Microfinance regulation in Bangladesh - a long path to progress
Few issues are as emotive in the Bangladesh microfinance industry as regulation. It is important, however, to identify the predominant rationale for action, which the author takes to be depositor protection. Confusion exists concerning the relationship between the issues of depositor protection, legal form, commercialization and professionalization on the one hand, and regulation on the other. This lack of clarity inhibits action. This article opens by presenting a background against which regulation appears increasingly necessary, but suggests that other mechanisms may be more appropriate for many MFIs. It presents various models for protecting depositors, but cautions that any regulatory framework must be assessed for practicality and the cost of supervision and enforcement. The article suggests that commercialization may be appropriate for some MFIs. It concludes that many of the steps taken towards creating a regulatory framework are in the interests of all stakeholders.
Product costing: the experience of MicroSave-Africa
Two methods of product costing - allocation-based costing and activitybased costing - are outlined here: and a working example of allocation-based costing is given. Allocation units and bases, transfer pricing and marginal pricing are explained. Staff from MicroSave-Africa's partners have been trained in this methodology, and this paper describes how partner institutions introduced costing to their systems and discovered which products were making losses. Results from the costings have in some cases led to alterations to the products and to an increase in profitability.
Electronic banking for the poor – panacea, potential and pitfalls
This article examines what types of electronic banking technology are open to microfinance institutions. It then proceeds to examine how various electronic products might be attractive to poor customers in terms of improved accessibility, affordability and ease of use. From the financial institution's point of view, the functionality of electronic cards, pricing of electronic solutions, the segmentation of different products for different client groups and possible partnerships all need to be considered. The environment can either support or hinder the adoption of electronic banking and the article describes how the evolution of the financial and retail sectors, the extent of financial literacy and the policy and regulatory environment should support these developments. Although developing an extensive e-banking solution is beyond the range of most microfinance programmes at present, a range of options suitable for some microfinance programmes is presented. Finally, the article suggests principles for donor involvement in this sector.
Understanding and preventing the failure of new products
Despite Herculean efforts new financial products sometimes fail. After outlining how some failures arise, this paper proposes steps that can be taken to reduce the risk of failure. Products can fail at any stage of development but problems are particularly likely during the product design stage, during pilot testing and during rollout in the case of a product that is not pilot tested.
Crossfire: Will electronic banking reach the very poor?