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Evolution of Microfinance Legislation in Kyrgyzstan

Evolution of Microfinance Legislation in Kyrgyzstan. Muhammad Junaid. Law on Microfinance Organizations defines an MFO as…. A specialized financial institution established as legal entity to provide microfinance to certain categories of legal entities and private individuals.

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Evolution of Microfinance Legislation in Kyrgyzstan

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  1. Evolution of Microfinance Legislation in Kyrgyzstan Muhammad Junaid

  2. Law on Microfinance Organizations defines an MFO as… • A specialized financial institution • established as legal entity • to provide microfinance to certain categories of • legal entities and • private individuals

  3. TYPES OF MICROFINANCE ORGANIZATIONS

  4. Three Types of Microfinance Organizations

  5. Degree of regulation depends on the nature and functions of the MFI

  6. Deposit Taking MFIs are subject to stringent regulatory controls

  7. Rigorous Prudential Regulations are applied for deposit taking MFIs • Capital adequacy • Max. risk per borrower • Max. equity holding • Insiders and affiliated individuals • Loan Loss Provisions

  8. The law provides flexibility to MFIs • “Microcredit” is not defined in the law • No restriction on sectoral or geographic concentration of loans. • No stringent reporting requirements (except deposit taking companies)

  9. Other law applied to Microfinance Organizations • Civil Code of KR • Law on the “National Bank of KR» • Law on “Banks and banking activity» • Law on “Licensing” • Law on “Credit Unions” • Law on Microfinance Organizations in KR” • Law on “Non commercial organizations”

  10. The law was a turning point for Microfinance Industry in Kyrgyzstan • Investment in Microfinance institutions increased manifold • Corporate Governance improved • Increased access to finance at lower pricing

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