IDB, ASBA call for more transparency, client protection in microfinance regulation

Wednesday, March 23, 2011

IDB and the Association of Supervisors of Banks of the Americas (ASBA) have called for more transparency and client protection to foster proper regulation in the region's microfinance industry, a press release from IDB reads.

Both institutions, with support from the Swiss technical cooperation trust fund, published a guide for effective regulation and supervision of microfinance operations aimed at regulators of microfinance institutions (MIFs).

The entities called on MIFs to "disclose credit costs and other terms of credit agreements to clients and provide them with input to make their decisions," and recommended that regulators "conduct evaluations of the clauses of credit contracts to prevent and punish abusive practices," the release reads.

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IDB and ASBA also called for the same guidelines to be applied to non-supervised credit institutions that operate in the microfinance sector "because they detail sound practices that seek to minimize the risks these institutions are exposed to."

To read the IDB/ASBA guideline in English, go to this link

To read the IDB/ASBA guideline in Spanish, go to this link