ABSTRACT
In recent years, the discussion on regulation has broadened understanding of the extent to which the realities of the political economy influence the regulatory policy choices of different institutions. This chapter discusses regulatory issues in the microfinance sector, which caters to the needs of those who have been excluded from the formal financial sector, largely through reviewing the sector specificities, and existing practices of regulation. During the post colonial period, subsidised agricultural credit was considered an appropriate development strategy to reach the poor. The main providers of informal financial credit services are lending by individuals on a non-profit basis; direct but intermittent lending by individuals with a temporary surplus; lending by individuals specialised in lending, whether on the basis of their own funds or intermediated funds; individuals who collect deposits or ‘guard’ money; and group finance. There are certain instances where the regulatory authorities contact a consulting firm to perform regulatory functions.
