The CBR will be “proportionally adjust” microfinance organization

The CBR will be “proportionally adjust” microfinance organization

ST. PETERSBURG, November 25. /Corr. Roman Podervyansky/. The CBR will be “proportionally adjust” the market for microfinance institutions (MFIs) of the country with consideration of peculiarities of their niches and risks. This was reported today by the Deputy Chairman of the Bank of Russia Vladimir Chistyukhin at the 14th National conference on microfinance and financial inclusion.

“In 2015 we have many kinds of the financial industry – not only in microfinance, credit cooperatives and pawn shops – is held under the banner of the registry cleaner. Want to the registry is only good and workable members, said Chistyukhin. – We are ready to work with any number of participants that will be registered. The main thing that it was a quality business to business model, was carried out the minimum Supervisory requirements and obligations to customers. Then we believe that the industry (MFI) is operating normally and in principle is a normal element of the financial market of the Russian Federation”.

The role of the segment and approach the Central Bank

“Consider the subjects of microfinance not just as another institution providing loan funds to households and businesses, and as a very important element of financial inclusion, explained the Chairman of the Bank of Russia approaches of the regulator. – We understand that in some niches, in particular lending to small businesses and start-UPS in small towns, rural areas, often MFIs and credit cooperatives there is simply no viable alternative”. Big players in these niches “minimum contribution”.

For the Central Bank of the Russian Federation “it is very important that the subjects of microfinance, credit cooperatives and pawnshops continuing its activities, in order to ensure affordability”. While the regulator is working to ensure the quality of this market. “Developed indicators of financial inclusion, going to start measuring our territories on the extent to which individuals, entrepreneurs can get finuslug, and what to do if they are not enough,” said he.

The Central Bank of the Russian Federation, as recalled Chistyukhin, about two years ago got “inherited” from the former Federal financial markets service (FFMS liquidated in 2013 – approx.) prudential regulation and supervision of the microfinance market, credit cooperatives, and then by the Lombards of the country. “Now, all of these activities very tightly into our regulatory and Supervisory practice,” he said.

Proportional control

The Bank of Russia is committed to “consistently implement the principle of proportional regulation” in relation to this segment – based on risk, said the Chairman of the Central Bank. “We do not equate microfinance markets, credit cooperatives and pawnshops to their “older brother” – credit institutions and other financial market participants,” said Chistyukhin.

So, when the transition to a single chart of accounts most of the participants Finance must implement new accounting rules based on international financial reporting standards (IFRS) in 2017. MFIs and credit consumer cooperatives in 2018, the agricultural cooperatives and pawn shops – in 2019. “Given the greater lag (gap) time to prepare all these mechanisms,” he said.

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Media: the Central Bank intends to conduct a site inspection of microfinance organizations

“Plus, we plan to develop a special standard for simplified accounting systems, which will allow the minimum to invest small farms. To financial, accounting not become for them a complex, “scientific” research, and was a mere reflection of their activities, – said the Chairman of the Central Bank. – Similarly suggest the gradual introduction of reserve requirements by the regulations”.

The most important innovation he called the Central Bank’s proposed legislative reform of the Institute MFI. “It is that all MFIs should be divided into two types. Some of the larger, entitled to attract funds from third parties, and the latter is smaller, that such a right will not have. But the oversight requirement will be different”, – he noted. The first is then a niche “between MFIs and banks today” and the second “will have the opportunity to deal with a very limited, careful supervision, without any encumbrances”.

Issues of self-regulation

On the background of the law on self-regulating organizations (SROs) in the financial market, the regulator is “seriously thought, what the powers on supervision of MFIs and other business entities be transferred to SRO”. But then “somewhat disturbing trend”, said the Chairman of the Central Bank.

Speaking of checking all 9 SRO credit consumer cooperatives, he noted that “the activities that these SROs are in control of its participants, to put it mildly, not ideal. Sometimes practical monitoring is not conducted”. The audit revealed “the abuse in several SRO-related, for example, misuse of the compensation Fund that from our point of view is taboo”.

The Chairman of the Central Bank stressed that in addition to internal decisions of the Bank of Russia of readiness to share some powers with an SRO will be required reciprocity on their part. “SRO in the response should ensure a high level of quality of their work, – he said. – I hope that 2016 will be devoted to this area, which we consider as very important.

Next year we also plan enough to pay attention to the largest MFIs. Maybe some of them will pass inspection”. According to him, they “let “live” to see how the business built a flagship on a particular segment of the market, what are the accomplishments, the failures, make recommendations for improving the situation.”