§ Dr. TongeTo ask the Secretary of State for International Development what measures her Department has undertaken to encourage British banks' involvement in microcredit schemes. [58157]
§ Clare ShortWe recognise the importance and potential benefits of involving British financial institutions in microfinance. In many developing countries, however, it may be more appropriate and feasible to develop the capacity of local banks.
582WSpecific measures which DFID has taken to encourage British banks' involvement in microfinance include the following:
DIFD supported the Centre for the Study of Financial Innovation (CSFI) in the organisation of a series of meetings in the City of London on the subject of microfinance. This led to a report 'Credit where credit is due: bringing microfinance into the mainstream' which was published by CSFI. A particular target of this publication is British commercial and merchant banks, to encourage them to play a more active role in microfinance.The Department is actively working with commercial banks overseas to induce them to lend either direct to small and microenterprises or to lend to retail microfinance institutions, usually by DFID providing some form of guarantee.DFID is supporting research on linking self-help groups (and informal credit providers) with formal financial institutions in developing countries. Central to this research is the idea of 'linkage-banking' where banks, British or local, are linked to co-operative groups which can then provide microfinance on a wider scale.