Microfinance in Russia (Policy Paper)

Published

Moscow, 2001

Authors

Policy paper produced under Tasic project SMERUS 9803
"Support to development of small entrepreneuship"

Annotation

The sector policy study on microfinance in Russia has been carried out within the above framework. Purpose of the study is to provide an overview of microfinance in Russia, to review relevant experience abroad, to identify the current policy issues of microfinance development in Russia, and to recommend ways and means the Federal Government can address these issues, in order to create a more enabling environment.

This report was circulated among experts and MFIs and later discussed at the Task
Force 3 (Access to Finance) meeting.

According to the estimates of the RC, in 2000 the sector as a whole served 13,100 clients with total disbursements estimated at Rbls 1,170 million. This clearly shows that the sector is
still in embryonic state. Experience abroad shows that the Government at the
early stages of sector development is involved in a promotion and advocacy
capacity, rather than in a regulating capacity. In this respect a clear
distinction must be made between enabling legislation and legislation aimed at
regulation and supervision. The former is aimed at creating a legal and fiscal
environment in which microfinance institutions can viably operate.

Based upon international experience, as a general rule it seems prudent not to rush
a formal regulatory and supervisory framework until the sector has reached a level of maturity.
Usually formal regulation of the microfinance industry is undertaken only
when MFIs intend to become deposit-taking institutions, since this would bring them in the domain
of banking legislation. It is therefore recommended that at this stage the
government interventions focus on the creation of a microfinance-friendly
climate, through enabling legislation and fiscal measures.

Index

Table of Contents
Acknowledgement
EXECUTIVE SUMMARY
Role of the government at this stage of sector development
Mapping microfinance
1. INTRODUCTION
1.1 Framework of the SMERUS project
1.2 Purpose of the study
1.3 The case for microfinance; core questions for sector policy
2. INSTITUTIONAL MAP OF THE MICROFINANCE SECTOR
2.1 Types of institutions involved in microfinance
2.2 Micro-lending Institutions
2.2.1 Characteristics
2.2.2 Overview of institutions
2.2.3 Observations - Development issues
2.2.4 Policy recommendations
2.3 Credit Unions and credit co-operatives
2.3.1 Characteristics
2.3.2 Overview of institutions
2.3.3 Development policy issues
2.4 Regional funds
2.5 Donor programmes
3. BRIEF OVERVIEW OF RELEVANT INTERNATIONAL EXPERIENCE
3.1 Phases of development in the microfinance sector
3.2 Regulation of Microfinance
3.3 Credit unions and credit co-operatives
3.4 Comparison between credit co-operatives and micro-lending institutions
4. TOWARDS AN ENABLING ENVIRONMENT
4.1 Problems that need to be addressed - opportunities yet to be captured
4.2 Government policy on microfinance
4.3 Harmonisation of the regulatory framework
4.4 Regulatory framework for micro-lending institutions
4.4.1 Core questions to be addressed
4.4.2 Status of the veto opinion
4.4.3 Lending from borrowed funds
4.4.4 Information centre
4.5 Tax regime for micro-lending institutions
4.6 Credit Unions
4.6.1 Legislation for Credit Unions
4.6.2 Policy recommendations
4.7 Funding requirements of the sector
5. SCOPE FOR SPECIFIC INTERVENTIONS
5.1 Policy dialogue with the MFIs
5.2 Policy consultation with donors
5.3 Statement of Policy
5.4 Enabling legislation
5.5 Creation of a second tier lending mechanism for microfinance
5.6 Information Centre for Micro Finance
APPENDIX 1.
List of references
APPENDIX 2.
Relevant web-sites on microfinance

Doc ID

3612

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