ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Regulating Microfinance Institutions

Recent events in India have brought a fresh focus on the appropriate regulatory stance towards microfinance. This paper analyses the puzzles of financial regulation in this field from first principles and argues that mainstream mechanisms of consumer protection and micro-prudential regulation need to be modified. From this perspective, it suggests regulatory strategies that need to be adopted for dealing with microcredit and financial distribution that focus on the poor. This conceptual framework also helps analyse two policy responses, viz, the Malegam Report and the draft Microfinance Bill, 2011.

Annuity Market in India

Annuities markets around the world are small but are likely to grow as a result of reforms in the public social security systems and private pensions plans, which partially replace the defined benefit plans with funded defined contribution plans. When people retire, they may choose or are sometimes required to annuitise these defined contribution savings. Therefore, it is important to learn whether or not annuities markets exist and what kinds of market failure can be anticipated. Several papers have analysed markets in the US, UK, Canada, Switzerland, Australia, Israel, Chile and Singapore. This paper extends the analysis by examining the annuities market in India. The paper focuses on the analyses of the expected present discounted value (EPDV) of cash flows from the annuity, and the money�s worth ratio (MWR), which is the EPDV divided by the initial premium cost. It points to several key weaknesses in the annuities market that need to be corrected to enable the development of a healthy annuity industry in India. It also summarises some of the key policy choices that must be made to enable it to play an effective role in the broader pension reform.
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