New microfinance bill submitted for approval

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New microfinance bill submitted for approval

A new bill on microfinance has been drafted and proposed in the Pyithu Hluttaw.

The bill, which will replace the 2011 Microfinance Institutions Law, was submitted by Daw Khin San Hlaing, an MP from Pale constituency and chair of the Banking and Financial Development Committee on December 10.

“The bill aims to support people in rural areas, eradicate illegal loan associations and provide financial assistance to local businesses involved in agricultural and livestock activities,” she said.

She added that it had become necessary to amend the existing legislation in order for it to be compatible with the changing environment and evolving technologies.

Major criteria included in the new bill include requirements that association members not be heavily indebted, sustainable development of those associations and sharing of financial knowledge among the members, said MP U Tin Tun Naing, secretary of the Banking and Financial Development Committee.

“The new law will provide recourse for lenders and borrowers and permit action to be taken against any wrongdoing. So, if the microfinance institutions (MFI) lend correctly and the lenders pay off their loans accordingly, this sector will develop and grow over the long term,” said Daw Khin San Hlaing.

She added that besides rural farmers, microfinance can also be harnessed to support growth in the education and healthcare sectors.

If the microfinance sector develops and is regulated well, people will be able to borrow money at lower interest rates from MFIs and avoid falling into a situation where they are unable to service their debts, she said.

Myanmar MFIs also provide borrowers the option of taking smaller loan amounts. Loans of up to a maximum of K10 million are available.

According to data in October, there are 189 local and foreign organisations that provide small loans to low-income people in all states and regions including Nay Pyi Taw. In total, MFIs have lent more than K4.800 billion to more than 3.7 million members.

From: Myanmar Times