Regulation of microfinance NGOs

Abstract

This article initially looks at the growing calls for regulation of the microfinance sector and then places Bangladesh, as a case study, within the context of the subsequent debate. It starts with a consideration of the need for appropriate regulation and supervision of the microfinance activity, particularly as it endeavours to ensure the safety of deposits, especially of the poor, as well as securing the other aspect of the double bottom line, the financial sustainability of the organizations. This is followed by a review of possible options for regulation and supervision, and the potential shortcomings of the conventional approaches.This article then reflects on the possibility of placing microfinance regulation and supervision in Bangladesh under the Palli Karma–Sahayak Foundation (PKSF) or Rural Employment–Generation Foundation, an autonomous apex financial institution. Finally, there is a summary of principal conclusions, policy suggestions, and signposts for future research.