§ Sir Alastair GoodladTo ask the Secretary of State for International Development with which central banks her Department has held discussions concerning the introduction of legislation for the regulation and supervision of micro-finance institutions. [39182]
§ Clare ShortThe growth in numbers and in size of microfinance institutions (MFIs) has been significant only in the last couple of years. Most MFIs have received their408W capital as grants from donors which means that supervision and regulation was not an immediate issue. Only recently have a relatively small number of MFIs become sufficiently mature to be seeking to raise more capital from depositors. It is at this stage that supervision and regulation become particularly important as individuals' savings are at stake. To date the performance of central banks in regulating and supervising formal financial institutions has been weak due to problems of political corruption.
The Department for International Development are at the forefront of the donor winning, by supporting the work being done by the Microfinance Network and by CGAP in this important area. Bilaterally, we are at the most advanced stage in Bangladesh, where DFID are supporting a supervision and regulation project, which includes dialogue with the central bank. As more MFIs mature, we anticipate providing further support to this area.