August 31, 2010 -- The Basel Committee on Banking Supervision published a final version of its document on microfinance activities and core principles for effective banking supervision. The document represents the global standard for sound prudential regulation and supervision of banks, identifying key differences between conventional retail banking and microfinance activities. "Given the unique characteristics of microfinance and the range of practices on regulating and supervising this line of business, the guidance will assist supervisors in applying the core principles in a manner that is commensurate with the type, complexity and size of depository microfinance activities conducted in their jurisdictions,” said Basel Committee Chairman Nout Wellink, who also is the president of the Netherlands Bank. Among other things, the guidance calls for regulators to develop specialized knowledge within their supervisory teams to evaluate the risks of financing to low-income people and small, informal businesses.
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