Global microscope on the microfinance business environment 2012

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Key changes and impacts since last year:
l Two private credit bureaus (CRIF NM Credit
Assure Ltd and Creditinfo Jamaica Ltd) have now
been granted licences by the Ministry of Finance to
collect information on borrowers’ credit history
from lenders and other sources.
l Proposals by the BoJ to bring closer regulation
to Jamaica’s numerous credit unions continues to
be debated, with parts of the draft legislation (such
as imposing a cap on unsecured credit and
minimum capital requirements for start-up credit
unions) being strongly opposed by the Jamaica Cooperative
Credit Union League (JCCUL).
l Scotiabank has retained a subsidiary called
Scotia Jamaica Microfi nance Company Limited or
CrediScotia that is exclusively dedicated to micro
lending.
■ Mexico
Key characteristics of the microfi nance business
environment:
l The main regulator, the Comisión Nacional
Bancaria de Valores (CNBV, the National
Commission for Banks and Securities), has defi ned
microfi nance as a broad range of services targeted
at the lower-income population, rather than a
sector in itself. As a result, there is no general
microfi nance framework, although the CNBV has
made efforts to consolidate microfi nance activity
into a limited number of legal entities, thereby
reducing the complexity of the market seen in
previous years.
l The Sociedades Financieras Populares (SOFIPOS,
for-profi t fi nancial partnerships) are the main
regulated vehicles for microfi nance, along with
Sociedades Cooperativas de Ahorro y Crédito
(SOCAPS, non-profi t savings and loan cooperatives),
the latter having an auxiliary system
of regulation. Both SOFIPOS and SOCAPS are
allowed to take deposits.
l Transparency varies greatly depending on the
type of MFI, its size, and whether it is regulated or
supervised. Accounting standards are generally
high for regulated institutions (only listed fi rms are
© The Economist Intelligence Unit Limited 2012
<strong>Global</strong> <strong>microscope</strong> on the microfi nance business environment 2012
allowed to adopt IFRS), while non-regulated MFIs
are forced to adopt minimum standards of
transparency and governance if they are part of a
network. Transparency in pricing is also high for
regulated institutions, but non-regulated MFIs
tend to avoid publishing effective interest rates.
l There is a fi nancial sector consumer protection
agency known as CONDUSEF, which also has modest
supervisory powers thanks to a recent law.
Disclosure of fees is mandated for both regulated
and non-regulated institutions by CONDUSEF, but
online access to information is limited. CONDUSEF
also offers dispute resolution services, such as
conciliation. There are also two credit bureaus,
which together serve nearly 100% of the adult
population.
l Over-indebtedness remains a problem in some
regions of the country and particularly in the
South.
Key changes and impacts since last year:
l The newly elected president has pledged to
increase the public sector’s participation in social
and development banking in order to increase the
country’s traditionally low levels of fi nancial
inclusion and credit provisioning. This could create
further competition in microlending.
l There remains a high level of concentration in
the microfi nance sector, with the biggest four fi rms
holding a dominant share of assets, clients and
loan portfolio. This has partly led to higher than
average interest rates, despite few structural
impediments to lending and relatively low NPL
ratios. Other causes for high interest rates,
however, include elevated credit risks, steep
telecommunications and transport costs, as well as
security costs.
l Formalisation of non-regulated SOCAPS (of
which over 400 exist) is scheduled for December
2012. However, only 63 have done so or are
currently in the process of formalisation and the
CNBV estimates that only 150 will have succeeded
by the deadline.