ADB report favours strengthening legal framework for microfinance

Microfinance Focus, Nov. 13, 2009: Strengthening legal frameworks governing microfinance is needed to address weaknesses in the financial sector, said a report by the Asian Development Bank on Thursday.

The study,”Intra-regional Trade and Investment in South Asia,” examines the progress of economic integration in the South Asian region which includes India, Bangladesh, Sri Lanka, Nepal, Bhutan and the Maldives.

The report argues that financial sector reform in the region can help alleviate poverty by encouraging growth and development of capital markets. This will create more options for investment and savings including microfinance.

“In addition to reaping benefits of removing trade and investment barriers, South Asia must look toward the immense potential of regional cooperation and integration in other areas, including the financial sector,” said Kunio Senga, Director General of ADB’s South Asia Department.

Other recommendations of the report include disciplined fiscal policies, privatising state-owned financial institutions,lifting non-prudential and capital account restrictions, and improving accounting standards.

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