month training series aims to introduce regulators and MFIs to best international practices for responsible finance.
The next training is scheduled to be held for regulators in Nay Pyi Taw (December 11-12). This will be followed by a training for MFIs in Mandalay (December 12-15). The program is expected to reach out to more than 50 licensed MFIs and more than 150 participants, including around 50 regulators over six months.
Responsible finance is a client-driven business approach, which ensures that financial institutions offer their services in an accountable, transparent, and ethical manner. In Myanmar, more than 170 MFIs — most of them licensed in the past five years — are serving around 70 percent of the population that do not have access to a regulated financial services provider.
Considering the increasing number of MFIs, as well as other financial services providers including fintech companies, informal lenders and cooperatives, there is a potential for multiple lending to the same clients. This could lead to over-indebtedness and credit bubbles, as it happened in Asia, Africa, Latin America and Eastern Europe. Further, some clients may not be aware of the fees, the way in which interest rates are calculated, or the general credit terms.
Given the scenario, IFC — in partnership with the multi-donor trust fund LIFT — is introducing responsible finance principles and sound practices in Myanmar. Through this program, the supervisory staff from the Ministry of Finance’s Financial Regulatory Department (FRD) and MFI leaders will learn about global responsible finance approaches, monitoring systems for the MFI sector, and how to develop one-to-three-year plans to strengthen their lending practices.
“The need of the hour is client protection, financial awareness, and transparency in lending policies for MFIs in Myanmar, which are serving thousands of micro enterprises, lower income households, and women in rural and urban areas. These clients will benefit fully from appropriate products and services, only when these are coupled with responsible finance practices,” said Vikram Kumar, IFC Country Manager for Myanmar.
In addition to this program, IFC will further engage with the FRD and MFIs to adopt client protection principles. IFC is also supporting the development of a national credit bureau to promote credit information sharing among the lending institutions, following its technical assistance in the issuance of a landmark credit reporting regulation in March 2017. Ongoing efforts have also been made to develop a secured transaction system that would allow businesses, especially SMEs, to access finance based on movable assets.
In Myanmar, IFC’s efforts reinforce its advisory initiatives to enhance the capacity of financial institutions and mitigate lending risks at the industry level. This technical assistance aligns with IFC’s investments of $17.5 million in local MFIs to help meet Myanmar’s critical needs for financial services and unlock the country’s economic potential.
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