(IMF Working Paper, Prepared by Anupam Basu, Rodolphe Blavy, and Murat Yulek1, September 2004)
The capacity of MFIs has an important bearing on the compliance with regulatory requirements. It is therefore important to put in place appropriate measures in the following areas:
• capacity building at the institutional level including in bookkeeping and reporting standards, strengthening of internal controls and credit decision mechanisms, and improving technology and human resources; • similar capacity constraints should be addressed on the supervision side, ensuring competence and effectiveness and focus (given the high unit costs of supervision)
of supervising staff; • development of the borrower database infrastructure through improved data compilation at an institutional or sectoral level and establishment of credit bureaus; • finally, the general judicial environment also has an important bearing on the development of the sector. The enforcement of microfinance regulations and general business related laws is crucial for the development of a formal microfinance sector as it is for the rest of the financial sector in general.
The first two are areas where a coordinated effort by governments and donors can be helpful.
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International Monetary Fund
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The IMF is an international organization
of 185 member countries. It was
established to promote international
monetary cooperation, exchange stability,
and orderly exchange arrangements; to
foster economic growth and high levels of
employment; and to provide temporary
financial assistance to countries to help
ease balance of payments adjustment.
Since the IMF was established its purposes
have remained unchanged but its
operations—which involve surveillance,
financial assistance, and technical
assistance—have developed to meet the
changing needs of its member countries in
an evolving world economy.
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