Leveraging the outreach of non-bank financial institutions

Sabine Spohn , Asian Development Bank/PSDI Pacific Microfinance Week, Nadi, Fiji, October 2013

ADB action on Financial Inclusion in the Pacific

Continued commitment will be pursued through three key streams
1. Improving outreach to rural areas and outlying islands 2. Introducing new technologies, such as branchless banking 3. Reforming the enabling environment to support growth

ADB will continue working in coordination and/or partnership with key development partners, mobile network operators, local and national organizations

Structure of the Presentation

Common Outreach Constraints of non-bank financial institutions

Two examples of ADBs support to increase outreach:

1. Secured Transaction Reform 2. Microfinance Risk Participation Program

Common Outreach Constraints

Costs to deliver services on a cost covering basis Institutional and human resource constraints Unsuitable legal systems Capital constraints to expand operations

The Reform
Provide an easier way to use movable property as collateral for loans
How? Legislative changes that provide for an efficient framework Implementation of online collateral registry to assist lenders in evaluating borrowers 100% predictable results in the case of default

Benefits of Secured Transactions Reform

What Secured Transactions Systems do

Microfinance Risk Participation Program

Risk Participation Structure

PFI submits quarterly report to ADB

Default risk of MFI is equally shared by the PFI and ADB

ADB approves limit for

MFI based on PFI request

Partner Financial Institution (PFI)

PFI provides LCY loan to MFI

Microfinance Institution (MFI)

Thank you.

More information contact :

Sabine Spohn, Pacific Liaison and Coordination Office www.adb.org/plco sspohn@adb.org